Social Entrepreneurship Project Manager, 14 January 2014

Could you briefly tell us about your work as a Social Entrepreneurship Project Manager?

I provide support in the founding of social firms. In such firms vulnerable people with sufficient motivation and capacities take steps towards paid employment. At present, there is little throughput from sheltered workplaces to paid employment, and sheltered workplaces are suffering under large budget cuts. Hence, currently there is a strong need for social firms; contrary to sheltered workplaces, they are not primarily dependent on government subsidies.

In my current projects, the Rainbow Group (RG) has a lot of expertise on offer regarding the target group and how to support them. However, the RG is not very entrepreneurial, so we found some entrepreneurs, who were up for working socially responsible. Together with these entrepreneurs we are working on the foundation of two new firms.

How did you develop your knowledge and skills?

I gained experience in bringing together relevant parties and entrepreneurship in various ways. Moreover, I spend a lot of time on information exchange with other parties. I love combining the social with the commercial in a creative manner. All in all this work requires some pioneering, we learn through trial and error. For now I will be working for RG for one year, and after that we will consider whether it should become a more structural job.

You were also involved in the foundation of Happy Workers. Could you tell us about this former project?

I founded Happy Workers as a social firm with workplaces for reception, delivery and service. Baker Hartog (a famous baker in Amsterdam) offered us delivery opportunities, and this went rather well, but we did not have enough business. Consequently we started a market stall with good coffee and sandwiches of Baker Hartog. We trialled this concept, but again we did not have enough business; we needed more stalls to make our endeavours profitable. In the end we could not achieve sufficient sales, so we stopped the project.

At the moment, which projects are you working on at the RG?

Currently we are in the process of founding two firms:

1. Shipping company Kees will be a private limited liability company, transporting and delivering goods by boat. One of our clients will be De Prael, which is a social firm brewery; Kees will be responsible for the stocking and delivery of De Prael. This project demands quite some investments, but the required budget of €130,000,- has already been covered. Also, agreements have been made with two future clients. Before we commit to anything officially, we will first try to make agreements with two more customers through acquisition. Moreover we will have to secure a suitable location. The boats will be electric and thus environmentally friendly and the project will of course support the clients of the Rainbow Group towards employment. The project will operate financially competitive and -contrary to trucks- the boats will be permitted to deliver 24/7. In short, there are many benefits for potential clients, but nevertheless firms are often reluctant to take the risk of changing supplier.

1. Rainbow Popcorn will also be a private limited liability company, and it will be founded in a team effort of RG and the John Altman firm. John Altman is a brand that produces cookies at an existing factory and that makes money through their brand's licenses. They want to expand their product range to popcorn, and they want to sell it at festivals, together with the RG's clients. The project will start with one popcorn carts, which has been paid for through crowd-funding. At present we are hiring two professionals: one for sales and one for the practical support. The carts will be staffed by the RG's target group. At first, the work will be a sheltered workplace for everyone, but the clients should have career opportunities within the project. Eventually, for instance, around 30% of the employees should have a paid position. Because we are pioneering, a lot of things will have happen through trial and error, such as finding the right balance between target group and non-target group. For example: we could opt for a combination of one target group and one non-target group member working for each cart. In any case we plan to make Rainbow Popcorn a growing firm, and eventually we would like to expand our sales to supermarkets.

In this project John Altman is doing the marketing and positioning of the firm in a very professional manner, but we will also hire someone who is responsible for getting us into the right places, who will ensure sales at festivals. This person has to work together with the coordinator, who does the purchasing and makes sure that everything runs smoothly. Together they are the entrepreneurs, and ideally they are co-shareholders. Actually, the captain of the ship has to be a real all-rounder, but hardly anyone has all the skills required; You have to be entrepreneurial, commercial, have feeling for the target group, know the field you are working in, and be a good salesperson. Practically no one can do all these things well. At the shipping company one person will be responsible for all tasks, but in that case the acquisition will have been done in advance. If we do not manage to sell enough, we will have to hire someone specifically for the sales, and -for instance- reward this person for each successful sale.

Quite a lot of capable people seem interested in working for a social firm. If you create a social construct where those coordinating the project take a financial risk through shareholding, meaning their income is partially dependent on the success of the project, you have a solid construct in which the funders' risks are limited. You create more opportunities and commitment if you only pay people when the project is up and running. Although the project will not become very valuable -and if it does the profits will be reinvested in the enterprise and additional workplaces- we do think those involved should be able to make a healthy profit. I know from experience that you have to work your ass off to set up and run a firm, and I do believe people should receive an appropriate financial compensation. Making money is not necessarily something to be frowned upon; it can also be a very social thing. For instance at Happy Workers I noticed that many employees felt very proud of their work, knowing that they are helping to make a profit. It feels more significant than the low-threshold activities at sheltered workplaces, where they can show up late three times a week and nobody really minds. It is a completely different story, but I believe in the sociability of businesses. However, in the healthcare and social sector I know several people who think differently about this topic, who think we are making a profit over the backs of our clients. I do not think that is the case. If all goes well John Altman will indeed make money out of this project, but at the same time they are creating workplaces, where others can also make a living. Thus it is not the one or the other, but it is the combination of the two that leads to new opportunities. The usual sheltered workplaces lie miles away from the regular labour market, and this limits the possibilities immensely. When doing business it is very important to have a clear view of all the players' interests, and in the case of John Altman I have a good feeling about it. Right now they are putting a huge effort and tons of time into the project, while it has not yet earned them anything.

