You’ll need to develop the detail of:

• how you create value that customers want to pay for (your business model)
• how you fulfil your social or environmental purpose (your impact model).

These two models work together. Not everything you do to make money will fulfil your purpose. Not everything you do to fulfil your purpose will make money. But both are essential to making a lasting impact.

Use the following questions to develop your business and impact models. They’ll help clarify your thinking, no matter what stage you’re at, whether you’re starting a new business or keen to do more good with your existing business.

Answer the 11 questions in the order they appear. To record your thoughts, download the worksheet further down the page.

Answering this question identifies the overall purpose for your business. Your purpose will shape the rest of your answers. Your purpose should:

• aim to solve a problem
• be inspirational
• be simple
• be broad.

For example, Manaia’s purpose is to raise awareness of climate change and nudge others to be less harmful to the environment.

Be clear about your customers from the start. They’re the heart of your business model, and they’ll shape important parts of your business.

‘Customers’ means people who support your business financially. For example, people who buy your products or services, investors, people who donate and organisations who give you grants.

First, identify different types of customers. For each type of customer, identify specific groups you want to target. For example:

Customers for Manaia’s vegan sandwich business

Define your ideal customers

Understanding your customers’ issues is key to creating things they need and want. Think about why they would want to give you their money.

For example, the main issue for Manaia’s:

• sandwich buyers could be a lack of tasty ethical options for lunch
• investors could be where best to make an ethical investment
• donors could be how to feel like they’re doing something about climate change
• sponsors could be how to raise their profile with a younger audience.

Think about how others are currently solving these problems. This will help you see how you fit into the bigger picture.

What benefits will your ideal customers get from your business? What will make your business stand out to them? This is what makes you unique. It will help you attract and keep customers, plus get ahead of your competition.

For example, Manaia’s sandwich business will be highly ethical. It will be vegan, source all its ingredients locally and use compostable packaging. This means avoiding harm to animals, limiting carbon emissions from transport and reducing waste to landfill.

Developing your unique selling point

What products or services will you provide to solve your customers’ issues? Your answer will be how you deliver your unique value.

For example, Manaia will sell the tastiest vegan sandwiches made from all local ingredients with compostable packaging.

Think about how you’ll market and distribute your products. Focus on marketing for now. How will you make sure your customers know about you?

For example, Manaia will market her vegan sandwiches on Instagram, on university bulletin boards and through flyers delivered to office buildings.

Marketing and sales

Money can help you do good in the world. Think about the ways you can make it, and how much you’ll make. Consider:

• how much you’ll charge for your products or services
• how you’ll charge, eg one-off sales, subscriptions, ongoing licence fee
• whether you’ll charge everyone the same, or have different prices for different people
• other types of income, eg grants, donations or sponsorship.

Use rough estimates if you need to, but use numbers that reflect the size of your business. Use our handy step-by-step guide on using forecasting and modelling to check your numbers.

Financial models : Step-by-step guide

For example, Manaia estimates her vegan sandwiches will cost a total of $6 to make. She plans to sell them for around $9 from her food cart, and for $15 including delivery to office workers. She’ll also offer a $280 subscription for a month’s worth of lunch deliveries. She thinks she can make about $370,000 in total sales in a year.

She’ll also apply for local government funding of $10,000 for the first 3 years.

All up, Manaia hopes for a total income of about $380,000 a year.

You’ll need to manage your costs to succeed. Estimate your day-to-day running costs, plus the costs of fulfilling your overall purpose. Don’t include the cost of starting your business. Consider the costs of:

• making and delivering your products or services (eg materials, rent, staff, power)
• fulfilling your overall purpose (eg giving items away)
• finding new customers (eg marketing and sales).

If you don’t know some of your costs, use rough estimates. Manaia isn’t sure what her costs will be, but she makes a guess:

Annual costs for Manaia’s vegan sandwich business

Manaia’s estimated total income is $380,000. If she takes away her estimated costs of $348,000, and another $8,960 for tax, that leaves $23,040 profit.

Twenty percent of that profit is $4,608. That’s the amount Manaia will aim to donate to a tree-planting charity.

Think about the numbers that will show your business and impact models are working. For example, how much will you need to sell to fulfil your purpose? What ratio of costs to income will you need? These numbers will change as your business succeeds.

Measuring the impact of your purpose-led business

For example, Manaia aims to donate 20% of profits to a tree-planting charity, so she’ll need to check all her figures carefully. She also wants to know the effect of avoiding animal farming, transport and plastic packaging. She decides to measure the:

• amount of carbon emissions avoided (by using local, vegan ingredients)
• kilograms of waste diverted from landfill (by using compostable packaging)
• approximate number of trees planted (based on dollars donated to the tree-planting charity).

Think honestly about any advantages you have over other businesses. Maybe you have special knowledge that others don’t have, such as a secret recipe or a special design. Or you might have partnerships that others don’t. Or maybe you can use something for free that others can’t.

For example, Manaia has strong family relationships with local growers that other businesses don’t have. This gives her a low-cost and guaranteed supply of the best ingredients from her local area.

Think about the resources that make your business unique

Think about the problem you identified in Question 1. Now add detail to create your impact model. This will help you ensure you make the impact you intend. An impact model shows how your business activity links to good outcomes.

To create a simple impact model, outline five things:

• Problem: The thing you want to help solve.
• Participants: Who or what you want to help, eg certain people or the environment.
• Activities: The things you do that help you make a difference.
• Outputs: The immediate result of your activities (often something you can easily count).
• Outcomes: The positive changes in people’s lives or for the planet because of the things you do (short-term, medium-term and long-term).
• Lasting impact: The overall change you aim to make.

Manaia’s impact model

Check both your business model and your impact model by talking to a range of people.

See if you can find potential customers to test your products and services. Their feedback can help you tweak your ideas and avoid mistakes.

Work closely with those you want to create an impact for, plus any charities or organisations you’ll partner with. They’ll help you be sure you can make the difference you plan to.

Check your biggest assumptions or risks. Go back and update your models as you gather new info and refine your idea.