It’s all about the Money***
The greatest, most realistic selection criteria that will determine the sustainability and eventual scope of impact is…(drum roll please)…the money**, specifically the ability to generate revenue and/or cash flow from operations.
I’m sure that only a few would give this answer and that it is probably the least popular thing to say in the social sector, but I believe** that it is true. I have thought about this from my own experiences this summer, but I never realized how true it was until our class on Tuesday. Kim Tanner and the Jenesis Group have become my new heroes and role models in Social Entrepreneurship. The fiscal-centered selection criteria and method that they have chosen to approach social entrepreneurship with was so refreshing to hear. As was noted, my inner, number-crunching, debit vs. credit accountant was beaming.
The fact is, no matter what kind of purpose you have for your business, venture, company, foundation, entity (however you want to classify what you’re doing), without money it will go nowhere. In today’s world, nothing is free. Even if the word “free” is advertised, there is always a small asterisk that informs you of an associated cost required. Someone, somewhere, somehow has to give you money in order to finance the service that you wish to perform. The traditional method is to require a fee for the service you are performing or a price for the product that you are giving and to have that cash flow finance the growth and sustainability of your business. The difficulty with the social sector is obviously that in many services, asking for a fee is inappropriate and counterproductive. Without this ability to fund the business from operations, you must solely rely on financing from investors and donors. Although this ability allows you more freedom to mold your service how you want, it takes the life and sustainability of your venture completely out of your hands and at the mercy of your investors and donors, who may have different motivations or ideas for how your business should be run and the impact it should be making.
This is the type of issue that every entrepreneur must consider, for whether or not you are able to finance your business, your idea, is a question of life or death for your business. Therefore, if financing really is that important, then why is it not the most prominent selection criteria? If we truly want to make a difference in the long-term, and if we truly want to provide a value-added service to the widest population possible, then we must consider the ability to generate revenue or cash flow from operations. Whether this be a fee, sponsorship, or partnership, the money coming in is like the blood of your business and will provide your business with the freedom to truly make a difference.
**Now with the asterisk. Having said all this, even as an Accountant, I recognize that without a good idea, passion, and creativity, money will get you no where. Money might be a prominent criteria, but it is not the only one.