How do I start scaling?

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How do I start scaling?

You have decided why you want to scale, you are ready and motivated, you have decided what approach to use and chosen the most appropriate scaling path: now you are ready to implement! This chapter will guide you through the set-up and execution of your scaling, providing you some key questions to reflect on.

The key questions in this chapter:

  1. Have we assigned people accountable and is our team well informed about the scaling strategy and the implementation plan?
  2. Have we considered reaching out to a mentor or advisor for expert advice during scaling?
  3. Are our current systems and processes capable of handling additional growth?
  4. Do we have access to the funding and additional resources that we will need as the business scales?
  5. Have we identified opportunities to leverage our network or the network of our partners during the scaling process?

1. Have we assigned people accountable and is our team well informed about the scaling strategy and the implementation plan?

We already spent some time on the question ‘Is our leadership team ready and highly motivated to scale our impact?’  In ‘Chapter 1, Am I ready for scaling’, you already assessed the competences and motivations of your leadership team, transferred accountabilities if necessary. Now we take it a step further and take a look at the challenges the social innovator will face during the scaling implementation.

In order to involve the whole team (including your Board) and enable them to understand the strategy of the organisation, good communication and transparency on a regular basis is necessary. This allows team members to have ownership. Find the right balance in sustaining employee motivation with your desire to change the world. Reporting is good for internal use, and can also help for external purposes: informing institutions or funders about how the social innovation is evolving (e.g. using the grant received), or receiving advice and guidance from them in return. It is important to understand that accountability arrangements might change as your organisation grows.

Keep ensuring that your social mission is being achieved during the scaling process. The assessment of each phase is really important in order to evaluate the next steps.

2. Have you considered reaching out to a mentor or advisor for expert advice during scaling? 

If you need support during your scaling, don’t be afraid to reach out to an external mentor or advisor who can guide you. Look for someone with the right competences. Depending on your need, this can be someone who is very familiar with the sector of social innovations (governance structure, financing model…), or someone from other sectors (marketing, technical development…). If you scale into another country, someone who knows both contexts can be very useful. The outsider position of an external advisor allows him an impartial view of the implementation process and identifies difficulties or risks that you will encounter on your way.

BENISI FACT
Network resources and business coaching & support were the most commonly used resources
55 percent of the social innovations used business coaching and support during their scaling trajectory.

3. Are our current systems and processes capable of handling additional growth? 

Scaling almost always means growing. The social innovation will begin operating with more employees or considerably more partners. A shift may occur towards more specific roles for employees instead of ‘everybody doing everything’. The founder will delegate some of his tasks to other team members if necessary and his role will tend more towards management and leadership. In some cases you will move to new markets. All these changes mean that you may have to gradually put in place new processes that allow you to handle the growing process without creating risks for the initial initiative. It is challenging for enterprises to have time to both set up the systems and to continue to run the day-to-day business.

4. Do we have access to the funding and additional resources (people, IT, etc.) that we will need as the business scales? 

Finding funding is one of the major challenges social innovators face during the scaling process. Of all the available funding resources, you have to find out which resources fit best with your organisation and growth plans. There are (for e.g.) social initiatives suitable only for financing using grants, while there are other initiatives which better fit with other types of funding like equity or loans. Social innovators wishing to scale their social initiative have to take into account differences such as:

  • the maturity of the investment proposed (start-ups, seed, consolidation, expansion, etc.)
  • the fit between funders’ ambitions and your own ambitions
  • the origin of funds sought (friends and family, crowdfunding, private investors, financial intermediaries, governments, etc.)
  • the type of funding (grants, loans, equity, etc.) and the organization’s ability to provide a return to funders

To gain a better understanding of what kind of financial resources your innovation needs, it’s helpful to clarify the amount of money needed, the time frame and the desired type of financial support and related risk/return. Be aware that finding funding is also influenced by your legal status. Social organisations who fall between non-profit and for-profit may experience some difficulties in the process.

BENISI FACT
External funding leads to successful scaling
Of all the resources used by social innovators, funding had the highest success rates (growth funding: 76 percent and start-up finding: 79 percent) to achieve positive revenue growth during the scaling process followed by legal resources (75 percent).

Investment readiness 

We would like to put forward three elements that social organisations are evaluated on for receiving investment:

How is your organisation creating social change and how is the social impact measured, taking into account the current situation in the market and how it will evolve in the future?

  • How resilient is your organisation with respect to your team and the stakeholders involved (clients, users, investors, etc.)?
  • How is your financial situation (income, potential markets, the professional capacities of the financial team, the management of cash-flow, etc.)?

