If you are considering starting a business, my first advice is to study some relevant and successful entrepreneurs. If you also have a burning desire to make the world a better place, you should definitely talk to some very particular people: vendors of The Big Issue.
It is a common misconception that The Big Issue is a charity; in fact, it is a social enterprise. The vendors first have to raise the cash to buy the magazine and then persuade people to part with their cash, the classic model for entrepreneurship.
The people behind The Big Issue are highly focused entrepreneurs with a social conscience. John Bird was raised in an orphanage, went to prison and slept rough on the streets. In 1991 he founded the magazine with successful Body Shop entrepreneur Gordon Roddick.
His foil is Nigel Kershaw, a printing expert who first became involved when they were looking at producing the magazine themselves. Then, they worked on various entrepreneurial ideas, such as Big Issue vendors manufacturing fair trade candles for The Body Shop.
Finally, they followed the path often taken by successful entrepreneurs: to have even more fun by investing in other people’s businesses and Big Issue Invest was formed.
Any entrepreneur with an established track record, a fully functioning management team and a genuine market opportunity can potentially grow their company by taking on inward investment.
My own advice is invariably for them to scale back their ambitions and try to grow the company organically from revenue, or do everything they can to retain at least 51% of their company.
If you question this sound counsel, you should spend some quality time with an entrepreneur who came to work one day only to be suddenly, and often correctly, fired by their investors.
If your business would benefit from inward investment, has the potential to make some serious money and also has a genuine social purpose, then you should talk to Kershaw at Big Issue Invest. They have been running a social enterprise loan fund since 2005 and have recently launched a new investment fund.
Their process is no different to any other venture capital firm. Experienced investment professionals will first examine your plan to see if it stands a good chance of making some serious money and therefore provide a healthy return for the investors.
Then, they will check that the enterprise has a demonstrable social purpose; the day-to-day business activities of the company must also make the world a better place. Big Issue Invest will measure and report to their investors on the enterprise’s social impact.
Kershaw is looking for people with the right stuff, or as he nicely defines it, are ‘six-thirty people’. These are business veterans, who spend eight a.m. to seven p.m. making money and then at 7.01 attend a charity event or undertake voluntary work.
Kershaw reckons that at six-thirty these people have the right combination of business and altruistic mindsets, and therefore might make successful social entrepreneurs and investors.
The terms of business from any investment fund always have specific requirements.
In the case of Big Issue Invest, this might include a commitment to interview or train a specific number of Big Issue vendors for future employment.
This makes complete sense to me; when I walk up The Strand I always make a point of avoiding eye contact with the irritating ‘charity muggers’ but always buy a copy of The Big Issue, as I am always interested in meeting aspiring entrepreneurs.
More importantly, the magazine is always a cracking good read and excellent value for money, well worth the £2 investment.
Big Issue Invest can be found at www.bigissueinvest.com.
Originally published in The Financial Times. Copyright ©Mike Southon 2011. All Rights Reserved. Not to be reproduced without permission in writing. Mike Southon is the co-author of The Beermat Entrepreneur and a business speaker.