If I had to choose a single takeaway from a summer of numerous experiences and lessons, it would be this: Anyone pursuing a career in social impact better get comfortable with ambiguity. For the most part, that excites me. Uncertainty leaves room for creativity surrounding strategy and solutions, offers increased leadership opportunities, and creates space to make your impact. But, I have to admit, there are a couple of drawbacks. As someone who loves curling up with coffee and a good excel-sheet, ambiguity can sometimes slow my roll. (Luckily, Anjali Patel has a few tips to help me out with that.)
Yes, I am that colleague who is overenthusiastic about the magic of VLOOKUP (save the making-fun for later, contact form below). But more importantly, I value the power of financial modeling as a decision-making tool given a series of assumptions. I was fortunate enough to be able to use this tool to analyze a potential earned-income business line as a fellow at Goodwill NYNJ, a social enterprise that strives to empower individuals with disabilities and other barriers to entry through the dignity of work. However, given the ambiguity of the potential business model and many unanswered questions, the vast majority of my time was spent on gauging the appropriate parameters that went into my analysis. A model, no matter how beautifully designed, is useless if the assumptions that it is built upon are not accurate.
My colleague Maggie Nazer offered an insightful thought process on initiating an earned revenue stream. Below, I offer a few notes on navigating the uncertainty around the assumptions, specifically as they pertain to a financial model.
· Understand all related costs: When forecasting for a new opportunity or a new business, it is important to flush out all inputs. For example, in a non-profit, this most likely includes deducting a certain percentage of revenues for potential administrative overhead.
· Be honest about sales and revenue growth: Many non-profits and social enterprises do not put as much effort into sales and marketing as a purely for-profit business. It then follows that sales growth assumptions must be tempered.
· Evaluate core competencies: Given that this opportunity is mission and value aligned, it is also possible that the organization already contains the necessary labor, equipment, relationships (especially important) and expertise. The more competencies utilized the better, and it is important to incorporate this possibility into your cost and growth assumptions.
No, definitely not. All of the researching, preparation, and excel rows cannot guarantee an outcome, especially when trying to engage with important problems and opportunities in our own communities. However, a thoughtful approach to the financial analysis of those opportunities can be invaluable in the decision-making process.
Further, I’ve learned that it’s important to take that understanding and apply it to my career goals as much as I applied it to my financial model. My time with Inspiring Capital provided the space and resources to learn as much as possible about the social impact space in a 10-week span. Ironically, the more I learned, the more wide-open and confusing my own potential path started to seem. Fortunately, the fellowship also allowed for time to hone in on my own personal “variables.” I’ve learned that I would thrive in a role that empowers me to thoughtfully analyze opportunities or investments and execute on that analysis in a small social enterprise organization or team. These assumptions are always subject to an edit given new information, but the intentional thought process that continues to inform them is imperative. Like the model I built this summer, the path I set for myself inaccurate without continued reflection around my own assumptions.
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