You’ve launched your social enterprise because you believe in a mission — you’ve witnessed a need in your community and have been inspired to take action.
But do you know how much impact your business truly makes? You may have an idea of what you’re accomplishing, as indicated by the number of customers you reach or revenue you generate, but these don’t demonstrate whether your social mission is being fulfilled and whether it’s effective. To demonstrate how much good your business actually creates, you need to measure your social impact.
Below, we explore 4 reasons why measuring social impact is vital to the success of your social enterprise.
- Secure funding
While social entrepreneurs may be challenged to find investors for many reasons, there is a growing group of impact investors eager to back social enterprises.
In addition to traditional metrics, impact investors also want to know how much impact a potential investee is creating. Thus, measuring your social impact is one of the first steps in showing investors you’re the right business to invest in.
By measuring and reporting your impact, you:
- Help investors to understand the bigger picture of your business and vision
- Demonstrate exactly how your business delivers on its mission
- Create metrics that allow investors to compare across investment opportunities (and ultimately choose your business to invest in, due to its amazing impact)
While impact investment makes up a small percentage of total investment in other markets, impact investment is the driving force of small business investment in Nepal.
As of 2015, approximately USD 17.3 million has been deployed by impact investors in Nepal, with an additional USD 54 million in funds preparing to be deployed.
- Keeps your business on the right path
As a social enterprise, a social purpose is at the core of your business plan and model. As you measure social impact, you’ll be able to assess your business’s strengths and weakness, and whether you’re still actively addressing the problem you set out to solve.
You’ll be able to answer the questions, “where are we delivering the most impact, and where can we be more impactful”? Knowing the answers to these questions will allow you to: evaluate your business performance; optimize financial costs in underperforming areas; and ensure that your operations are aligned with the mission that inspired your business in the first place.
- Align with the Sustainable Development Goals
We will explore this topic in detail in future articles, but it’s worth mentioning now that the UN’s Sustainable Development Goals (SDGs) are a fundamental set of 17 goals to follow and align your social impact with. Measuring your social impact allows you to align your business’s social initiatives and impact goals to the global framework of developments and showcase your contribution to SDG’s in a quantifiable method.
- Communicate globally
Once you start measuring impact and aligning your work to the SDGs, you will have access to a common development language. The SDGs are global in nature — governments, international investors, and businesses alike are following them. Thus, when you measure your social impact and demonstrate that your business is working towards a particular SDG, people will know what you’re talking about, because they know the goals.
This is important as you’ll be able to easily, clearly, and effectively communicate your business efforts and success to a global audience.
Measuring impact matters
Whether you’re interested in securing funding from impact investors, improving your decision making processes, or growing your business and revenue, measuring your social impact counts. It will make clear that your vision, mission, and business are making a positive and significant impact on others’ lives.
But how do you go about measuring impact? We’re exploring methods next time, so stay tuned!