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Steve Andrews Finding Impact

FIP 46: Tackling Unit Economics with Steve Andrews

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This week’s Finding Impact Podcast (FIP) features, Steve Andrews, Founder and CEO of NewLight Africa. After spending years in the solar industry, Steve found himself asking what else did his customers need? Since 2010 Steve has been hard at work bringing life-enhancing products to rural people across Africa. Frustrated by the challenges of scaling up through the existing (non-profit) model, Steve is pursuing a for-profit model with a strong focus on marketing and solid distribution network, in order to rapidly scale-up impact. With around 600 million people living without electricity in sub Saharan Africa alone, and the off-grid population outgrowing grid expansion, there is an enormous opportunity to create a sustainable business whilst creating incredible social and environmental benefits.

On this episode, Steve will show us the benefit of taking time to understand the unit economics surrounding your business. We’ll also learn more about:

  • The importance of listening to your customers and selling what they need in a way that works from them
  • Can community based models be scaled? Is there a limit to their growth?
  • What are the benefits to starting small with a focus on unit economics?
  • Does each decision you make impact the potential profitability for your company?
  • When is it okay to turn down opportunities that you feel may not be right for your business?
  • If you can build it and make it profitable in one county, you can do it in two and if you can do it in two….
  • How can a cookie cutter core model work for your business?
  • How to develop a financial model for scaling your social enterprise.
  • How do you choose your unit economics? (county, state, city, country?) what will be right for your business?
  • When does a change of direction become a distraction and how to keep simplicity at the forefront of your plan.
  • Are your KPIs ‘vanity measures’ or are they helping your business to grow?
  • When is your model tested and ready for the “replicate” button?
  • The importance of a realistic and generous margin for error

Links to Resources:

 

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What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

FIP 40: Cash Flow Fundamentals with Alex Eaton

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Growing up on a small farm in the US, Alex Eaton was raised with a sensitivity to the reality of smallholder farming. It’s no surprise that after 8 years of leading the International Renewable Resources Institute, Alex, a serial entrepreneur, built Sistema Biobolsa in Mexico in 2010 to enable farmers to use biogas solutions to improve agricultural outputs and provide cleaner cooking. At that time, social enterprise was a contradictory term: people looked down upon entrepreneurs trying to make money off the poor. Since that time, Sistema Biobolsa’s product has extended its reach as far as Asia and Africa.

On this podcast, Alex gives entrepreneurs a reality check about maintaining a laser-focus on achieving market returns by leading their companies to do one thing, do that thing well, and sticking to cash flow fundamentals. We’ll specifically cover:

  • Sistema Biobolsa’s origin story and early-stage roadblocks, from designing the product and business, to the journey from non-profit to social enterprise, including what stopped Alex from giving his patented design away.
  • Understanding how, because of funding mechanisms in the sector, social enterprises are not responding to normal market conditions or industry competition, nor are they learning from the well-known mistakes of the INGOs that preceded them.
  • What it means for social enterprises to “stay hungry,” why that’s a necessity for financial and social success, and how Alex practices this with his team.
  • The advice Alex has for his younger self, from appreciating the mundane to not recreating the wheel.

Resources:

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What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

jon shepard finding impact

FIP 35: Optimising business models for impact entrepreneurs, with Jon Shepard

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After leaving the army in his late twenties, Jon’s work with the Prince’s Trust set him on a path of finding purpose in his life. Later, Jon worked with Gib Bulloch at Accenture Development Partners in 2003 on a model that became the influence for setting up Enterprise Growth Services at EY. After that experience, Jon realised he needed to do something with purpose rather than going back to the mainstream consulting model, which was high costs, high fees and high margins for large multinationals. He was attracted to social enterprise that were addressing the sustainable development goals through business, as potentially the most scalable and most sustainable way to do that.

On this episode you’ll learn:

  • Jon’s team does two things: optimise business models and ‘helping businesses get off the back of an envelope’
  • By ‘optimising business models’ he means identifying how businesses can be profitable i.e. taking significant costs out of the business without affecting the quality of service or product.
  • With getting businesses into scale mode, they help with things like IT systems, HR strategies, better financial controls and reporting.
  • The first step in optimising your company and making a push for profitability is to get a clear understanding of the numbers. They do this by collecting all the operational parameters of the business and the ratios between them that characterise performance.
  • A great example of taking costs out of the business is when moving to a mobile payment platform, so reducing costs of revenue collection.
  • Once a clear handle on the costs is known, and the main cost drivers are identified, they brainstorm with the management team to come up with solutions that would massively reduce the costs of the business.
  • This approach is an excellent decision making tool for any senior management to decide where to focus their limited resources on moving to profitability quicker.
  • EY’s Enterprise Growth Services is a not-for-profit, not-for-loss programme which means nearly 90% reduction in price compared to their maintsream work.
  • EY focuses on what they call ‘Impact Entrepreneurs’ which are social entrepreneurs plus great creators of jobs in low and middle income countries.

