Once you know what impact you want to have on the world, you need to work out how to achieve it. It’s time to explore your idea further and develop the details. Decide how you’ll make money in the long term, so you can help solve the problem you’ve identified.
You’ll need to develop the detail of:
These two models work together. Not everything you do to make money will fulfil your purpose. Not everything you do to fulfil your purpose will make money. But both are essential to making a lasting impact.
Manaia is worried about climate change. She’s researched how farming, transport and landfill waste contribute to warming the planet. She wants to raise awareness and nudge others to be less harmful to the environment.
Manaia’s plan is to start a sandwich business. It will be vegan, source all its ingredients locally and use compostable packaging. This avoids carbon emissions from animal farming, transport and landfill waste. She aims to show that meat-free, pollution-free, waste-free lunches are both possible and delicious. She’s hoping to change people’s eating habits for the better.
As well as having a direct impact through her core business, Manaia also plans to donate 20% of her profits to a national tree-planting charity. More trees help to suck up carbon dioxide, which is another way to tackle climate change.
Use the following questions to develop your business and impact models. They’ll help clarify your thinking, no matter what stage you’re at, whether you’re starting a new business or keen to do more good with your existing business.
Answer the 11 questions in the order they appear. To record your thoughts, download the worksheet further down the page.
|Think about your…||Questions that help|
|Purpose||Question 1 is about identifying the problem you want to help solve.|
|Business model||Questions 2–10 are about how you make money in the long term.|
|Impact model||Question 11 is about solving the problem you’ve identified.|
Answering this question identifies the overall purpose for your business. Your purpose will shape the rest of your answers. Your purpose should:
For example, Manaia’s purpose is to raise awareness of climate change and nudge others to be less harmful to the environment.
Be clear about your customers from the start. They’re the heart of your business model, and they’ll shape important parts of your business.
‘Customers’ means people who support your business financially. For example, people who buy your products or services, investors, people who donate and organisations who give you grants.
First, identify different types of customers. For each type of customer, identify specific groups you want to target. For example:
|Types of customers||Groups to target|
People who buy Manaia’s sandwiches.
People who give money to a business in return for profit.
|People who care about any of the following:
People who give money to support a cause, without expecting anything in return.
|Same as for investors.|
People who contribute to an event in return for publicity.
|Organisations focused on promoting health or sustainability.|
Understanding your customers’ issues is key to creating things they need and want. Think about why they would want to give you their money.
For example, the main issue for Manaia’s:
Think about how others are currently solving these problems. This will help you see how you fit into the bigger picture.
What benefits will your ideal customers get from your business? What will make your business stand out to them? This is what makes you unique. It will help you attract and keep customers, plus get ahead of your competition.
For example, Manaia’s sandwich business will be highly ethical. It will be vegan, source all its ingredients locally and use compostable packaging. This means avoiding harm to animals, limiting carbon emissions from transport and reducing waste to landfill.
What products or services will you provide to solve your customers’ issues? Your answer will be how you deliver your unique value.
For example, Manaia will sell the tastiest vegan sandwiches made from all local ingredients with compostable packaging.
Think about how you’ll market and distribute your products. Focus on marketing for now. How will you make sure your customers know about you?
For example, Manaia will market her vegan sandwiches on Instagram, on university bulletin boards and through flyers delivered to office buildings.
Money can help you do good in the world. Think about the ways you can make it, and how much you’ll make. Consider:
Use rough estimates if you need to, but use numbers that reflect the size of your business. Use our handy step-by-step guide on using forecasting and modelling to check your numbers.
For example, Manaia estimates her vegan sandwiches will cost a total of $6 to make. She plans to sell them for around $9 from her food cart, and for $15 including delivery to office workers. She’ll also offer a $280 subscription for a month’s worth of lunch deliveries. She thinks she can make about $370,000 in total sales in a year.
She’ll also apply for local government funding of $10,000 for the first 3 years.
All up, Manaia hopes for a total income of about $380,000 a year.
You’ll need to manage your costs to succeed. Estimate your day-to-day running costs, plus the costs of fulfilling your overall purpose. Don’t include the cost of starting your business. Consider the costs of:
If you don’t know some of your costs, use rough estimates. Manaia isn’t sure what her costs will be, but she makes a guess:
|Materials (bread, vegetables, spreads, packaging).||$188,000|
|Salaries for Manaia and a part-time staff member.||$80,000|
|Other running costs (eg delivery, rent, marketing).||$80,000|
Manaia’s estimated total income is $380,000. If she takes away her estimated costs of $348,000, and another $8,960 for tax, that leaves $23,040 profit.
Twenty percent of that profit is $4,608. That’s the amount Manaia will aim to donate to a tree-planting charity.
Think about the numbers that will show your business and impact models are working. For example, how much will you need to sell to fulfil your purpose? What ratio of costs to income will you need? These numbers will change as your business succeeds.
For example, Manaia aims to donate 20% of profits to a tree-planting charity, so she’ll need to check all her figures carefully. She also wants to know the effect of avoiding animal farming, transport and plastic packaging. She decides to measure the:
Think honestly about any advantages you have over other businesses. Maybe you have special knowledge that others don’t have, such as a secret recipe or a special design. Or you might have partnerships that others don’t. Or maybe you can use something for free that others can’t.
For example, Manaia has strong family relationships with local growers that other businesses don’t have. This gives her a low-cost and guaranteed supply of the best ingredients from her local area.
Think about the problem you identified in Question 1. Now add detail to create your impact model. This will help you ensure you make the impact you intend. An impact model shows how your business activity links to good outcomes.
To create a simple impact model, outline five things:
|Participants||The planet and all the species on it.|
|Activities||Selling delicious vegan sandwiches with locally grown ingredients.
Donating profit to tree-planting charities.
|Selling at least 150 sandwiches every weekday.
Donating 20% of income to tree-planting charities
|Outcomes||Growing more trees.
Feeding people nutritious locally grown food.
Raising awareness of climate change.
|Lasting impact||Helping to address climate change in a positive, delicious way.
Nudging others to be less harmful to the environment
Use our template to answer the above questions and sketch out your business model and impact model. Use this template with a brand-new idea, or to boost the good your existing business does.
Check both your business model and your impact model by talking to a range of people.
See if you can find potential customers to test your products and services. Their feedback can help you tweak your ideas and avoid mistakes.
Work closely with those you want to create an impact for, plus any charities or organisations you’ll partner with. They’ll help you be sure you can make the difference you plan to.
Check your biggest assumptions or risks. Go back and update your models as you gather new info and refine your idea.
Jessica Palalagi, Capability Enabler at Ākina Foundation
The 11 questions above are based on:
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