The business definition of scalability is “the ability to increase revenues while your marginal costs decrease with each unit sale.” Chances are, if you’re reading this, you probably already knew that. But what does it mean for a social enterprise? Scalability is a unique challenge for any startup, particularly when it includes the expansion of social responsibility and a core value system.
Growth or scale is not a "one-size-fits-all" strategy because different industries require different approaches to overcome the challenge of reaching more customers while controlling costs. Yet pertinently, the decision to scale up is not just about decreasing the gross price of a product or service, it’s also about generating a social impact that grows, thrives and, above all, sustains. Scalability comes into play when a business has built a solid foundation for sustenance. What does it take for those roots to establish themselves and spread without compromising a mission? Whole Foods’ co-CEO, Walter Robb, says it explicitly: “Our purpose comes first, and our profits follow.”
So how do you know if you’re ready?
You know yourself well- and so do your consumers
Knowing your identity and clearly articulating your story from the very beginning, can help solidify your brand identity and create customer loyalty. “I encourage people to put forth the branding question and talk about it as early as possible,” Jim Bull, founder of creative agency Moving Brands, told The Venture. “Getting that right from the outset can set yourself in market in a much more considered way.” If you establish yourself well, you’re laying the foundation to scalability.
While Fortune 500 companies can easily project a sense of social consciousness through brand development, ventures with less recognition can also hone this appeal with the same social media tools. Keep in mind that the consumers of your product are smart, engaged, and following your mission.
That sense of community keeps your business model in tact and can help you build on the aforementioned foundations, providing your business with a solid platform from which to scale. As your followers see your mission grow, trust and loyalty to your business will be further established. A five-minute video, a TinyLetter newsletter, or a behind-the-scenes Instagram account can help assure your audience that your roots and social mission are staying in tact and not being compromised whilst your business grows.
You have established business processes
If your business has a replicable model and clear processes, you may want to consider franchising as a way to scale and expand. Sanergy, an enterprise that designs and manufactures low-cost, high quality sanitation facilities with a small environmental footprint, put the franchising model at the heart of their business. Their mission is simple and straightforward: to provide hygienic sanitation for people in need while also treating and reusing waste. Having a small footprint and low cost to construct, each centre is designed to service a customer base of 77 people. Because of their low overhead costs and durable finished product, their Fresh Life Toilets are pre-fabricated on-site at Sanergy’s local workshop and then delivered to franchisees. Not only does this help their bottom line, it also ensures that the product doesn’t have to be built in the field, which is not always possible. From construction to distribution, the process is handled with quality, usage and affordability in mind- and keeping the social mission in tact. The franchisees earn income through pay-per-use fees, membership plans, and additional sales of complementary products to toilet users, whilst the income generation potential is an important incentive for the franchisees and distribution channels to maintain the facilities and provide good customer service. By having a clear and concise business model and process, they eliminate many unnecessary problems for themselves and those who franchise their product.
You understand the markets into which you’re expanding
Detailed market research is one thing, but if you’re considering entering a new market, don’t assume you can learn all there is to know about how it operates from your desk. The best way to get a fundamental understanding is by actively immersing yourself in the market. That means personally visiting your customers, asking them about their needs and building the crucial relationships and networks with the right people on the ground who can help your expansion plans become a reality. “You can’t stick to something on a creative principle versus something that’s really needed by the market, so being adaptive to your own product, adaptive to the needs of the people who are going to buy your product, is important,” says Bull, who has advised a number of businesses entering new markets.
For Sanergy, their route to growth has been to stay local, keeping both the manufacturing and market close to home. They hire local residents to own and operate their facilities and establish an invested relationship by making their team members franchise owners. This is a best in case example of social franchising, the benefits of which are numerous for both sides: from generating jobs and a sense of ownership in the local community to integrating your brand in the community from the bottom up. This takes on a new importance in emerging economies, where your enterprise may become an asset to a local community in unexpected ways.
However a company chooses to scale their business, the focus should remain on how you can balance your growth with retaining your core mission and audience. Whether you are changing your production plans or expanding into franchises, taking the time to find a sustainable, long-term solution to benefit your organisation’s growth into the future is an absolute must.
The Venture is a new global social enterprise initiative searching for extraordinary startups and new ideas that use business to create positive change. If you have a GCC-based social enterprise or an idea for a social enterprise, enter The Venture #WinTheRightWay to potentially win your share of US$1 million.