When an idea seems plausible after being pressure tested the way The Social Entrepreneur’s Playbook advises, you should be ready to measure the success of your business. The authors, Ian and Jim, offer two ways to measure the success of your business idea. The first measures social impact and the second measures financial performance.
1 – Measure Social Impact
When measuring social impact, you need to decide on a unit that can determine the benefits being delivered by your solution. For example, the number of students able to access Kytabu’s digital platform. Another example is the number of farmers saving money through East Africa Fruits’ modernization of fruit storage and distribution.
Both these African Entrepreneurship Award winners knew how to find a solution to a problem in their respective regions. They successfully measured the social impact through the number of lives impacted.
A way to approach this is to revisit your solution and the benefit it provides to potential customers. Once you remind yourself of the benefit, you need to think of an outcome metric that will measure the impact you intend.
2 – Measure Revenue
In order to measure financial performance, you need to decide on a unit of revenue. This can be as simple as counting the number of products sold or hours served, assuming these are your revenue drivers. When measuring revenue, as with social impact, the numbers are your best friend.
A way to approach this is to remind yourself who your target customers are and to establish whether they will pay for your product or service or someone else. In the book, Ian and Jim remind African entrepreneurs that it may not be your beneficiaries who pay for your service.
Next, figure out how you will realistically project the number of products sold or hours served in order to communicate this to investors or stakeholders.