April 10: Passion-driven entrepreneurship

Tuesday’s “Start Something, Columbia!” radio broadcast featured entrepreneurs in the nonprofit space. Here are the show notes:

We talked about 6 Ways Nonprofit Entrepreneurs are Distinct from Traditional Entrepreneurs:

  • 60% of social entrepreneurs are women, while only 41% of traditional entrepreneurs are women
  • Survival rates are higher for nonprofits — 84% survive the first 5 years vs. 50% of regular businesses
  • The average age of nonprofit founders is higher (53) than traditional founders (40)
  • Education level — 89% of nonprofit founders have a bachelor’s degree, while only 31% of traditional entrepreneurs have a college degree.

We interviewed Dave Mackey of Epworth Ice Cream and heard about the Epworth Children’s Home Foundation opening a business venture to subsidize the philanthropy that has traditionally supported the primary mission of Epworth.  With its history as a working dairy, the ice cream brand seemed an obvious choice.

We interviewed Jessica Oliver of Girls Rock! Columbia and heard about the social justice mission of that program and the summer camp that is its marquis event every year. Applications for campers are now being accepted.

And we heard from Patrick Jinks of The Jinks Perspective, a coach for nonprofit leaders helping them achieve organizational effectiveness. Like Dave, Patrick is a member of the 1 Million Cups Columbia community.

We talked about the 3 Challenges Unique to Nonprofit Entrepreneurs:

  • Historic Problems vs. New Solutions — many nonprofits are addressing challenges that have been around for a very long time. Because these problems are so persistent, there’s a misconception that they cannot be solved. So entrepreneurs in that space have to convince their followers that the solution is possible in addition to convincing them that their solution will work.
  • No Product, No Profit — many nonprofits are service-oriented and have to show impact in order to convince donors and supporters to stay engaged. Nonprofits have to set goals and hold themselves accountable and also tell the story of their impact.
  • No Big Pay Day — in contrast to fast-growth startups that sell for a big pay day, nonprofits are unlikely to be purchased or acquired, so there’s no insta-rich scenario for a nonprofit founder.

Here are some more comments, stats, and links from the show:

From Harvard Business Review: Women Entrepreneurs are more likely to get funding if they emphasize their social mission.

3 Nonprofit Founders who are inspiring entrepreneurs

  • Larsen Jay – Random Acts of Flowers, repurposing flowers to lift the spirits of hospital patients; Lesson = opportunity is everywhere; even in the worst circumstances, there are needs and problems that need solving.
  • Aaron Negherbon – CopsDirect, providing needed equipment for training of police across the country; Lesson = don’t settle for good; he had founded TroopsDirect to meet the needs of deployed service members and applied that model to CopsDirect, helping those people who put their lives on the line to keep Americans safe.
  • Doniece Sandoval – Lava Mae which converted buses into mobile showers and enabled San Francisco’s homeless people to address a basic need: hygiene. Her idea was about preserving dignity; Lesson = break big problems down into manageable problems — not homelessness, but hygiene and dignity in the homeless community.

8 Basic Principles for Nonprofit Entrepreneurs

  1. Earned income is paramount — don’t just rely on philanthropy
  2. Be a player, or don’t play at all — if your service or product is not 1 or 2 in the market, kill it; you have to make an impact and you can’t do that if you try to be all things to all people.
  3. Starting a business venture is not the only path to success — earned income strategies and business ventures are not the same thing; the first is low-risk and may be programs or short-term initiatives, the second might be built on the first, but it must be sustainable and long-term — think Epworth’s Ice Cream business.
  4. Unrelated business activities are dangerous — the best businesses built out of nonprofits are organic to their mission
  5. Be patient and don’t run out of money — social entrepreneurs are known for underestimating how long something will take and how much it will cost.
  6. Recognize the difference between innovators, entrepreneurs, and professional managers — many social entrepreneurship enterprises fail because they’re being led by the wrong people.
  7. The nonprofit “culture” gets in the way — “culture eats change for breakfast” — love that quote, meaning that if the nonprofit expects to change, it must address the fundamental differences between nonprofit and business. Here are five important ones:
    1. Be willing to take risks.
    2. Make tough choices about staff members.
    3. Relinquish control.
    4. Emphasize market pull (aggressively adopt a customer focus mentality)
    5. Price more aggressively (service companies build a 50% gross profit margin into their pricing).
  8. Remember the Noah Principle: No more prizes for predicting rain, you only get a prize if you build an ark.

Link to the podcast episode here.

Do you have a cause tied to your business? Leave a comment and tell us about how your entrepreneurship is making a difference in your community.

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