Some people start businesses to improve the quality of their life, others seek to work for themselves, and some simply see an opportunity in the market that they can’t resist.
But sometimes the thing that tickles the entrepreneurial spirit in you is the desire to use business as a means of creating positive change.
This is called “social entrepreneurship”, and it’s an approach to business that’s gaining in popularity as globalization brings conversations about sustainability and international development to a global stage, and more people ask themselves, “What can I do for the world today?”
Social entrepreneurship involves starting mission-based social enterprises that dedicate some or even all of their profits toward furthering a cause—giving their customers a purpose behind every purchase.
What is social entrepreneurship?
Social entrepreneurship has a very broad definition that can arguably include non-profit organizations like Doctors Without Borders, which rely almost exclusively on donations and grants, and even for-profit companies like Tesla that put their clean energy products front and center.
What’s a social enterprise?
A social enterprise is a type of business where the bottom line and success metrics are measured in more than just profits. Instead, social enterprises typically measure success based on a triple bottom line:
- People: The social impact of your business, and your ability to change lives and develop a community in a sustainable way.
- Planet: Your environmental impact; how you contribute to a sustainable planet or reduce the carbon footprint (CO2 emissions) of your business and customers.
- Profit: Like traditional businesses, they need to make make money in order to sustain themselves, pay workers and grow as an enterprise.
Social Entrepreneurship is about harnessing commerce for a good cause.
For this reason, one of the challenges to succeeding in social entrepreneurship is that it’s easy to measure profit (did you make money, or did you not make money?), but it’s not as easy to measure your impact on people or the planet and communicate that to others.
Social entrepreneurs adopt a business model that puts their mission at the center of their business, and are held accountable to their customers and stakeholders based on their proposed impact.
The benefits of building a social enterprise
For today’s consumers and businesses, social responsibility is a growing priority as concerns about climate change, international development, and supply chain ethics become a more prominent topic of international discussion.
In a CSR survey by Cone Communications, 87% will purchase a product because a company supports an issue they care about. In another study, 91% of global consumers expected companies to operate responsibly, and address social and environmental issues
This reflects a shift in consumer awareness about the impact of their purchase decisions. Not only are businesses being held to a higher standard, but many consumers are holding themselves to a higher standard as well.
So while social enterprises, by definition, must dedicate a portion of their profits to the impact they want to make, they do enjoy the following benefits that help them succeed:
- Mission-based branding: A company story with a cause at its core makes consumers feel good about every purchase they make from you.
- Partnership opportunities: A social enterprise, because of their mission-based motivations, can partner with other non-profit organizations and for-profit companies to leverage existing audiences and established reputations to create a presence in their market. “In kind” resources and discounts are not uncommon for social enterprises.
- Press coverage: Publications and blogs love to cover social enterprises and their impact, helping them to evangelize their efforts and share their impact.
- Certifications and support systems: Social enterprises can be eligible for grants, “impact investing” opportunities that focus on job creation and sustainability, and special certifications such as a Benefit Corporation status that make it easier to establish credibility, commit to transparency, and attract customers, employees, volunteers, and investors.
For the sake of this piece, we’ll look at what it takes to create a sustainable for-profit social enterprise. And that starts, as most businesses do, with figuring out what you want to sell.
Finding a product to sell and a mission to lead
The mission might come first for social entrepreneurs, but that doesn’t eclipse the importance of having a quality product to sell. When all is said and done, a for-profit social enterprise needs to make money to survive just like any other business idea.
But there’s a pattern amongst successful social enterprises of establishing a good “product-cause fit” that aligns their mission with what they sell.
Social enterprise examples
LSTN Sound Co. for example, sells premium headphones where a portion of profit goes toward the Starkey Hearing Foundation to restore hearing to people around the world.
Cotopaxi makes and sells outdoor gear for adventurers and travelers, dedicating 2% of total revenue to provide grants to specific non-profits that seek to alleviate poverty in different parts of the world.
Free Guide: How to Find a Profitable Product to Sell Online
Excited about starting a business, but not sure where to start? This free, comprehensive guide will teach you how to find great, newly trending products with high sales potential.Get the free guide
These are only a handful of many examples of ecommerce-based social enterprises that do a great job of not only tying a sense of purpose to their products, but using traditional business strategies, such as event marketing and giveaways, to promote their mission.
Defining your mission and illustrating your impact
For social enterprises, their mission is a competitive advantage that can help them stand out in a crowded market—if they can communicate their motivation and the impact they can make.
Many social enterprises adopt a model where they donate a portion of profits to a cause, but that’s not the only way to position your company as a social enterprise.
