There is a lot of talk these days about social enterprises (#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 the trend that resonates with all generations and revolutionizes the way people do business. Because ‘socents’ are fairly recent, there is little research on their successes, failures, and what motivates them.
As with all new things, people are following social business to see if it really is a successful and revolutionary new way of doing business or if it’s just the trend of the moment.
Social enterprises: what are they?
Social entrepreneurship, according to Harvard Business Review“has emerged in recent decades as a way to identify and generate potentially transformative social change.”
Social Business Council of Canada describes social enterprises as – “enterprises owned by non-profit organizations that are directly involved in the production and/or sale of goods and services for the combined purpose of generating income and achieving social, cultural and/or environmental objectives.”
The main identifying characteristic of social enterprises is that they are businesses that have a greater purpose and generally aim to ‘do good’ weather make a profit.
Social Enterprises: Key Challenges
The first and most important challenge of a social enterprise is that it is not an easy way to increase income. Most pennies take years before they break even, let alone start generating funds. Long-term commitment and subsidies are essential and hard to find. For this reason, a common way to seek funds is through crowdfunding campaigns such as IndieGogo or PinUp.
But even then, nothing is certain, and balancing the social and financial priorities of a social enterprise is extremely challenging.
The second challenge we have seen is the difficulty of selling a new idea. In most cases, the idea has not yet proven to be successful and is therefore not without risk, although it may have great potential. It is difficult to “launch” an idea that has not yet shown results; and it is almost impossible to implement the idea without the money to do it. It’s a bit of a “chicken before the egg” dilemma and can be one of the most frustrating aspects of starting a social enterprise.
As Demand Media’s Sarita Douglas explained, “A social enterprise faces the same issues that any traditional business faces in its growth and operations. But social entrepreneurs also face unique challenges in delivering the social value, social returns, or social impact of the company in addition to the commercial value”.
Benefits: success it is possible
To be successful, the social enterprises it must meet both social goals and significant financial constraints. The initiative must be financially sustainable, otherwise the project will require a steady stream of grants, charity, and donations that traditional non-profits rely heavily on; which are, by nature, unsustainable and difficult to secure.
Many social enterprises maximize their impact through collaboration, cooperation, and social innovation. They approach traditional business problems in a different way; and the scale of the business does not necessarily equate to the scale of the impact.
A common practice among social entrepreneurs is to share ideas with their peers. For us it has been essential to build relationships and networks to maximize impact. Instead of worrying about competitors, we have adopted a strategy of sharing information and connecting with our peers in an effort to gain insight, industry “best practices” and future contacts.
We recommend brainstorming with experts and collaborators to help find solutions to common industry problems. Simply put, the more people who are inspired and join your “movement”, the more likely others will take notice and, in turn, make resources available.
There is still much work to be done to discover the full benefits of running socially responsible and financially sustainable organizations. The bottom line is this: a social enterprise is a business. It should be run by experienced business professionals who understand financial planning, scalability, and growth. plus Social problems
