What is a social enterprise?
Put simply, a social enterprise balances profit with doing the right thing and giving back to people and the planet.
There are various definitions. However, all social enterprises have a mission that solves a social problem. Their purpose, values, vision and mission can extend to all parts of the business: who they employ, giving back to the community, sustainable sourcing of materials and products (social procurement), etc.
What makes a social enterprise different?
“Social enterprises are businesses that trade to intentionally tackle social problems, improve communities, provide people access to employment and training, or help the environment.” – Social Enterprise – Business Victoria.
- It is not a legal structure (i.e. a company, sole trader, partnership)
- You can get certified.
Three key elements:
- Have a defined primary social, cultural or environmental purpose consistent with a public or community benefit, and
- Derive a substantial portion of their income from trade (rather than donations, grants and other funding), and
- Invest efforts and resources into their purpose such that public/community benefit outweighs private benefit.
The Victorian Government defines social enterprise as organisations that:
- are driven by a public or community cause, be it social, environmental, cultural or economic
- derive most of their income from trade, not donations or grants
- use the majority (at least 50%) of their profits to work towards their social mission.
It’s worth being aware of these definitions for your local area. Governments in many parts of the world are supporting social enterprise through training, funding, business networks, and other methods. Tapping into this local support can help you start and grow your social enterprise.
In Victoria, Australia the State Government has created a Social Enterprise Strategy to support businesses. It’s a great place to start looking for opportunities, ideas, training, and connections. There is also now a national strategy.
How does an online business become a social enterprise?
Like any business. A social enterprise must be profitable to be sustainable.
All the good intentions and passion in the world come unstuck when you can’t pay the bills. Get the business fundamentals in place and get advice if you need help with this.
The three steps below align with the three key elements of a social enterprise:
1) Define or update your mission, purpose, and values. This is a great explainer of how these work together for your business and brand.
- Get your business model and fundamentals in place and working.
- Take action. Demonstrate how you are taking steps forward and the difference that is making, aligned with your mission, purpose, and values. Who has benefited? What are the challenges? What’s next? Consider being transparent and accountable by publishing this on your online channels.
Are you starting a business (a ‘startup’)? Watch this short video with tips for social enterprise startups:
“As a social enterprise, you are going to get asked about your mission A LOT. It’s what makes you stand out. Funders will want to be sure about the social change they invest in, and customers will check you’re different from less ethical alternatives. You might even get a few nosy journalists checking you’re not just greenwashing to get business.” – School for social enterprise
Is innovation or an innovative business model essential?
No. Your local Op Shop isn’t an innovative business model but it’s a social enterprise. It’s been around for years. Think about the problems they solve and the good it delivers!
While there are a lot of disruptive and innovative social enterprises, it’s not a requirement of being a social enterprise.
An innovative social enterprise looks specifically at social problems, identifies a solution to address them, and then sets up a business to help solve it.
This can be as simple as finding new uses for discarded items by upcycling them into art or handmade goods. Or, as complex as defining a whole new manufacturing process to create a biodegradable toothbrush to reduce landfill and give back to communities.
Get connected with like-minded businesses and thought leaders
There is a big community of social enterprises, organisations that support them, and thought leaders in this space. This ecosystem exists locally, nationally, and globally. It includes:
- SENVIC – a social enterprise network in Victoria, Australia
- School for Social Enterprise – a global platform to support social entrepreneurs
- Disrupts for Good social enterprise podcast by Causeartist
By nature many social enterprises and their leaders are generous. This includes sharing their knowledge and advice.
Do a local search in your area, connect with podcasts reach out to businesses you want to work with. There are a variety of social enterprise meetups in all parts of the world where you can connect with established and aspiring social enterprise owners and leaders.
Get inspired and awarded
There are many inspiring stories of success and positive social outomes. Awards have been set up to showcase these stories and reward celebrate their efforts. Examples include:
- Frankie ‘Good Stuff Awards’ in Australia
- Schwabb Foundation for social enterprise awards
- Social enterprise awards UK
Grants are also offered in some countries. Do a local search to connect with these opportunities. If you are a little daunted, connect with a professional grant expert to assist with your application.
Does my business need to be certified?
No. But, it definitely adds credibility. It also helps avoid being labeled as ‘greenwashing’.
There are a number of different certifications. Look for local advice and do your research before committing because any certification program takes time, energy, and resources away from other business activities.
Certification programs also have the benefit of helping your business stayed aligned with its vision, mission, purpose and values.
Many certification programs have a simple quiz, or survey to evaluate where you are in your journey to be a social enterprise. This helps you know whether you are ready to be certified or if certification is right for your business.
Here’s an example for Australia: Social Trader certification process.
Starting an online business, what do I need to know?
If you are looking to start an online business that aligns with the definition of social enterprise, all the fundamentals stay the same.
You may want to use the business model canvas from the social enterprise lab, rather than a standard business model canvas. Checking what grants, business accelerators and support are available is also sensible. All startups require help, advice and support.
An online business that does a lot of social good, including balancing profit with giving back to people and the planet can be a social enterprise.
You may decide to pursue identifying as a social enterprise and go down the certification path. Or, you may simply incorporate this into your purpose, mission, vision and values.
- Operating an ethical online business that does good stuff can be very simple.
- As simple as aligning with the three elements included in the social enterprise definition.
- Let us know if you think we have missed any key elements or links!