It’s not just saying, ‘Hey, we have a social mission as an organization, and X percent of our sales goes to nonprofit X, Y, and Z.’ I think it needs to be deeper and more authentic than that.Stephan Jacob, Co-founder of Cotopaxi
There are also social enterprises that focus on:
- Creating jobs within the communities they care about, such as hiring local ex-convicts or ethically outsourcing production to communities in need of fair work and career development opportunities.
- Reducing their carbon footprint by planting trees or going out of their way to reduce carbon emissions throughout their entire supply chain and educating customers about it.
- Hosting workshops and people development initiatives to teach skills and empower people to build better lives for themselves and their communities.
- Advocating for diversity and inclusion on behalf of underrepresented groups and becoming an engine of inspiration, such as Goldie Blox does by making toys to expose young girls to the joys of engineering.
Transparency and sustainable impact are essential for a successful social enterprise. And these things are easier to achieve if your cause is close to your heart and you choose an impact that you can measure.
“Integrity is doing the right thing, even when no one is watching,” in the words of C.S Lewis.
Transparency is about visibly demonstrating your integrity and holding yourself accountable to your mission and the people who support it.
Depending on your mission, you can directly implement your plans for change as a social entrepreneur and expand your contributions as you grow. But if you choose to partner with non-profit organizations (NPOs) to help execute the “social” part of your social enterprise (as many do), be sure to do your homework before you reach out and ask questions like:
- What am I ultimately giving back to?
- How will my contributions actually be used and what are the organization’s operating costs?
- How does the organization measure its success?
- Is their impact sustainable, or will it only end up doing more harm in the long run?
- Does this organization have an ethical history as a non-profit?
This is all part of your founding story—the tale of why you started your business—and will likely come up again and again in your elevator pitch, About Page, PR efforts and more. So refine your story with your mission in mind and your action plan for creating change.
Funding your social enterprise
Social enterprises are accountable to the cause that they support, and that means automatically setting aside a portion of future revenue to invest in their impact.
Social entrepreneurs often have to be creative with how they raise money, and that’s why crowdfunding is a popular option.
Crowdfunding websites such as Kickstarter can not only help you raise the money you need to get your idea off the ground, but get your mission out there in a community that exists on the very premise of supporting projects and causes they believe in. Learn more about running a successful crowdfunding campaign in The Ultimate Guide to Crowdfunding.
There are also a growing number of grants that you can apply to for social enterprises that meet specific requirements, and a new trend of “impact investing”, where the return on investment expected isn’t just financial, but includes social and environmental impact as well.
Marketing your mission
What works when it comes to marketing can vary from business to business, but the need for transparency and the “for-benefit” position that social enterprises adopt make certain marketing strategies especially effective at generating awareness.
After all, you’re marketing your mission, not just your business.
Digital media and the internet enable storytelling at a scale that wasn’t possible before.
From shooting videos to sharing photos on social media, social enterprises can leverage content to share real stories of the impact they’re making and provide proof that every customer’s purchase helped do some good in the world.
You can visit the affected community and film a documentary-style video. Or you can create an infographic for a data-based illustration of your impact or why your vision of change is needed.
There are ample opportunities for a social enterprise to spread its mission and tell its stories with content.
Since NPOs often host events for fundraising and other initiatives, social enterprises can partner with or sponsor the causes that relate to their mission.
Whereas this would be deemed a marketing expense for traditional businesses, for a social enterprise it can double as an investment in their cause.
With a feel-good story and a carefully crafted pitch, a social enterprise can win media mentions from bloggers and publications that are constantly on the lookout for something interesting to cover for their audiences.
Since there’s a purpose behind your company, there’s usually a lot more meat to the story by default than there might be for a traditional business.
Purchasing isn’t the only way for people to support your mission. They can donate their voices online too.
According to an analysis by CoSchedule on why people share things online, 84% used social sharing as a way to support causes or issues they care about.
As long as you integrate your mission into your marketing, you can expect your audience to help you spread the word.
The rise of social entrepreneurship
Social entrepreneurship isn’t the only way a business can be for-benefit and not just for-profit.
Many companies are owning their social responsibility based on a growing belief that those with the power to do so can and should try to make the world a better place.
Our connected world has brought about a new era of awareness, where we can find problems to solve and lives to improve across the street or across the world if we choose.
People from all over are making the decision to make change in whatever way they can, whether it’s by being more conscious of what they buy as consumers, or building an engine for social and environmental good by becoming entrepreneurs.
Braveen Kumar – shopify