Social Cost Case Study - Discussion Template

Questions: 1) What are the main cost drivers of this business? 2) What categories / types of social costs do you think might exist in the below social enterprise? 3) How would you estimate these social costs? 4) What else can you say about this business from this income statement? 5) How would you improve the layout of this income statement to better assess performance? Social Enterprise Cleaning Company income statement FY2009 Actuals, $000s Category REVENUE Sales: Residential Sales: Commercial Grants - State Grants - Individual and Foundation TOTAL REVENUE DIRECT LABOR Cleaning Staff Salaries Team Lead Salaries Employee Benefits - Weekly Payroll Employees Payroll Taxes - Weekly Payroll Employees TOTAL DIRECT LABOR Cleaning Supplies GROSS MARGIN SALARIES & RELATED EXPENSES Supervisory Salaries Support Staff Salaries Employee Benefits - Semi-Monthly Payroll Employees Payroll Taxes - Semi-Monthly Payroll Employees TOTAL SALARIES & RELATED EXPENSES NON SALARY INDIRECT EXPENSES Occupancy Transportation Insurance Marketing Overhead Allocation Utilities Miscellaneous Depreciation Telephone Building Maintenance Staff Training Supplies & Printing TOTAL NON SALARY INDIRECT EXPENSES TOTAL OPERATING EXPENSES TOTAL EXPENSES (Direct labor, supplies, operating) NET MARGIN (GROSS MARGIN - OPERATING EXPENSES) Total cost 243 162 120 30 555 Social cost % of total Business % of total cost

160 78 25 69 332 21 202

117 39 10 19 185

27 19 5 7 35 2 2 2 2 1 12 1 116 301 654 (99)

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which is not typical of cleaning businesses ED time spent on fundraising for social enterprise Additional training costs not related to cleaning. now that you see the information in DBL format? 5) How would you benchmark this social enterprise's performance from both a business and social perspective? Social Enterprise Cleaning Company income statement FY2007 Actuals.Answer Template note: rationale for suggested answers are embedded as comments To discuss: 1) What might have driven the estimates of social costs below? 2) How was this similar/different from what you came up with? 3) What else would you need to know in order to refine / revise these estimates? 4) What more can you say about this business's performance. it appears that the business is bringing in more subsidies than they are incurring in social costs. $000s Category REVENUE Sales: Residential Sales: Commercial Grants . e. This may not be a good thing . but not as much so as cleaning staff Typical "market rate" cleaning companies do not offer benefits at all to entry level cleaning crews Calculated as a weighted average of the above social costs 120 30 150 405 160 78 25 69 332 21 202 35 11 25 14 85 65 22% 14% 100% 19% 26% 124 67 56 247 21 137 78% 86% 0% 81% 74% 100% 117 39 10 19 185 16 3 2 21 13% 8% 0% 11% 11% 101 36 10 17 164 87% 92% 100% 89% 89% Extra time spent by supervisors on recleaning areas (for training purposes. perhaps the social costs are too low (e. In addition.Semi-Monthly Payroll Employees Payroll Taxes ...Individual and Foundation TOTAL REVENUE DIRECT LABOR Cleaning Staff Salaries Team Lead Salaries Employee Benefits .Social Cost Case Study .pricing may be too low . supplies.g. costs not found in a typical cleaning business Transport is provided to/from the first site. due to target population inefficiency) Estimated additional time spent by admin assistant on grant management 27 19 5 7 35 2 2 2 2 1 12 1 116 301 654 (99) 3 3 10% 15% 4 10% 3 12 33 118 32 25% 10% 11% 18% 24 16 5 7 32 2 2 2 2 1 9 1 104 268 536 (131) 90% 85% 100% 100% 90% 100% 100% 100% 100% 100% 75% 100% 90% 89% 82% Some of the space is used for case management and grants processing.scale may not be sufficient to support indirect expenses. especially on the commercial side . need more case management or job placement support) Total cost 243 162 120 30 555 Social % of total cost 0% 0% 100% 100% 27% Business % of total cost 243 162 100% 100% 0% 0% 73% All grants considered "social income" All grants considered "Social Income" This was determined based on a time study that showed additional inefficiency of target population as compared to "typical" cleaning staff Team leads at this social enterprise are still less efficient than typical team leads. is this business achieving the desired social outcomes? If not.State Grants .Semi-Monthly Payroll Employees TOTAL SALARIES & RELATED EXPENSES NON SALARY INDIRECT EXPENSES Occupancy Transportation Insurance Marketing Overhead Allocation Utilities Miscellaneous Depreciation Telephone Building Maintenance Staff Training Supplies & Printing TOTAL NON SALARY INDIRECT EXPENSES TOTAL OPERATING EXPENSES TOTAL EXPENSES (Direct labor.as it is masking poor business performance.Weekly Payroll Employees TOTAL DIRECT LABOR Cleaning Supplies GROSS MARGIN SALARIES & RELATED EXPENSES Supervisory Salaries Support Staff Salaries Employee Benefits . operating) NET MARGIN (GROSS MARGIN . life skills classes Note that this business is doing much worse than thought (as a business).Weekly Payroll Employees Payroll Taxes . Drivers may include: .too high supervisor-to-employee ratio relative to other cleaning companies .OPERATING EXPENSES) At this point in time.g.

on inefficiency) me spent by admin nagement used for case nts processing. ypical cleaning to/from the first cal of cleaning draising for social ts not related to ls classes .social income" Social Income" based on a time ditional inefficiency s compared to ial enterprise are typical team h so as cleaning cleaning r benefits at all crews ted average of the pervisors on reining purposes.

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