There’s been a lot of chatter lately about Social Enterprise (#socents), a relatively new way of doing business, which we believe is a ‘movement’ in the entrepreneurial world. It seems that millennials (in general) are the driving force behind a trend that resonates across generations and revolutionizes the way people do business. Because ‘socents’ are fairly new, there has been little research on their successes, failures, and what makes them tick.
As with all new things, people follow social enterprise to see if it is indeed a successful and revolutionary new way of doing business or just a current trend.
Social Enterprise: what is it?
Social entrepreneurship, according to Harvard Business review“It has emerged over the past few decades as a way to identify and bring about potentially transformative and social change.”
Social Canadian Company Board describes a social enterprise as – “a business owned by a not-for-profit organization that is directly involved in the production and/or sale of goods and services for the mixed purpose of generating income and achieving social, cultural and/or environmental objectives.”
The main characteristic that identifies social enterprises is that they are businesses that have a larger purpose and generally aim to ‘do good’. when make a profit.
Social Enterprises: key challenges
The first and most significant challenge of a social enterprise is that it is not an easy way to increase revenue. Most socents take years before they break even, let alone start generating funds. Long-term commitments and subsidies are essential and hard to find. That’s why a common way to raise funds is through crowdfunding campaigns like IndieGogo or PinUp.
But even so, nothing is certain, and balancing the social and financial priorities of a social enterprise is challenging.
The second challenge we observed was the difficulty of selling new ideas. In most cases, the idea has not been proven to work, and is therefore not without risk although it may have great potential. It’s hard to ‘throw’ an unproven idea; and it is nearly impossible to implement the idea without the money to do so. It’s a bit of a ‘chicken before the egg’ dilemma and it can be one of the most frustrating aspects of starting a social enterprise.
As Sarita Douglas of Demand Media explains, “Social enterprises face the same problems that any traditional business faces in its growth and operations. But social entrepreneurs also face unique challenges in delivering the social value, social advantage, or social impact of enterprises in additional commercial value”.
Benefits: success is possible
To be successful, social entrepreneurss must match social objectives and significant financial constraints. This initiative must be financially sustainable, otherwise the project will require a constant stream of subsidies, charities, and donations that traditional non-profit organizations rely heavily on; which are unsustainable and difficult to secure.
Many social enterprises maximize their impact through collaboration, collaboration, and social innovation. They deal with traditional business problems in different ways; and the scale of the business is not always the same as the scale of the impact.
One common practice among social entrepreneurs is to share ideas with colleagues. For us, building relationships and networks to maximize impact is very important. Rather than worrying about competitors, we adopt a strategy of sharing information and connecting with our peers in an effort to gain insights, industry ‘best practices’ and future contacts.
We recommend brainstorming with experts and contributors to help find solutions to common industry problems. Simply put, the more people who are inspired and join your “movement,” the more likely it is that others will notice and in turn, provide resources.
Much work remains to be done to discover all the benefits of running a socially responsible and economically sustainable organization. The bottom line is this: social enterprises are businesses. It needs to be run by professionals with commercial experience who understand financial planning, scaling and growth as good as social issues.