A social enterprise is not a business model per se; it is not defined by profits or the idea to accumulate wealth. It is rather like a non-profit with a need to address a social problem or issue that is plaguing the world at any given moment. So, by definition, a social venture is all about finding the right solution to a social problem or any demand sector through the market-driven approach of a general business scheme.
However, there is still a massive requirement of social enterprise ventures, more so in the wake of the global coronavirus pandemic, which has brought widespread panic, loss of wages and incomes, and a persistent health problem to every social stratum.
Is it a charity?
Let us clear a few notions from the get-go. It is not a charity even though philanthropy is at the heart of such a venture. It is more about relying on products and services to make money, but investing it right away to serve more numbers, instead of wealth accumulation. Keep in mind that you do not need to be overly reliant on volunteering, donations, and grants.
On the topic of ethics – Jonah Engler
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Social enterprises are the embodiment of ethical practices. However, it is essential to distinguish that not all ethical practices are social enterprises. Keeping that in mind, social enterprises can range from physical health improvement programs, mental wellness, child education, and small loans to the poor and needy. Whatever, be the concern, a social endeavor is all about reducing the harm to the planet and its inhabitants while at the same time, building processes and products to benefit the quality of human life.
Here are some essentials of a social enterprise venture, according to leading philanthropist Jonah Engler:
- Working for a legit cause – Before setting up your enterprise, you need to ask yourself the most crucial question. Keep in mind that your venture should have a primary goal of bettering society and the quality of life. And it is all about the less fortunate ones and the marginalized sections of the community. You have to develop a business idea that has to seep the virtues of ethics and positive impact. You can find inspiration from real-life stories, personal experiences, or work on a cause that is very close to your heart.
- Look for a demographic to benefit – As stated previously, there are questions that you need to ask yourself before taking the plunge. The second query to yourself should always be about who will the concern benefit? It will allow for planning for the next steps of setting up shop, recruiting the workforce, and directions to innovate. Having a clear goal and path will let you take analytics data and measure and evaluate your impact.
- The funding of such an enterprise – This is probably one of the most critical causes of concern. Funding sure is hard to hope for, let alone achieve. The case is all the more complicated following the coronavirus pandemic, which has resulted in mass-scale freezing of businesses, trade routes, and supply lines. However, you will be relieved to know that social enterprises have their world of funding that can be entirely unaffected by the economic downturn since it is about helping the less fortunate.
Keep in mind that you need to start with a proper business plan with precise detailing regarding the social nature of the concern. Understand that, however brief, the plan must include a detailed outlook regarding the problem, the demographic affected, and the solutions proposed.
Armed with your write-up, there are numerous channels to explore, including self-funded initiatives, community participation, and loans. There are several government agencies and offices that you can try as well, depending on your state/country of residence. There are added incentives for starting a social enterprise that includes tax cuts and rebates on raw materials.
Additionally, keep tabs on social media through hashtags and campaigns regarding fundraisers and support organizations for social enterprises. There are several social enterprise alliances all around the U.S. that are more than happy to extend networking, charitable and opportunity assistance to dedicated individuals.
Selecting a model that is right for you – Keep in mind that there are several models to choose from, and it is all about the size, scope, and mission of the venture. There is a legal structure as well, along with a customer base and a source of money.
Here are the types of social enterprises that you can build:
CIC or Community Interest Company
Here is a “limited” company option with more checks due to the CIC regulations and requires transparency of Directors’ remunerations.
This is the most common option with day to day operations being run in a democratic and participative fashion.
Here you need to work with a board of voluntary trustees, and regulations are burdensome due to greater access to tax reliefs. Keep in mind that you can start by merely applying a sole trader and later develop into a specific type of social venture model.
Evaluation of impact
Social enterprises are generally impactful with a direct positive effect on society as well as the environment. Therefore, to assess the reach and the success of your concern, you need to take the necessary steps to ensure that an authentic evaluation procedure is operational. This will allow you to set the parameters as well as identify the best ways to scale up production, features, or diversify. You also need to maintain absolute transparency and assess the social change in both qualitative and quantitative terms. Measure and test are the keywords for any social enterprise.
Wrapping things up
The social enterprise model is perfect for an investor or an individual looking to do good for society. However, there are unique challenges, but they help when the values, goals, and mission statements are on point with the people’s ethos.