Stick to your knitting? Or take on a Scarf Shop franchise?
I’ve had a bit of a moan on Twitter this morning about some poor service we recently received from a third sector organisation. We booked a room for an event – and to cut a long story short they offered friendly but poor service. We did most of the running round to confirm the booking details, and then on the day they gave the projector we’d hired to someone else. Then, to round things off, they didn’t put enough postage on the invoice, so we ended up paying £1.14 for the privilege of collecting our invoice from the sorting office!
I’m interested in understanding the root causes of the poor service we received. I think there’s an issue about diversification and the need to generate income. I imagine the organisation in question started off years ago as a community development organisation, renting a room in a tatty corner of a council building in the neighbourhood where they grew up. And along came European millions to enable them to build a multi-purpose venue, which housed the work that they do and also gave them the opportunity to rent rooms to other people.
There’s no problem with that necessarily. And you can’t really argue that much with organisations which look to diversify in order to bring in various sources of income. But what if you don’t have the skills to compete in your new marketplace? Venue hire is a massively competitive market, and customers are very demanding. To compete, you need to be good at what you do.
There’s a good argument to say that you should stick to your knitting. It’s tough though, particularly at the moment as funding streams dry up. It can be tempting to come up with bright ideas which will supposedly generate “free” money to keep you going.
The one that I’ve been asked to help with most is the community cafe which wants to expand into outside catering. The argument goes: “We can charge £5 per head for the kind of stuff we sell in the cafe for £1.50.” True – to an extent. But it’s a whole different market – with different customers and competitors. That’s not to say that you can’t make it work. But it’s not necessarily the case that a community cafe can sustain itself through a Robin Hood strategy of selling paninis to office wallahs whilst offering cheese baps to the urban poor.
So what do I do about this? I work with people to help them to assess their ideas. Nothing particularly clever, and no scientific formulae to help us to understand whether a particular idea offers a chance to generate income. But we start by considering:
- Does this idea involve selling more of our existing services to existing customers?
- Does it involve selling existing services to new customers?
- Does it involve selling new services to existing customers?
- Does it involve selling new services to new customers?
The theory there is that there’s likely to be greater risk in developing a new service, and selling it to a customer group that you know nothing about. It may also require more resources in terms of time and money. That’s not to say not to do it – but grouping ideas like this at least gets people talking about risk – and their ability to take on new business ideas.
It’s hard to work out whether your idea is likely to generate income. And unfortunately, the more outlandish the idea, the harder it can be to argue against it. You can be accused of lacking vision. But with money so tight, we have to try to find ways to help people choose the right way forward, instead of digging a deeper hole.
I know the problem. precisely because it’s my knitting. As software develop having created a package for organising room booking and co-ordinating catering and equipment portering services.
No it seemed sensible to me, especially in the absence of funding for social enterprise, to make that the income generator for our core funding. So Meeting Point as it’s know serves government, corporations, NHS and charities and the revenue supports advocacy and strategy papers we deliver to leverage economic development overseas.
Imagine, for all the social enterprise directories I’ve registered with offering 66% discount to other social enterprises, there’s not been even a glimmer of interest.
Too many egos I reckon. All wanting to save the world, but only under their own banner.
“And unfortunately, the more outlandish the idea, the harder it can be to argue against it. You can be accused of lacking vision.” That produced a shudder of recognition.
Non-visionary that I am I once caused consternation by questioning whether the small charity I was a trustee of really would be able to take on and improve the delivery of most of the functions of a metropolitan local authority funded entirely by a series of charitable pop concerts and club nights.
In my experience the tragedy is too often that the 3rd sector thinks it’s OK to give crap service because it is a 3rd sector organisation. In other words, customers will be willing to tolerate crap because it’s somehow important to suffer when you do business with 3rd sector orgs.
In my book, you need to be every bit as good and professional as the private sector alternative – with the social mission being the benefit that tips the customer your way.