Links to resources

Connect with Jon:

  • Jon’s phone number and contact form on EY.com/EGS

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

 

David Goldberg Finding Impact

FIP 33: Charity Revenue via Consulting with David Goldberg of Founders Pledge

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Founders Pledge asks tech entrepreneurs to make a commitment early on in their journey, that when they come into some liquidity, be that an exit or payout, they will give a portion to their favourite charity. David shares stories of what happens when the charity and tech startup world collide. He’s a charity founder on a mission – striving for the same efficiency and outsized returns of a tech startup, but instead of cash, he’s going for impact. Listen on and be inspired!

On this episode, you’ll learn:

  • David’s early market research with founders was a resounding ‘yes’ – saying that they’ve been too tied up in growing their business that they’d love to think more intentionally about what they will do with their success when it happens, rather than being reactive on not making the impact they would want.
  • In 9 of 10 cases in his first meetings with founders, they were happy to make a legal commitment to donating a portion of their wealth to charity on exit.
  • Founders Pledge is also trying to get people to give more effectively. They do this by injecting rigour into the analysis of causes and interventions, to ensure high cost effectiveness and verifiable outcomes that are rooted in evidence.
  • David and his team have developed a methodology that listens to the stories of the pledgers, links those stories to a cause area, unpacks the cause area and their problems, and some of the proven solutions. This primes the pledgers so they are ready to give effectively when the time comes.
  • They bring members of Founders Pledge together once a quarter to lead them on their journey towards being a more effective philanthropist.
  • For example, they put on an event focusing on economic empowerment and brought in speakers including the chief economist of DFID, Rachel Glennerster from J-PAL, and Michael Faye from Give Directly.
  • Their events follow a similar structure each time, that begins with speaker presentations, and are followed by a panel discussion and engagement with the members.
  • They also send out reading lists weeks before the events that encourage members to engage in a meaningful way at the event.
  • David sees Founders Pledge to be more than moving money to effective charities – the problems of poverty and other causes are so big, that money alone isn’t going to solve them.
    Founders Pledge is targeting entrepreneurs because it is likely that they can also contribute to solving the problems as well, possibly through social enterprise.
  • Founders Pledge is free for its members – they have a core set of donors who fund their core costs. But the service they provide is so valuable to their members, that others organisations have wanted their services too. So they’ve decided to open shop as a consultancy doing research for non-pledgers to bring in revenue to support their core costs and make their model more sustainable.
  • For anyone considering bringing in an extra stream of revenue to their charity or social enterprise, make something people want, which is important both for the supporters of your organisation and for the recipients of your intervention. And if you can’t prove the impact, it’s probably not worth doing – for fear of causing harm to the people you’re trying to serve or being ineffective and wasting valuable resources.

Resources:

Connect with David:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

Nicole Van Der Tuin Finding Impact Podcast

FIP 016: Credit Scoring for Under-Served Populations with Nicole Van Der Tuin

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For nearly ten years, Nicole has been working to get capital to places where it is scarce. She believes the cost of capital is central barrier to economic growth and development and she’s been focusing on ways to bring that cost down. In 2010 she set up First Access, a business that offers a credit scoring platform for lending institutions in emerging markets. In this episode, Nicole talks us through credit scoring for under-served populations and how this applies to any social entrepreneur taking on some level of risk with a lending product, such as asset financing or loans to customers.

Some of the things you’ll learn on this podcast include:

  • Ways to build up the “record of proof” for customers living in the informal economy, such as what you have earned, owned, spent.
  • How the emergence of mobile phones and the requirement to link SIM cards to people through some form of ID, has created the first mass of data, recording formal transactions for the majority of the world’s population.
  • How micro-finance institutions have been using a very labor intensive process for so long to offer small loans for people, creating a high cost per loan.
  • Also, how micro-finance institutions for too long have been non-digital and so leveraging the data they have on their customers has been hard.
  • The First Access analytics platform enables staff to act on patterns they’re seeing in the data of their customers.
  • The platform eliminates bias and ensures their decisions are made on the context of their country or region.
  • How using data analytics can reduce average customer acquisition costs dramatically, just by, for example, instantly approving any customer whose credit score comes within the top 5% of loan applicants.
  • Hiring a credit analyst would be a good move for any enterprise taking on some form of risk with a lending product.
  • A good first step for any social enterprise could be to simply start building up their data set to enable credit scoring faster at a later time. First Access can help organizations do this through a simpler, entry-level subscription which excludes the data analytics but ensures robust data collection using best practices.
  • We discuss distinctions between the lending products out there. One is small business micro-enterprise loans done through a customer evaluation process where you collect info about the customer before you lend them the money. This category is where you’re giving a borrower an asset that requires a down payment to ensure buy-in from that customer which predicts how likely they will pay and use the product.
  • Collecting data at the point of sale is good for your business, not just for potential credit scoring applications and assessing risk, but to know more about your customers which will make your sales and marketing more effective.
  • Email info@firstaccessmarket.com to request more info about credit scoring algorithms and other basic information to help improve your learning about this area.

Resources:

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