If you are seeking ways to build a business and leave your mark on society, social entrepreneurship can help you do both. Social entrepreneurship is the use of the techniques by start up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a variety of organisations with different sizes, aims, and beliefs.
This social entrepreneurship delivers benefits in a self-sustaining way by using their revenues to finance activities that generate social benefit. Social entrepreneurs use their business and creative skills to help identify and solve social problems on a large scale. A social entrepreneur is a passionate risk taker who applies innovative and practical solutions to benefit society through their business practice. There are several benefits to being a social entrepreneur from both a business and societal standpoint.
The Benefits of Social Entrepreneurship include:
Implementing Societal Change
Perhaps the most rewarding advantage of being a social entrepreneur is the impact you can have on society. Social entrepreneurs create businesses in a variety of industries that can have a positive impact on society, including alternative energy, health awareness and education. Social entrepreneurs view communities as the solution and not as the beneficiaries of products and services. Social entrepreneurs provide the resources and expertise that help communities improve their qualities of life.
Creating Inspiring Solutions
Another benefit of becoming a social entrepreneur is the freedom to explore and create innovative solutions that can inspire change. Social entrepreneurs are constantly on the lookout for new and inventive solutions to problems and often enlist leaders within their field to assist in project development. Taking risks rewards social entrepreneurs; thinking outside the box and looking for create ways to address problems.
Working as Your Own Boss
Entrepreneurs do not work under a boss, so they have the freedom to trust their own intuitions and make their own decisions. Entrepreneurs are zealous problem solvers whose leadership skills and passionate nature might cause them to feel unsatisfied in a traditional employer-employee relationship.
Creating Jobs and Income Streams
As business owners, social entrepreneurs benefit the economy by generating jobs and income. In addition to providing jobs, social entrepreneurs also use part of their profits to fund projects that can benefit the community as a whole. This combination of business acumen and social awareness is a big lure to many people interested in becoming social entrepreneurs.
Social enterprises develop and apply creativity, which are important to social and economic development to develop new goods and services. The social entrepreneurship program will boost the creativity of the participants may it be entrepreneurs or students. Creative social entrepreneurs generate market demand for their goods and services while also contributing to the dynamic shift in cultural sustainability, social justice, and economic development around the world.
Different types of Social Enterprises
There are many different types of social entrepreneurship business models and structures, which vary according to their core purpose, ownership, management structure and accountability.
A community project is a term applied to any community-based project or initiative. This covers a wide variety of different areas within a community or a group. Projects can cover almost anything that concerns the community and aims to address a social, environmental or economic issue.
A non-profit organisation (NPO) is an incorporated organisation which exists for educational or charitable reasons, and from which its shareholders do not benefit financially. Surplus revenues is reinvested in the organisation to achieve its goals, and used for its own expenses, operations, and programs. In order to reduce dependency on traditional sources of funding and revenue, non-profits are financing their sustainability through a mix of revenue sources that include for-profit businesses.
The sources of income for non-profit sector continues to be a challenge, as some traditional sources, especially directs government support, begin to diminish or disappear. So the non-profit sector has looked more to a business model to contribute to their mix of revenue sources. The models vary widely, from the long used thrift store to the actual ownership of a for-profit business.
Co-operatives (or “co-ops”) are community-focused businesses that balance people, planet and profit. Co-ops are legally incorporated organisations owned by their members who use their services or purchase their products. Co-ops can provide virtually any product or service, and can be either non-profit or for-profit enterprises. The co-operative sector keeps dollars circulating within the local economy, provides secure employment and is a means to revitalize and sustain healthy communities.
A social enterprise, typically initiated by a non-profit, uses business operations and strategies to generate revenue from the private market to assist in sustaining the organisation’s primary services. Different forms of Social Enterprise can include:
- Training for those with challenges in facing the workforce
- Employment creation for marginalized populations
- Non-profits that house social enterprises with the goal of subsidizing their services
- Non-profits/private sector business partnerships that support goals of the non-profit
- Businesses owned and operated by Indigenous communities
- Social Purpose Business
Social Purpose Business
A social purpose business is a profit making enterprise that also has a positive social and/or environmental impact. Another way to describe a social purpose business refers to having a blended value or triple bottom line: people, planet, profit.
Challenges Faced in Social Entrepreneurship
Social entrepreneurs have been around for many years, but the explosion in global connectivity and intense competition for philanthropic funds seems to have propelled the sector into a more central position in the business world. The essential difference between social entrepreneurship and traditional businesses is that the mission is central to the business of a social enterprise, and income generation takes an important, but secondary, supportive role. The social entrepreneur seeks to implement innovative and creative ideas to solve large-scale social problems in a sustainable way. 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 enterprise in addition to commercial value.
Social enterprises can be run as for-profit or non-profit and sit somewhere in the middle of the traditional corporation and a purely charitable organisation. Some organisations are able to generate sufficient income through the sale of socially beneficial goods or services, but many are not. Other funding opportunities include corporate investment, donations and government funding. Approaching investors may not be easy, however, if the organisation is perceived as more non-profit than profit-oriented and not likely to make a reasonable return for investors. On the other hand, many donors are distrustful of a social enterprise being run as a for-profit company where too much focus may be placed on wealth generation and too little on social value.
Communicating Value Objectively
The social enterprise delivers more than commercial value, and it is the additional social value that often ignites the passion of the social entrepreneur. This in combination with the fact that social value is not easily measured can make it difficult to communicate the bottom line to investors, donors or the community at large. It is important to stay objective to remain convincing, and to make the right decisions in moving the enterprise toward its goals.
Strategy and Long-Term Focus
It is important to any business to identify a long-term strategy, define appropriate goals and drive growth in a sustainable manner. Difficulties for social enterprises again stem from the fact that the purpose of the organisation is to create social benefits. It is often the case that multiple social benefits can mean multiple goals, all of which must be evaluated in terms of cost of provision to ensure true value creation. A strong strategy will identify a unique value proposition compared to other organisations and indicate clearly what the organisation will not do. Activities of the social enterprise should work together and reinforce each other.
Remaining True to the Mission
Establishing a good strategy for the social enterprise will help to mitigate the possibility of mission creep. It is often easier to fight fires and not focus on the long-term goals of the organisation, but this could result in an undesirable shift in the social value provided. A successful organisation will continuously review strategy and work to improve it, but changes in the mission can cause confusion and dilute the organisation’s impact.
Five Reasons Why Social Entrepreneurship Is the New Business Model
- It connects you to your life purpose.
- It keeps you motivated.
- It brings you lasting happiness.
- It helps you help others discover their life purpose.
- It is what today’s consumer’s want and also the latest trend. BIG
Khalid Al Qoud is the founder and Chairman of Al Qoud Consultancy and Prince Events Management. He is well trained in fostering professional relationships with various individuals at a local and international level, and has a deep understanding on how to approach them.
Source: Business in Gulf Magazine, Volume 11, Number 11 – November 2017 Edition
Did you know?
The Olive Tree SAL, the company behind arab.org, is also a social enterprise.