Social Enterprise Isn’t New

Category: Business planning Entrepreneurship Startup

Thirty-five years ago if you asked my father what he did for a living, he would say he was a business owner and there was no degree in the world that could teach you this stuff! Fast forward to now, and if I asked the same question, most people would say they are entrepreneurs and you can get a degree in entrepreneurship from a number of Universities.

We are now beginning to see a trend to social entrepreneurship, and you guessed it, you can get a degree in that too! Some see this as innovative, but like most things, social entrepreneurship is not new; its roots can be traced through the centuries, as far back as the 17th century. I would argue that this is an evolution of business values and how we are approaching social issues. I tend to look at the social entrepreneurship model as a beautiful blend of business principles and nonprofit values.

Early examples of social entrepreneurs

A few decades ago, Ashoka Foundation, founded by Bill Drayton, coined the term social entrepreneurship and, around the same time, the Grameen Bank by Muhammad Yunus became an incredible example of what a social enterprise could look like.  

When Tom Shoes launched in May 2006, their “One for One” model became well-known in the social enterprise world. When you buy a pair of TOMS shoes, another pair goes to someone in need. What’s more interesting, though, is the story behind this business model.

After a while, TOMS discovered their model was actually doing more harm than good to local economies. The simple act of giving shoes to those in need was, for example, putting local shoemakers out of business. The company was not making the impact they first imagined. They weren’t actually solving a social problem; in fact, they were unintentionally creating other social issues, which caused a lot of social media backlash.

TOMS completed a long process of re-evaluating their One for One model. They discovered they could create meaningful change through their business model by instead partnering with local organizations who were connected to the communities. The TOMS website now reads that they will help a person in need by providing shoes, sight, water, safe birth, or bullying prevention. TOMS helped bring the social enterprise model to the forefront in business, and no matter how they change, they will forever be known for their One for One model.

Building your business model

The issues TOMS faced are at the crux of social entrepreneurship; people are well-meaning and care deeply, but sometimes a solution or idea does not actually solve the problem. That’s why it’s very important to validate your assumptions. If you don’t, you will go on to create a social enterprise without knowing how to create profit to support your social mission.

Did someone say profit? Yes, and I refer to it as Profit for Purpose. At the core of a social enterprise is its social mission, but there’s an important word in there that tends to get missed: ENTERPRISE.

en·ter·prise

ˈen(t)ərˌprīz/

noun

  1. A project or undertaking, typically one that is difficult or requires effort.

  2. a business or company.

I love this definition as it highlights the effort it takes to create a business or organization. A social enterprise can be focused on a number of different social missions, from the environment or poverty to education or barriers to employment; unfortunately, the social issues are endless. The key is that the social mission is embedded into the core of the business model. Whether it’s where you source your materials or how you treat your people or the environment, you are using the profit generated to fund your social PURPOSE.

Think of it as the 4 Ps: People. Planet. Profit for purpose.

Remember that generating profit is not as easy as it seems. As any entrepreneur would tell you, it’s not easy to make money, let alone help a social cause while you’re doing it.  Launching a worthy social enterprise also won’t guarantee you customers. Your story may get you in the door, but you still have to be priced competitively and provide an incredible service (sometimes even better than your competitors) to be successful. Typically, entrepreneurs don’t pay themselves for the first two years, and businesses don’t typically make true profit until year four or five, so understand that your social enterprise cannot be expected to save the world the day it opens. Ultimately, the numbers, your offering, and the social mission all need to make sense, socially and financially. 

A vision for the future

Social entrepreneurship at its core is about systematic change. In order to truly solve social issues, we need all levels of government, civic organizations, educational institutes, businesses, nonprofits, and the general public to help enact the change we need in the world.

Daniela Papi-Thornton, former Deputy Director of Skoll Centre for Social Entrepreneurship in Oxford, has this outlook from her report Tackling Heropreneurship:

“Being a social entrepreneur is one career path that can move us towards positive social change, but there are a lot of other roles that are needed as well. We need people to join them and do the stuff most entrepreneurs find boring, like accounting, creating replicable processes and models, and measuring impact. We need entrepreneurial minds in governments and large international organisations. And we need traditional businesses and multi-national corporations to take leadership in positive social change as well.

If we view social enterprise start-ups as the main tool for social progress, then we miss out on the many other pathways that might be a better fit for some future social impact leaders’ skills, and we miss out on opportunities to reshape the entrenched systems that are currently holding us back.”

In the end, we all have our part to do and if you want to be involved in social change, you need to get ready to get your hands dirty, to fail, to change, and most of all, to collaborate.  

If you’d like advice on planning or growing your social enterprise, I would love to help you! Feel free to reach out to me via email: hcree@atb.com. Download your free copy of the Tackling Heropreneurship report here.

 

Looking for startup advice or one-on-one support?

Give the Business Link Business Advisors a call at 1-800-272-9675 or email askus@businesslink.ca.

About the Author

headshot of Hannah Cree

Hannah Cree

ATB

Hannah Cree is the Social Entrepreneurship Specialist at ATB, providing strategy & education across Alberta. She is also the co-founder of CMNGD (COMMONGOOD), a linen service for the hospitality industry providing transitional employment, at a living wage, to people facing poverty.

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