The Purpose-Driven Social Entrepreneur

by Karim Abouelnaga

  Here are some pointers to help you build a stronger team:

  Ask an advisor to join your team.Starting a company with people is a lot like playing a team sport: there are competitions and funding pitches—some you’ll win and others you’ll lose. I believe it is essential to have a coach to have a successful team. By that logic, it doesn’t make sense to try to build a business team without an advisor. Find someone in your network, a friend, a mentor, or even someone you might just know who has had experience building a successful business (success marks in business to look for: being operational for more than ten years, selling a company for $5 million or more, doing several million in revenue annually, etc.). Make a list of eight to ten to start with; then narrow that list down in half to only those that you think might truly care about what you’re building because they have some personal connection to you or what you are trying to do. Then reach out to them to see if they would be willing to meet with you or check in via phone every two to three weeks and be on call as you work on building your business.

  Ask for input on decisions that haven’t already been made.When you are heading up a company, there will be several instances where you will have to react on the spot or make an obvious decision. It doesn’t make sense to bring the entire team together to ask for their input. An update through email is usually sufficient for small decisions. However, make sure you always consult your team for larger decisions.

  Never ask anyone on your team to do something you wouldn’t do.This tip is more than just literal. You shouldn’t give others on your team work just because you do not want to do it or would not enjoy doing it. Odds are they won’t enjoy it either. Instead, give them work because you need their help or you can’t do it.

  Entrust key tasks to those who have the skills.In a small startup, early team members must be well versed at several things or at least willing to learn how to function in different roles. If you ask someone to do something that they don’t know how to do, they may lose motivation. Or, if they’re unwilling to learn, that’s a red flag.

  5. Delegate key tasks as evenly as possible.

  It’s hard to provide people an even amount of work, because they often have very different work styles and timelines. However, you can distribute work in a value-oriented way. For example, having a teammate focus specifically on your website is just as valuable to a startup as having someone focused on managing its finances. Both are valuable, but the upfront and maintenance work is very different.

  6. Notice the small things that show you care.

  I’m really big on birthdays. Really early on with our founding team, I would always recognize when it was one of our teammate’s birthdays. It doesn’t necessarily have to be birthdays, but find something personal that shows you care.

  As you can see, the small details are what can easily make a difference. If you want to build a strong team that stays by your side, then focus on the small details as well as the large.

  Chapter Eighteen

  Raising Funds

  “Imbue your money with soul, your soul, and let it stand for who you are, your love, your heart, your work and your humanity.”

  —Lynn Twist

  I gave a presentation at the Global Good Fund Conference in DC on how I raised $2 million in two years, and that event generated dozens of questions on how I did it and what I learned.

  There are thousands of organizations in the world that are doing incredibly impactful work, and people are being solicited by them all the time. Your job isn’t just to demonstrate to people that your mission is important but to also prove to them that their donation is going to have more of an impact on the work you’re doing than it will at one of the other organizations they could potentially be giving to.

  Here are some of the most important aspects I’ve learned about raising funds:

  The majority of giving in the United States comes from individuals. This takes a little while to sink in. Most new nonprofit founders come up to me and ask me about the secret to getting grants and how we got all of the grants we needed to fund our organization. There are usually a few things that are wrong with that. First, they are assuming that the majority of our funding came from grants, which, in fact, is not the case. More than 50 percent of our funds raised came from individuals. I came across this mini-blurb in my fundraising journey, and it drastically changed how my team allocated its time within fundraising:

  According to Giving USA’s Annual Report on Philanthropy, in the year 2000, more than $200 billion was given to the not-for-profit sector. Of that $200 billion, only 5% came from corporations, 7% from foundations, and 80% from individuals. The bulk of the giving comes from individuals, and from those people who give 88% of the money, 75% of them made less than $150,000 yearly.

  Second, most foundations don’t make hundreds of grants a year. They tend to have a portfolio of organizations they give to or support, and they continue to support them year after year. Unless the amount of money in the foundation increases, they usually don’t look for new organizations. With that said, if there is an individual who emphatically believes in your work and they happen to sit on a foundation board, you can bypass most of the traditional bureaucracy involved with getting money.

  You don’t need to have a nonprofit status or a 501(c)(3) to start raising money from individuals.I strongly advise that organizations consider finding a fiscal sponsor. Having a fiscal sponsor allows organizations to leverage another nonprofit’s tax-exempt status to take on donations from individuals.

