When we look at the Business Model Canvas for a social enterprise or Common Good business, there are distinct differences in some of the elements of the design.
Most importantly, a social enterprise focuses on both mission and margin. This dual-thinking approach applies first and foremost to a social enterprise’s Customers. Customers include both beneficiaries of the mission; including purchasers of impact and those that are paying customers for the product or service. Keep in mind with all of the business design elements, that there are likely multiple perspectives or customer considerations.
This is also true for the Channels design element.
Distribution Channels are the various purchasing outlets where your target customers may purchase or experience your product or service. This ranges from use of e-commerce websites, to a retail storefront, to selling your wholesale through delivery channel partners.
Channel partners are also important because they can help you reach more paying customers faster, allowing you to scale up your revenues and impact.
Let’s say that you run a local bakery as a social enterprise with a mission of employing formerly incarcerated persons (Dave’s Killer Bread’s model). However, in order to scale regionally, you need to find a wholesale channel partner who can deliver a large volume of sales. A food co-packager who can design, package, and distribute to major grocery chain customers would be an excellent channel partner.
A more unique consideration are “upstream” value chain partners (often listed as Key Suppliers on a business model canvas). This can be as simple as the sustainable, ethical practices of your suppliers to a more complicated partnership based on a cause.
Let’s look at a mattress recycling social enterprise employing persons with barriers to employment to disassemble old mattresses. This business model is complex. First, it is dependent upon the regular supply of raw materials. Hotels become both a supplier and a paying customer when trucks pick up and haul their old mattresses to be recycled.
Another key channel partner is the municipality who advertises drop-off sites for the public (also a supplier). There are two beneficiaries: first, the municipality who diverts landfill waste and saves on future taxpayer cost, and second, the workers with barriers to employment who gain job skills. The success of this business model is based on educating the public of the common good of recycling and the ability to associate that cause with all partners’ brands (hotels, the city, and your social enterprise).
Now that you know why carefully selecting your channel partners is so important, you may be wondering about guidelines to follow when designing or evaluating this business element.
Here are three major considerations:
Alignment. How does your social enterprise mission and values align with the channel partner? What socially responsible, sustainable, and equitable practices are demonstrated now and how can they be validated in the future? Consider a pilot project before making long-term partnerships.
Economics. What are the margins that your social enterprise must make per unit? This is where social enterprises can have a competitive advantage. Their mission and margins may appeal to corporate partners who are well-positioned to sell higher volumes and gain wider awareness.
Optics. Does your partner’s brand promise and reputation compliment your social enterprise cause or target audience? Beware of a miss-match, but don’t shy away from educating the public together. Talk through the connections, implications, and aspirations with a potential channel partner.
If you are interested in learning more about the Business Model Canvas or discussing channel partners, book a complimentary coaching session with Paul today.