renjith krishnan

Social Enterprise Objectives

A social enterprise requires both efficiency and effectiveness.

An objective is an end result, and it is often referred to as a “target.” Objectives serve as quantitative measures within a fixed time frame that propel your social enterprise toward accomplishing its mission. The time frame for achieving the objectives should correspond with viability and other mid-term goals set forth in the mission statement. Secondary objectives for marketing, human resources, and production flow from these main objectives, and operational strategies are built upon them.

The objectives must address both bottom lines—business and social—of your enterprise and can be divided into two categories: social impact objectives and financial sustainability objectives.
Regardless of type, objectives must be SMART:

  • Specific — well-defined and clearly stated
  • Measurable — quantifiable or absolutely calculable
  • Achievable — realistic under the circumstances
  • Relevant — supporting accomplishment of the mission and contributing to realizing the vision in the long term
  • Timebound — time based (corresponding to the period of the business plan)

Social Impact Objectives
Social impact objectives enable you to measure the social aspect of your mission statement.
Two objectives among these can be easily defined as SMART objectives:

  • Scale— the number of the target population your social enterprise will benefit. How scale is quantified depends on the goals and design of the program, but it is often expressed as a number of individuals served or jobs created.
  • Income Level — the level of net income distributed to the target population. It can take the form of wages, salaries, or profit sharing. It is often expressed in dollar or other currency value, as a total income per individual.

Financial Viability Objectives
Financial viability objectives represent the business component of your mission by addressing the social enterprise’s financial bottom line and measuring its viability.

  • Cost recovery— gauges the ability of the social enterprise to cover its costs through generated revenue. Cost recovery is expressed as the percentage of expenses covered by the revenues in a given period.
  • Net Profit/Loss— measures social enterprise profitability via the financial bottom line. A net positive number indicates a profit, whereas a net negative number indicates a loss. Net profit/loss can also be considered a “test of the market” indicator demonstrating the enterprise’s ability to operate as a successful business.
    Net profit/loss is reflected in the last line of the income statement and expressed in dollar or other currency value.
  • Cost-efficiency— measures the ability to render services at a decreasing cost over time. Cost-efficiency is often quantified as a net loss or profit per individual, expressed in dollar or other currency value. If the cost-efficiency amount is a negative value, it represents the amount of subsidies per individual necessary to support the social enterprise. If it is a positive value, it represents the profit generated by each individual.

Combining the Objectives
If your objectives seem incompatible or incongruous, they may not be achievable. In this case, adjusting expectations and objectives within limits that all partners can agree on can help you find a better fit between your objectives and mission. If this approach doesn’t yield stakeholder satisfaction, you may need to rework your mission statement and repeat the process until a workable mix is found. Finally, if dissatisfaction prevails, you are probably in the wrong type of business or industry to support a social enterprise venture, therefore you will have to select another business.

Written by Virtue Ventures
Adapted from Managing the Double Bottom Line: A Business Planning Reference Guide for Social Enterprises

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