Many Millennials have noble ambitions, but starting an organization that can achieve their goals requires patience and research.
A couple of national news outlets have published stories recently (like this one and this one) that suggest today's young people are uncommonly entrepreneurial. Meanwhile, well-known groups like Echoing Green, the Clinton Global Initiative, and the Hitachi Foundation are offering big rewards to young people who apply their enterprising minds to ridding the world of social ills. These efforts facilitate and respond to Millenials' penchant for starting "social ventures." They create organizations -- for-profit or non-profit -- that deploy businesslike efficiency in addressing unmet needs in a community or society.
It makes sense that starting social ventures has become popular among young people. After all, institutions that once attracted droves of ambitious college students -- like investment banks and government agencies -- have lost their luster. Newly-minted lawyers find their schooling has left them ill-equipped for the real world. Even big charities connote bureaucratic sloth to young people skeptical of large institutions.
It's important to note, though, that although starting social ventures is in vogue, it is not always the best approach to addressing the issues that irk young people. In many cases, working for an existing organization or advocating for a policy change offers a better shot at meeting their goals.
Anyone who thinks about starting a social venture should ask three questions before proceeding:
1. What does success look like?
In 2008, a college classmate named Rohan Mathew and I started the Intersect Fund, a New Jersey nonprofit that offers business training and loans to low-income entrepreneurs. Our goal is to be a strong ally for individuals in our state who want to start a business but lack the resources to do it. Having set up a system to make a lot of small loans, we see no reason why we can't eventually lend to all "micro-businesses" (those with five or fewer employees) in our state that need our services.
We would view such deep market penetration as a success, but we could have taken a different approach to economic development. If our goal, for instance, were making loans easier to get throughout the country, the best approach may have been to advocate for a stronger Small Business Administration more attuned to the needs of nascent microbusinesses. If there had been a well-regarded microlender already working in our area with our target market, we might have sought to join forces with them, perhaps helping them to adopt some of the technology-based solutions that have become such a big factor in our work.
2. Am I capable of marketing and delivering the service I seek to offer?
Keep in mind that need doesn't necessarily equal demand. When we got started, for example, we knew our city had high rates of poverty and unemployment. We also had a sense that many residents tried to start a business but failed due to a lack of money and accounting skills.
Given these conditions, we thought people would be beating down our doors for financing. To our surprise, the first year was pretty quiet. A steady stream of clients enrolled in and enjoyed our business training course, but we disbursed only three loans. It wasn't until we gained a reputation in the community and recruited staff who could speak our borrowers' language (this one seems pretty obvious in hindsight) that we were able to ramp up our lending.
We learned later than we should have that without capacity and connections, good intentions are useless.
3. Is anyone else already doing what I want to do?
Think hard about this one. If young entrepreneurs know of an effective organization in their community that already delivers the service they want to provide, they should try to work with it. If they try to start a competitor, they'll struggle to secure funding and community partners.
However, if the other organization is proving ineffective, it may be fair game for competition. If young entrepreneurs think they have a better approach than the one their competitors use, or that they could do the work just as well but with less overhead, they may want to give it a shot.
If no organization does anything remotely similar to what they want to do, they should ask themselves why. Consider the old example of the shoe salesmen sent to scout out new country for a potential expansion only to find that its residents wore no shoes. One wrote back, "There's a great opportunity here, everyone needs shoes!" The other was pessimistic: "It's hopeless, no one here even wears shoes."
Optimism is essential to starting any venture, but so is market research. It's important for young entrepreneurs to speak with community stakeholders and offer a scaled-down version of their service to gauge demand before launching a full-scale effort. The issues they seek to address are no doubt worthwhile. They owe it to themselves and their potential clients to approach it the right way.
Joe Shure is a Roosevelt Institute | Pipeline Fellow and co-founder and associate director of the Intersect Fund.