What are the first steps someone should take if they have a good idea for a social firm?

 The same as when they would want to start a regular business. The concept has to be very well developed: what are you going to offer? Who will want to buy it? What needs does it provide for? How will you set it up? It is essential that you set up a solid business plan before you commence. This has to include an environmental and market analysis, how you will organise it all and with whom you will collaborate. What are the strengths and weaknesses of the plan and your team? You have to find a strongly motivated team, which you can trust. You also have to set up a good financial plan.

For instance, in our case the RG offers support, but the RG is not entrepreneurial. You have to have an entrepreneur on the team, someone who is willing to take responsibility, who -for instance- is willing to spend two years of his life working sixty hours a week and have no vacations. You have to see opportunities and be willing to take risks. Besides, financial knowledges is crucial. Someone has to make it work as a business. So you have to pay careful attention to the way you put your team together: who will become shareholders? You have to put all this in an elaborate business plan. For instance, the plan for Shipping Company Kees is 30 pages long.

Can you describe the process for the development of a social firm?

1. A strong business plan
2. Acquisition, finding a suitable location, permits, financing, founding a BV (legal business requirements), website, quotes of suppliers. In this phase you have to arrange as much as possible, while committing yourself as little as possible.
3. Only when you have a suitable location, sufficient customers and sufficient financing you should start committing yourself to things and sign contracts.

You can finance the project through funds or a loan. Banks are generally quite reluctant to finance social firms; it is usually easier to get a loan from a fund. You can also get financed through crowd funding.

What bottlenecks did you run into in the process?
What obstacles did you encounter?

Over the course of time many initiatives have crumbled. The risk of failing decreases when someone has a business sense. You need to build on solid market research. You can also protect yourself somewhat by making agreements with buyers in advance and by limiting your expenses as much as possible, for instance by buying second-hand equipment. In the Netherlands you get subsidies for offering support to people in WIPs, this also provides for some financial security. Furthermore the risks depend on the branch you will be working in. For example in our shipping company we will only need a couple of big clients, whereas Rainbow popcorn will need a lot of customers to be successful. In the popcorn branch we will be selling to the public, which makes marketing extremely important. The project's success depends on its sales. You have to be able to sell something, and there is a big difference between people who sympathize with your project and people will end up doing business with you. On the one hand the social component can be appealing to buyers, but on the other hand it can also scare them off: will they be able to guarantee a constant high quality? Will they deliver on time? For all social firms it is essential that you always deliver a high quality product, and you always have to deliver on time. In case of emergency you should be prepared to hire incidental day labourers, so you can always deliver as promised. If you fail to do so a couple of times you're bound to go out of business. Your buyers have to trust that you offer quality for a reasonable price.

What do you consider to be the characteristic criteria of successful social firms?

Sales. You have to let go of the caring mentality and really work together with the people. You have to work commercially and in many care facilities that requires a real cultural change; you have to let go of the low-threshold mentality of the daycare facilities. There should be consequences when people are late at work or don't show up at all. A lot people will have the ability to work there, some not, but that is fine too. You shouldn't want to help everyone. You really have to work as entrepreneur and not as a care provider. It is also vital that you keep reviving your business, adjust to market changes, and don't get stuck in old patterns.

What do you consider to be the basic essentials for the foundation of a social firm, in a European context?

What you are doing is getting people out of social benefits. It helps if you do not have to pay your staff any wages in the beginning, because you do not have the funds for that yet, and you will have to provide a lot of support. If there are no existing policies and funds for WIPs in your country, you might want to make agreements with the social benefit agency, that the keep paying benefits for a while, and that the person working will not have to apply for jobs while working for you. Governments could even consider rewarding companies if they provide work for long-term unemployed people. Something like that exists in the municipality of Rotterdam. According to the Dutch participation law you only have to pay someone 60% of their wages if they are considered to be 40% unfit for employment, the rest is paid for by the municipality. Besides, municipalities could support social entrepreneurs through their own procurement. The municipality of Amsterdam for instance has never ordered beer from the Prael for any of their events; it would be good if they did so.

What kind of problems do Social Firms often encounter?
And how should you respond to such problems?

Our Popcorn project will only start operating in a couple of months. We still have a lot to learn. I personally believe in social firms as a bridge between sheltered workplaces and the regular labour market. At the moment, you are very lucky if merely 10% of our target group moves on to regular employment, but that is not the only way to measure its impact. We actually need an additional step between sheltered workplaces and regular labour, for instance a volunteer position in which support is no longer financed. In such a way you could make more valid comparisons between different social firms. The volunteers should receive a financial compensation, which is more rewarding than the compensation you receive in sheltered workplaces. The current situation in Amsterdam is actually the opposite, people get less income when they move onward; they should really solve this. Funds often ask what the throughput is of your project, but there are many ways of measuring the success of WIPs. In England they have developed various measuring tools. Work offers so many different things: meaning to life, social contacts, structure, you name it. Social firms have an exemplary role, they demonstrate the value of our target group and diversity.