“All of us, whichever job or project we choose to take on, do something to change the culture. The social impact, positive or negative, is our choice.” Seth Godin. Social Enterprise can be difficult to define as is a quite recent concept which has been evolving rapidly in recent years creating some confusion as it blurs the lines of traditional business, government and non-profit sectors.
The concept Social Enterprise is being use nowadays in almost any sector, not only businesses, so the first thing to do, is to really understand what this concept actually refers to. According to the definition given by the European Comision, social enterprise can be described as:
“an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners or shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives”
Similar definitions can be found, but what all have in common is the social perspective of the business. At this point, care must be taken not to confuse social enterprise with enterprises with CSR, since in the case of the latter, their essence is not social, but they do support causes that are social.
There are three main types of Social Enterprises:
- Those whose product or service directly solves the social or environmental problem (e.g. a brand that makes clothes out of plastic from the sea).
- Those whose objective is to generate income to finance their own or other organizations’ social projects (e.g. a company that sells water bottles and uses the proceeds to build wells in countries where there is a lack of access to water).
- And, those that sell products to employ vulnerable groups (ie: company that sells biscuits made by women with intellectual disabilities).
In recent years, new social enterprises have been created and others have changed their business model to become social enterprises. Therefore, they are not limited to a single field or sector, but rather they address avariety of issues and challenges and always based on innovation -technological and methodological- as well as on the search to generate social impact.
Nowadays, there are hundreds of social enterprises, but some examples are: MJN Neuroserveis (exists to predict epileptic seizures and have developed a device that anticipates them based on brain stimuli); BraiBook (first ebook for blind people, a device capable of translating any text from any format into Braille to make reading accessible to anyone in the world with blindness); Ecoalf (fashion brand that from plastic bottles, tyres or fishermen’s nets, make high quality clothing and accessories); or Auara (sells bottles of bottled mineral water made from recycled plastic and uses the profits to co-finance NGO projects, which also cover part of the cost).
However, like any business, there are advantages and at the same time, there are some challenges in this business model.
- Social impact: as stated before, these businesses work, fundamentally, to tackle social problems, and improve people’s opportunities. The fact that an enterprise is social enhances the brand and its reputation among the public, as it deals with a shared issue. Customers usually feel good when they buy products and services from companies that are helping their community or the world at large.
- Innovation: these businesses address a social need with a product that positively impacts the planet. In recent years, “social enterprise clubs” have been founded, where students are taught to create new business models that change the world. The aim is to develop their talent to create and promote social enterprises with new approaches and innovative ideas.
- Job: among the different advantages that offer social enterprises, the human resources is one of the most significant ones. These companies create stronger connections with workers, who often feel a higher sense of personal fulfillment. They generate decent jobs with good salaries and conditions. This approach has made them more resilient and stable in the face of economic crises.
- Competition for resources: Enterprises often have dependent relationships with the providers of resources, and the aim is often to align them so that they are moving in the same direction. However, this can be more difficult in social enterprises, where financial profitability and social impact can demand resource allocations in opposite directions and thus create tensions. At the same time, finding fundings can be extremely hard for these enterprises sometimes.
- Marketing and competition: due to competition with household names in existing commercial markets, most people are not aware of existing social enterprises. At the same time, the lack of competition is one of their biggest advantages, as they do not have to compete for recognition. The first difficulties these enterprises can face when they seek place in the market and connect with the public, can be easily overcame with a good marketing strategy as they work with popular social issues.
In conclusion, as the quantity of social businesspeople keeps on developing, the meaning of social enterprise keeps on advancing and evolving too. Also, despite the challenges, these enterprises are a more viable and sustainable alternative to traditional ones. Whether it’s starting a social enterprise from scratch or changing your business model, choosing to generate social impact can be valuable for you, your business and your picked cause.
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