Innovation Catalyst: Develop a business plan for a new venture

October 17, 2016

Innovation Catalyst: Develop a business plan for a new venture

CNM's Social Enterprise Catalyst, now expanded and renamed to the Innovation Catalyst, empowers nonprofits to develop business plans for ventures that enhance their effectiveness and sustainability. The next cohort of the Innovation Catalyst will begin in early 2017, and applications are due October 28. Click here for the application link. Read more in the article below, with interviews with past participants, our business planning consulting partners, and funders:

 

Introduction: Expanding the meaning of revenue diversification

The business-planning process formerly known as the Social Enterprise Catalyst has now been expanded and updated to become the Innovation Catalyst. This change comes from a need to expand the definition of revenue diversification; it doesn’t just have to be social enterprise ventures. These projects also do not necessarily have to generate profit (see information below about The Nashville Food Project’s venture). Click here to read more about the Innovation Catalyst, and read below to learn about previous projects.

 

Developing plans through the catalyst process

Nonprofits and businesses are often viewed as opposites, financially: nonprofits fight to make ends meet for a mission, while there are profits to be made in the business sector. However, groups of Nashville nonprofits challenged this precept by creating business plan to help them launch new ventures.

“It’s often believed that nonprofits can’t sell our mission, and that it doesn’t have the same monetary value as something that is for-profit,” said Friends Life Community Executive Director Waverly Christopher-Harris. “We are just really excited to be able to prove that that isn’t true, and that our mission is valuable in several different ways.”

This project is a collaboration between CNM and consulting partners at CauseImpact. During the ten-month program, CauseImpact consultants walk nonprofits through the entire process of creating a viable business plan for a social enterprise venture or other revenue diversification project. The program is sponsored by The Frist Foundation, the HCA Foundation, LBMC, Frost Brown Todd, and The Memorial Foundation. This support makes it financially possible for nonprofits to participate.

“This catalyst, and the funders who made it possible three years ago, continues to give the Middle Tennessee nonprofit community the chance to explore new territory,” said CNM Community Strategist Kim Carpenter Drake. “In many cases, our members are trying to juggle fiscal responsibility with evaluating changing trends in the sector. Social enterprise was becoming a buzzword nationally but we wanted it to be something more meaningful and powerful for our nonprofits.”

CauseImpact consultants Sean McGee and Dave Parker guide each team through every step of the business planning process, beginning with extensive market research and concluding with a completed business plan and final presentations to a group of community leaders. McGee says that while far too many entrepreneurs, investors, and donors seem to think that nonprofits can’t be pioneering, CauseImpact sees things differently.

 “There is no shortage of innovative ideas in the nonprofit sector. Because of the way nonprofits are structured, and because of the multiple stakeholder groups that each nonprofit serves, innovation requires more time, greater communication across stakeholder groups, and more effort towards building support for a new initiative among those diverse stakeholders,” McGee said. “The Innovation Catalyst approach takes those special needs into account, and provides the tools, the structure, and the support that nonprofits need to bring their innovations to life.”

 

Challenging assumptions

The catalyst model itself has also helped participants engage both staff members and outside supporters.

“It was great for team building, and the project increased board engagement in a new way as well,” said The Nashville Food Project Executive Director Tallu Schuyler Quinn. “For me as executive director, it was important to have the support of the board and bring them in on the project. Because it was a combination of business development and a creative process, it became a great way to get board members involved and incorporate their own backgrounds and experiences.”

Catalyst participants reported that the business-planning process challenged their expectations.

“It helps to come in with an open mind. We came with a lot of ideas, and some of them were quickly dispelled as we got deeper into the work. The project landed in a place that I would never have assumed,” said Safe Haven Family Shelter Executive Director Joyce Lavery. “But we came away with an implementable business model.”

Rebuilding Together Regional Director Becky Carter agreed that through the business planning process, your organization’s initial assumptions might be completely turned around.

“Being in the program is a lot of work! You have to challenge your assumptions, and you have to challenge what you think you know about your organization. And sometimes what you think is the best idea might not actually be the biggest money generator,” Carter said.

 

Innovative solutions

Cohort 3 completed their plans and made final “pitch” presentations last spring. The latest cohort consisted of the nonprofits Band Against MS, Friends Life Community, Rebuilding Together Nashville, Safe Haven Family Shelter, and The Nashville Food Project, and the business plans created were as diverse as the nonprofits themselves.