The perceptions and criteria to evaluate the attractiveness of projects are quite different for social organisations and investors. When the investor is, say a government or any other public body, it is important for them to evaluate the creation of new jobs that could be generated by a particular project. In the case of private investors seeking a financial return it is very common to evaluate 400 project proposals and to invest in only 4 of them (ratio of 1 percent).

There are also strong differences among sectors. Some of the social initiatives are better prepared to receive investments and to negotiate with investors. This is, for example, the case for ICT-based social investments. In this industry it is very common to receive external capital to support the investments.

We notice that there is an evolution of the investors’ skills which gradually tend to be more and more specialised. Investors start with a wide approach, without being sector specific. From there on, it is very common that they evolve to specialists in a certain type of investments, in order to take advantage of their previous experiences and current investments portfolio.

BENISI FACT
Funding was given to social innovations safeguarding control
Funding agencies tended to give money to social innovations using resources that safeguard control of the innovation and minimize their investment risk:
– Increased chance of funding: business coaching, network & legal resources
– Decreased chance of funding: platform for dissemination of knowledge and peer-to-peer support

(Social) return

Funding in social initiatives demands enhanced monitoring and assessment. These investments are not only measured in terms of profitability; it is needed to measure the impact accurately, and as such to be able to report to investors the social impact of their investments. Social impact monitoring indicators have to be objective and simple, with quantitative and qualitative measurements. When an investment agreement takes place, there is a long-term engagement between investors and innovator. A clear collaboration framework is necessary, including objective measurement.

Complexity appears aligned with the involvement of investors, for example in equity where there is a need for establishing a realistic return on investments taking into account financial results and social impacts. Equity has the advantage of not demanding a payback but the social innovator could lose control because investors are keen to take decisions about their investments.

BENISI FACT
Funding was used differently depending on the age of the social innovation
The external funding was used differently for start-ups vs mature businesses:
– Start-ups achieved stronger growth in jobs (115 percent personnel growth)
– Mature companies direct the funding towards revenue growth with over 200 percent revenue growth

Incubators and accelerators

There is an increasing number of social innovation incubators in Europe. However, there is still a limited number of accelerators. Social innovations have more possibilities for causing impact when they are supported by an accelerator because of the stronger support: making connections with other social innovations, impact funders and support that is in line with the phase in which the social innovation is. Accelerators provide mentoring to a team of innovators (it is common for an accelerator to accept a team rather than individuals), whilst also providing equity capital and introduction to customers. The social initiative is evaluated at the beginning and also during the different phases of growth whilst supported by the accelerator. 

There are also existing investor networks for social initiatives. However, their number and capacities are still far from being sufficient.

BENISI FACT
Market driven approaches lead to higher success
Organisations dependent on revenue from sales of products or services have higher success rates (75 percent) than those who are dependent on donations (59 percent) and subsidies (62 percent).

5. Have we identified opportunities to leverage our network or the network of our partners during the scaling process? 

Support is crucial during the scaling process, it can make or break the business. Support can come from your own network and from partner networks. We underline the importance of existing local and national networks such as incubators, dedicated support structures and networks. What can you expect from them? Knowledge, contacts, lessons learned, experience, etc. It’s the mission of incubators to give support and information. Especially when you scale to a new context, the involvement of local partners and networks can make the difference (getting market intelligence, mentoring…).

Some networks are ‘members only’ networks. In that case, you need to evaluate for yourself if becoming a member is relevant and useful with respect to successful scaling.

BENISI FACT
Network resources and business coaching & support were the most commonly used resources
58 percent of the social innovations used network resources to get access to clients and partners.

Related cases

Three Coins

Dia18

2JEvents

Dia19

Funds For Good

Dia20

My Dream Now

Dia21

Solari 6

Dia22

TIPS & TRICKS

  • Scaling is a matter of human relations: be sure to have your team, directors, volunteers and other stakeholders mobilized and convinced of the project.
  • Put in place your systems as early as possible as it will pay back later.
  • Seek funders which believe in your mission and social impact and can provide non-financial support in addition to financial resources, in order to maximize the chances of successful use of the financial resources they have provided.
  • In a context of important needs, resist the great temptation to accept any type of resources, including those coming from funders with a different motivation from yours.
  • Investment injection choices in the beginning are crucial for the path you will follow.
  • The existence of strong local and national networks and the direct implications of all stakeholders in the whole project is a key factor in scaling up.

Useful Resources

To find out more about implementation, please visit our online database with useful resources. A sample of these is listed here below:

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