  When you’ve met one individual, you’ve met one individual.Everyone gives for different reasons, and the level of involvement and engagement they want to have is also different. One of the biggest mistakes you can make is trying to treat two people in the same way or using the same method to get two different people to donate.

  Communication trumps impact.This is a sad truth. You don’t have to like it, but you have to appreciate it if you’re going to be successful at fundraising. If you do incredible work and no one hears about it, then it is rarely going to get the funding that it needs. I’ve heard horror stories of organizations that have had very little impact, yet had incredible storytellers and communicators who brought in way more money to support their work.

  People give to people not necessarily causes, especially in the very beginning. Trust is the most important quality to exude. Having strong leadership within an organization is important. The leaders of an organization have to be able to deliver results and impact. In the earlier days of an organization, before the viability of the concept is proven, people are investing in the founder and the leadership team. You have to be willing and able to ask people for money to support your mission. More importantly, you need to connect with the people who are giving you money. Even though the person making a donation is giving to support a cause, they know that it is a person who is leading the charge.

  Friends asking friends is powerful. Building off of the last lesson learned, when people ask their friends to support a cause they are donating to, they are more likely to give than if they get a solicitation from an organization. It is also much harder to say no to your friend, who is a real person, than it is to say no to an inanimate thing (the organization in this case). There is a huge body of research as well as consulting companies out there that help advise organizations on fundraising from friends. They call the field “peer-to-peer” fundraising.

  Fundraising is like sales.You have to convince people that your work is worth supporting. More importantly, you have to follow up. Persistence is key. Most people don’t like to think about giving away money, so they have to be constantly reminded that it is the right thing to do and that your organization is the right place to give the money.

  Recently, the team at Signals by Hubspot launched an entire SlideShare based on the Referral Squirrel data, and the results showed:

  2% of sales are made on the first contact.
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  3% of sales are made on the second contact.

  5% of sales are made on the third contact.

  10% of sales are made on the fourth contact.

  80% of sales are made on the fifth to twelfth contact.

  However:

  48% of salespeople never follow up with a prospect.

  25% of salespeople make a second contact and stop.

  12% of salespeople make three contacts and stop.

  Only 10% of sales people make more than three contacts with a prospect.

  The Benevon Model works.If you don’t know what the Benevon Model is, quickly look it up. In essence, it is great for helping you build your network through “friendraisers” if you don’t have a particularly large network. If you have a large network already, this model can have an exponential effect on your giving. It also allows other people within your circle of friends to get involved with your work.

  Diversifying your funding streams does not increase your odds of succeeding. In 2007, Stanford published a study that showed that more than 200,000 nonprofits had been started in the US since 1970, but only 144 of them had reached $50 million in annual revenue. Contrary to common logic around diversification, they actually raised the bulk of their money from a single type of funder, and they built professional organizations that were tailored to the needs of their primary funding source. I highly encourage people who are starting to think about growing their nonprofits to read these three Stanford Social Innovation Review articles: “Ten Nonprofit Funding Models,” “Finding Your Funding Model,” and “How Nonprofits Get Really Big.”

  Hiring a development person too early is a waste of money.When you’re first starting an organization, people don’t want to meet with your development person. (For those not in the nonprofit space, development is another term for a fundraising professional.) They want to meet with the founder. They want to hear about your vision and why you’re taking on this risk and sacrifice. What will ultimately wind up happening if you hire a development person too early is that they will just become an overpaid assistant. They will be reaching out to people in your network with very little success. Trust me, I made this mistake. Instead, hire an assistant to help you free up your time from menial tasks so you can focus your energy on building relationships and engaging more people in your mission.

  When you can’t get in touch with someone, handwrite them a letter. With the hundreds of emails super-busy people receive every single day, doing something unconventional like handwriting a letter will almost always get you an answer. I don’t advise you hand write a letter to a hundred people or anything like that. Instead, target three to five people who you think would be compelled by your work or mission based on what you know about them, and make sure you have some sort of connection to them (i.e., same alma mater, similar interests, crossed paths somewhere before, etc.). Then write them requesting a meeting. If they take the time from their super-busy schedules to talk, they are already signaling that they are invested.

  Learning is the key to success.You need to be actively learning and seeking out resources. I’m only in a position to be able to provide this information with you all because I’ve taken the time to seek it out. The field is always changing, and new innovations will continue to disrupt how things are done. A few of the lessons here should stand the test of time, but many of these may not be relevant in five or ten years. Also, for every one resource I mentioned here, I’ve easily gone through fifty others. Make sure you continue learning!