“When Nashville got involved in the social enterprise conversation several years ago, much of the focus was on generating more money. Fast forward to 2016, and we’re seeing innovative thinking across a broader spectrum of programs, services, and delivery models,” said Sean McGee of CauseImpact. “Many of the organizations in our more recent cohort are discovering more sustainable ways to deliver their core mission services in ways that go beyond simply generating more revenue.”

Projects included a venture called The Stable for the organization Band Against MS (BAMS), a nonprofit founded by country musician Clay Walker who has multiple sclerosis. The Stable will be a workout facility in Middle Tennessee that provides impactful personal training for people who live with MS. Ken Smith of BAMS says that he now feels confident about taking The Stable forward, even though the business planning process was by no means easy.

“Early on, I realized how complicated putting a business plan together really is,” Smith said. “But that’s the best thing to me about working with CauseImpact; they really helped me get through those difficult times when I just didn’t know if I could do it. Their support in talking through those difficulties was really amazing.”

Other projects include curated gift collections for Friends Life Community, and a full-service general contracting business to support Rebuilding Together Nashville’s mission. Safe Haven Family Shelter, a nonprofit that supports homeless families, is developing a staffing agency. This agency will provide wrap-around supports for employees dealing with the transportation and childcare challenges that arise when starting a new job.

The mission of The Nashville Food Project (TNFP) is bringing people together to grow, cook, and share nourishing food, with the goals of cultivating community and alleviating hunger. While the team had certain expectations entering the catalyst, these assumptions changed throughout the process. The resulting business plan created a contract meal service that ranges from partial-cost recovery to profit, but remains within the organization’s mission.

“We went in to this thinking we had a concept that was strictly a social enterprise that generated profit. But the great reveal for us was that we could do something different that’s still a huge help for our overall sustainability,” TNFP’s Quinn said.

 

Long-term impact and sustainability

Funders and sponsors agree that profits are not necessarily the bottom line. Pete Bird, president of The Frist Foundation and local revenue diversification champion, says one of the great things about this model is that the experts of CauseImpact see the agencies from another angle.

“Sean and Dave have brought a lot of businesses together so they’ve seen different models and they’re also experienced business leaders and innovators. It’s nice to have that wealth of experience when brainstorming. They also bring nonprofit sensitivity because for nonprofits, the most important thing to keep in mind is fulfilling the mission. Making money is not the bottom line – the mission is,” Bird said.

But in order to keep this mission alive, revenue diversification is key to long-term sustainability, Bird says.

“When times get tough, such as during the recession of 2008, grants, charitable solicitations, special events, and other ways of bringing in funding start to fail. But if you have something to fall back on – often it’s something to sell, a service or a product that fits with the mission – you can still market it during these tough times,” Bird said. “At The Frist Foundation, we’re interested in the overall welfare of nonprofits to be solid and sustainable. Earned revenue streams go right to the heart of sustainability. The more diversified the revenue is, the more sustainable the organization.”

Joe Atkins, LBMC partner, echoed the sentiment that successful revenue diversification projects are beneficial both for the constituents of a nonprofit and the organization’s overall sustainability. Atkins says LBMC wanted to support the catalyst in order to give back to the community.

“We’re very excited about what is happening in the social enterprise arena and we want to be on the cutting edge of hearing new ideas and also just being a support mechanism for those organizations if we need to be,” Atkins said.

Past participants include Interfaith Dental Clinic, which created the Interfaith Education Center for Community Dental Care. This school gives new dentists the opportunity to hone their skills while providing quality care to the under- and uninsured. Executive Director Dr. Rhonda Switzer-Nadasdi participated as a community panelist for the most recent round of final presentations.

“I think that nonprofits are the social innovators from the start; we always have been. Social enterprise is just another way of framing it and thinking about it,” said Dr. Rhonda Switzer-Nadasdi. “I think that most nonprofits are not just handling crises but are also trying to prevent them. We play a major role in seeing the landscape and coming up with long-term solutions. To do that, we need to innovate and we need to be brave, and creating a social enterprise is just one way to do that.”

The next cohort for this revenue diversification catalyst will begin in the first quarter of 2017, and the next cohort will be selected from a competitive application process. Applications are due October 28. Click here to read more and get the application here.

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