Three questions would-be social entrepreneurs should ask

Neon sign saying 'change'

From Dot Dot Dot founder, Katharine Hibbert.

When asked by a potential social entrepreneur whether they should give their business idea a go, my response is almost always “yes”. There are a lot of significant problems out there, and we need organisations to address those problems without relying on philanthropy or public funding wherever possible, as I discussed as part of a Cambridge University panel earlier this summer.

Most people who try to start a business face a range of pressures deterring them – entrepreneurship is rarely discussed as a career option at school or university, it’s hard to walk away from a reliable job in favour of the uncertainty of starting something new, and friends and family may worry about the impact of the would-be entrepreneur’s choices on them. So when someone has the germ of an idea, they’re likely to need encouragement from those who’ve already grown an idea into a sustainable organisation.

I tell them how satisfying and engrossing I’ve found the business of building Dot Dot Dot from scratch, and how much I’ve enjoyed growing a team of staff to work alongside.  I talk about how much I’ve learned from running a social enterprise for the past 12 years – about the problems we’re trying to solve, about what works and what doesn’t work, and about myself. And I tell them how satisfying it is to make any size of dent in an issue that matters.

However, if the conversation goes on for long enough, I also suggest a few questions to ask themselves, to make sure they’re on the right track.

1) How well do I understand the problem I’m trying to solve?

It’s easy to be infuriated by situations that are obviously unfair or harmful.  But these problems will have upset other people too, and if they were easy to fix, they’d be fixed already. For example, Dot Dot Dot grew out of the frustration I felt at seeing empty buildings coexist with severe need for homes. But it’s not enough to look at an empty building and to feel that someone should live there.  I needed to identify a niche in which I could offer a solution that provided benefits to everyone involved – property owners, residents and neighbours alike.

I was helped in identifying that niche by the three years I’d previously spent working on the twin problems of empty homes and homelessness, first as a journalist at the Sunday Times, then writing my first book, and then working on a Channel Four series on the subject. It meant that I knew the issue inside out, and I understood the different problems and incentives of property owners who had – for instance – inherited a problematic property from a relative, or bought a property in London as an investment vehicle, or acquired a building in order to regenerate it. This allowed me to narrow down my approach to a specific subset of property owners, to understand who it would be possible to house in their buildings and what would make them choose my service over any of their other options.

It’s not necessary to spend three years researching a problem before taking action – I’ve seen fellow social entrepreneurs get started with a service they think might be useful, then refine it as they learn more about the problem they are dealing with.  But it’s essential to get under the skin of an issue to come up with a new idea that has potential to make a difference to it.

2) Do I know what it would take for my business to become self-sustaining?

Understanding a problem and being passionate about it is only part of the foundation of a social enterprise. It’s also essential to have an idea of how you’re going to make enough money to deliver that service, and how you’re going to get there. While it’s inevitable that you’ll have to fund the early stages of a business through loans, grants and investment, at some point your business is going to have to pay for itself. It’s also going to have to make enough of a surplus to build up reserves to see you through bad times, and to pay back early lenders and investors. It’s important to know what that would look like to judge how realistic it is. Could your business make a surplus with a turnover of £500,000? £2m?  £100m? If you can get a sense of the scale you’ll need to break even, then you can have a look at the size of the market available, and consider your own ambition and capacity to grow a business to that size.

I also encourage would-be founders to think hard about their own path to a sustainable job within their business. Start-up culture valorises the risk-taking entrepreneur who works long hours under extreme stress for minimal pay. That mode of working is sometimes necessary, but no one can keep it up indefinitely. It’s important to think about how you’re going to build a path towards a job that you can continue to do in the medium and long term, and factor that into your goals.

3) Will I enjoy the journey?

I strongly believe that many more people should consider entrepreneurship, especially those from groups who are underrepresented among founders, such as women – after all, developing the deep understanding of a problem I mentioned in question one, above, is easier if the problem affects you, so we need founders with a range of lived experiences.  However, no one needs to start a new social enterprise to make a worthwhile contribution to the problems we face as a society, and there’s no shame in working for an organisation that already exists if that feels like a better use of your skills and a better fit for your personality. In marking Dot Dot Dot’s 10th birthday, I wrote about how much I’ve grown to love capable administrators and diligent managers – our culture celebrates founders, but should also praise those who build the structures that bring ideas to life.

So the last question I encourage would-be entrepreneurs to ask themselves is whether they will enjoy the process of trying to build a business. Most start-ups fail, and it would be particularly disappointing to spend years working in a way that made you unhappy and then still not end up with a thriving business. You need to enjoy the process of building an organisation, and you need to be able to tolerate the high degree of uncertainty that goes with that. You’ll have to find answers to tricky questions about everything from VAT to social media strategies to HR, many of which will be outside your previous experience.

The process can be extremely stimulating and satisfying, and you’ll learn an awful lot very fast, but it’s not for everyone, and if it’s not for you, you might make a greater impact – and enjoy yourself more – by contributing to a project that’s already up and running. If you do want to be a founder, you don’t have to do it alone – it’s much easier with a co-founder, and there are plenty of individuals and organisations out there to help – but you will need to take responsibility for overcoming an endless series of tricky challenges, and your solutions will need to be steered by your understanding of the problem you’re addressing.

All in all, though, if you have an idea for a social enterprise you’d like to make real, and your answer to these three questions is ‘yes’ or even ‘maybe’, then go for it.  And don’t be shy to ask for help along the way.