  Part iv: People

  All big things start small, and nothing impactful gets done alone. Practice Makes Perfect only got to where it is today because of other people. We are not a flashy tech startup. In fact, we’re probably the furthest thing from that. At the peak of our seasonal employment, we employ almost 400 people in a single summer. We are a people-driven company. And I’m proud of that.

  However, dealing with people does not come without its challenges. If you don’t effectively manage your people, they will manage you. I’ve spent many a night stressing about inaccurate reviews on Glassdoor from disgruntled employees (only to realize that every business gets them), I’ve spent hours coaching employees who no longer wanted to work at our company, and I’ve spent tens of thousands of dollars on benefits to take care of my people.

  You need the right people to run a business, but finding, utilizing, and managing them is never easy. This next section covers the very beginning of the people journey. It touches everything from hiring your first employee to onboarding them so they are set up to succeed, and working with interns to get them to add value.

  Chapter Nineteen

  The Hiring Process

  “Hiring the best is your most important task.”

  —Steve Jobs

  The one thing the best companies in the world understand is that their people are their most valuable assets. That rings especially true in a service-based business.

  Some of the largest challenges at Practice Makes Perfect have been addressed by bringing the entire team together and brainstorming solutions. I don’t think there is a single organizational problem that can’t be solved if you have enough smart and committed people sitting at the table. Knowing that the biggest and most important decision you can make is hiring the right people means that all CEOs should be prioritizing their time to make the right hires.

  Unfortunately, operating a business often gets in the way of desired priorities. So how do you own your company’s most important decision without having to vet every single candidate?

  Clearly articulate your company’s values.This is one of the most important things you can do, especially when you have a small team! The values and, more importantly, the behaviors that define your values will say a lot to a prospective employee about your company. I’ve had friends apply and choose not to apply to a company based on their values. So pay special attention to creating the things that are important to you in the workplace.

  Play an integral role in designing the hiring process.This is your opportunity to create the hurdles that will keep “bad fits” from joining your team. Though it is important to play a large role, make sure you’re not the sole voice in the design. The process you create will dictate how the interviews are conducted, what your team members will be looking for in potential employees, and will save you from interviewing every single candidate. People should only be able to get into your company by getting through the process you designed. The only exception we make is for people who have interned with us before. At that point, we’ve had enough time to evaluate whether or not they’d be a good cultural fit for our organization.

  Make the final decision on all hires. No exceptions.No ifs, ands, or buts. There is research that shows that a bad hire can cost as much as fifteen times their base salary. Not to mention that one really good hire often produces more value than three mediocre hires. That means getting it wrong can be costly and getting it right can actually be lucrative for your business. For every hire, we have put together a hiring committee of four people. We appoint a head of the committee who assembles a hiring packet for every candidate that they think should be hired. I get a hiring packet for every potential hire, and within a few minutes I can get a sense of the candidate and their abilities.

  Letting your teammates know that you will be involved in every single hire sends the message that it is really important to you. More importantly, it means that you’re likely to get people who are better fits for your company.

  Chapter Twenty

  The First Hires

  “When you are ready to make your first hires, look for people who understand your passion, want to add to your ideas and can envision ways to make improvements.”

  —Richard Branson

  When I was ready to hire my first coworker at Practice Makes Perfect, I was focused on finding someone who shared my values, was interested in what our company was doing, and could manifest th
emselves through our work. As a result, I wound up hiring a colleague from Cornell University. By turning to my network, I had a solid understanding of what he would and would not know.

  While going that route may have worked for me, it may not for others. That said, what I have learned is shared values and possessing a similar work ethic are extremely important. Obviously, the latter is difficult to know until they start working.

  For many startups, besides being concerned about hiring the right fit, bringing on your first employee can be a financial burden. In my case, I knew I had to raise the individual’s salary or come up with a strategic plan on how I was going to cover payroll.

  For those ready to bring on their first employee, keep these aspects in mind:

  Be transparent.

  Be up-front about your financial situation, and sell the person on the vision and growth trajectory of the organization. Often, people looking to work in startups are driven by more than money. If the startup is working on a mission they are passionate about, they may be willing to be on the ground floor and build up in lieu of a big salary.

  Invest in your first hire.

  As an entrepreneur, you need to take the time to teach and develop your first employee. The faster they can understand your business and industry, the sooner they can add value to the work you are doing.