While the social enterprise scene has gained traction in the UK in recent years, there still exists plenty of ambiguity as to the definition and classification of such businesses. First and foremost, it is important to remember that a social enterprise uses a for-profit business model which, like any other type of company, should not lose sight of the need to generate income to maintain its operations.
So what puts the ‘social’ into a social enterprise? Such organisations strive not only to make profit, but also to make the world a better place through their business— whether that’s working to protect a vulnerable group in society or tackle environmental degradation.
Laura Kromminga shares her insights into one approach, which is currently creating buzz in academic research - that of a spectrum. On the one side of this spectrum, there are traditional charities, aimed at social output and not earning any revenue through their work. On the other side are companies. They are not aiming to create social impact, but rather are purely commercially driven. The space in between is occupied by businesses with a social mission and some sort of generated revenue.
When you put them into four categories, you get the following spectrum:
The businesses and organisations on this spectrum are very diverse in their legal forms, with some businesses even falling in multiple parts of the spectrum.
Is social entrepreneurship for you?
Before embarking upon the creation of a social business, it’s important to get a good grasp of what the reality entails. To succeed, you will first need to understand how your business idea creates, delivers and captures value. A social enterprise’s value proposition includes the value created for both the individual customer and society at large.
You will need to be great at forging relationships and building a strong network. As a social entrepreneur you pursue at least a double- if not triple-bottom line (social, environmental and financial). This means you are - by definition - accountable to a wider spectrum of stakeholders. The best way to nurture and manage these relationships is by building partnerships with key stakeholders in sectors relevant to your venture. Who else is trying to solve the issue you are working on? Who are your allies? It is crucial to forge trust and strong relationships with partners in your value chain.
Additionally, succeeding as a social entrepreneur requires plenty of confidence, perseverance and patience. Whether you’re going through your first round of fundraising or trying to expand internationally, being able to weather a storm and pick yourself back up after setbacks is crucial.
Finally, it is important to remember that while the path of social entrepreneurship can often be a bumpy one, it offers a unique way to affect positive change and have a world-changing impact.
