MaRS Library Suppliers, distributors and partners for social ventures: Social Enterprises (SE) and Social Business
When developing a business plan for a social enterprise or a social purpose business, several external players and stakeholders should be considered. Remember that suppliers, distributors and partners play a strategic role in the delivery of any product or service to the customer.
Key external partners might include:
- Governmental contracting authorities
- Planning and regulatory officials
- Business (small and large)
- Local community residents
- Civic groups
- Faith-based organizations
- Local business schools and other academic institutions
- Legal services groups
- Professional organizations
- Media outlets and media contacts
- Regulatory agencies
- National associations
- Special-interest groups
- Political adversaries
External stakeholders for your social enterprise may include:
- Area residents
- Community associations
- Direct allies
- Direct competitors
- Communities of interest
- Joint-venture partners
As with traditional for-profit businesses, developing and leveraging key external relationships improves the delivery of the product or service and over time should lead to lower costs for SEs or SPBs.
Ask yourself: which of these potential partners will serve the mission well while helping you make effective and efficient use of your scarce resources?
Begin your social mission
To identify external players whose capabilities and interest fit with yours, start with the social value you want to create. Establish your resource needs by working backwards from this goal. What your needs are will determine what partners you might pursue.
You can read more about this process in the book Enterprising Nonprofits, a Toolkit for Social Entrepreneurs by Greg Dees, Jed Emerson and Peter Economy.
Some considerations for working with external players
- Which are the most crucial capabilities that will be delivered by external stakeholders?
- How do we make sure that these capabilities are delivered reliably?
- For the non-crucial capabilities, how do you make sure they are also delivered cost-effectively and reliably?
- Alignment of values and culture
How to build strong relationships with your social enterprise partners
You must develop a strong relationship with the suppliers, contractors and distributors that you have categorized as crucial to delivering your service or product. If you neglect these crucial components, your social venture could fail. Ideally, these partners are aligned with your organization for business reasons, social reasons or both.
- Alignment around social goals can lead to favorable economic terms but if this is the primary basis for the partnership, make sure the commitment from your partner is long-term.
- For partners with social alignment, you should try to understand their motivation for supporting your mission and how embedded that support is in their organization.
- You should ask yourself if their support is directly related to their business, employees or customers, is the support subject to change due to the companies changing corporate social responsibility priorities or will their support level change if a key internal champion moves into a different role or leaves the company?
- Leverage relationships that their key stakeholders or board members enjoy with target suppliers. Capitalizing on this type of indirect relationship can lead to in-kind donations, pro bono services or significant discounts.
- Reduce your cost by understanding your suppliers’ economics and finding ways they can reduce their costs to you. Capitalize on your value-add to them. For example, if partnering with you enhances their reputation, ideally by generating new business for them, they may provide you with a discount for this relationship.
- For a social entrepreneur, the most valuable asset you can use to build a strong partnership with your key suppliers and distributors is a shared commitment to your social mission. If you share similar values and your partner believes in your approach, you have a great opportunity to attract and keep them connected to your social venture. The challenge lies in identifying who is aligned with your work and how to open the door with that organization in order to make the case for a partnership.
Aligning social enterprise and traditional business culture
The big challenge is alignment of culture between the partners. As an example, SEs are committed to being both financially successful and supporting their clients and employees. This may mean going through a consultative process before making major decision that could slow down the process of moving the mission forward. This may not be the same culture as your partner.
Some tips to work well together include:
- Clarify expectations at the beginning of the partnership
- Try and make sure both parties understand clearly how the other operates
- Make sure to try and research your potential partner through your contacts or on-line to see if there is a cultural fit and to see if they’ve worked with ventures like yours in the past
Key success factors for SE and SPB social venture partnerships
Partnerships with agencies already established in the community where the social venture operates
These partnerships can deepen the impact and strengthen the performance of both the venture and the established agency given alignment of the social mission. Remember to fully understand and consider the limits of what can be done in a for-profit entity and use non-profit partners or other affiliates (link to .pdf) to provide the complementary services.
Building your brand by partnering with like-minded ventures
These strategic alliances can further build your venture’s credibility, reinforce your commitment to quality and social values, and access new customers.
Develop formal alliances with other socially-conscious companies
Gregory Dees discusses the following example in his paper “For-Profit Social Ventures”:
“Stonyfield Farm, producer of organic ice cream and yogurt, has formal relationships with other“earth-friendly” partners, including Newman’s Own, Recycline, and others. For participating companies, these alliances serve as endorsements of each others’ environmental practices and commitment, allowing each of them to build on the others’ brands and consumer trust while also gaining exposure to their environmentally oriented customer bases.”
Interested in learning more about social innovation and social entrepreneurship? Visit the SiG Knowledge Hub.
Dees, J.G., Emerson, J., & Economy, P. (2001). Enterprising Nonprofits: A Toolkit for Social Entrepreneurs. Toronto: John Wiley & Sons.
Dees, J.G. & Anderson, B.B. (2003). For-Profit Social Ventures. Duke University.
Hirshberg, G. (2008). Stirring It Up: How to Make Money and Save the World. New York: Hyperion.
- The high-tech buying process and the technology adoption lifecycle.
- Case Studies in Social Innovation: Timeraiser.
- Legal structures for social ventures: Social enterprise, social business and cooperatives in Canada.
- Venture capital: Financing a startup in the later stage of company development.
- Revenue models: Software as a service (SaaS) and subscription-based models.