New and small start-ups are seeing fantastic levels of revenue by focusing on social enterprises. To understand the reason for this, we first need to answer an important question: What is a social enterprise? Loosely speaking, a social enterprise in business can refer to a commercial project that addresses a particularly social need. This could be an effort to improve an environmental issue or perhaps to benefit a social group in need such as refugees. Often, this concept meshes with the idea of social innovation which is the process of aiding social causes in an interesting, unique or innovative way.
The term social enterprise was first coined by Nobel Peace Prize laureate Muhammad Yunus. Yunus used the term in his book, ‘Banker to the Poor’ in 2009. However, the actual description of the idea of an organisation that had social objectives and that was financially independent actually appeared much earlier, used by Freer Spreckley in 1978. As such, there is some debate on the origination of the term.
Regardless, the term is now being used to describe both large and small companies that have a social cause. For instance, one might use the term social enterprise to define a business that has particularly good hiring practices or that treats their employees well. Alternatively, it could also be used to describe a smaller not for profit (NFP) company that also uses entrepreneurial practices. In fact, it could be claimed that there are actually six different types of social enterprises. These are Entrepreneurial nonprofit, non-nonprofit, socially responsible business, give one, get one & donate a portion of proceeds, conscious company, conscious brand and outliers that are outside of these categories but have some sort of social responsiveness built into the business model.
The type of social enterprise examined in this article are new companies based on a social conscience idea that still make a solid level of revenue. It’s a growing number too because a recent report revealed a third of the UK’s social enterprises are startups. But what type of businesses are making their mark on the market and buying in with a socially conscious concept at the heart of their business?
Allotments And Biofuel
Social enterprise businesses in the UK have existed for years, and some of them have been incredibly successful. One particularly prominent social enterprise, Divine Chocolate. The company was formed in 1998 as a partnership with cocoa farmer cooperative in Ghana. The farmers of the beans gain a 45 percent share of the companies profits as well as a 2 percent annual turnover. This benefits the farmers with economic stability. Other companies like The Big Issue have also seen great sales and helped people in need, but who are the new kids on the block making an impression with investors and customers due to their socially conscious business ideas?
In 2001, a team of individuals banded together to create OrganicLea on an abandoned allotment in east London. Working to renovate the property, they transformed it into a location where vegetables could grow once more. With organic planting techniques, the aim was to keep the site as environmentally friendly as possible perfect for seasonal produce. The business moved slowly, selling season produce from the allotments and carefully managing the twelve-acre site. The small business now sells food to over 330 households and is constantly growing.
What’s fascinating is that this company is a full business with fifteen full-time employees and it does make a solid profit each year, selling produce across London. The aim of the business continues to be selling produce that is locally grown and completely affordable to all. With food prices rising, the company felt it was important to provide a food source that people could afford.
As well as this, the business aims to combat the environmental damage and impact on the environment that other larger farming companies have, offering buyers the more eco-friendly alternative. With no shareholders, the business is completely financially independent. As well as being a profitable business, the company set out to create an example to inspire people and show the true potential and value allotments could still bring.
Another example of this type of social conscious enterprise movement can be seen in Bio Bean. Joining forces with Royal Dutch Shell, the clean technology company was able to convert the byproduct of everyday coffee into fuel to run public transport. This is a smart example of how supply can be used to meet demand. According to the company, coffee cups cause 200,000 tonnes of waste a year in London. By reimagining what can be done with the waste, the business has been able to diminish levels carbon emission levels in the capital.
As well as being a huge win for the startup, the movement was supported by Shell, showing how big business can benefit from social enterprise due to positive publicity.
A World Without Plastic
In another part of the world a company in New Zealand have taken their personal care products to a new level by not using plastic in their cosmetic products. Ethique was born in 2012 when a university biologist had an epiphany while washing her hair that there was business potential in a company that offered cosmetic products without plastic bottles. Instead, the company exports its products in biodegradable cardboard. While the business started through crowdfunding sites, it now has grown 330 percent with an OTE of NZD 2.2 million for the financial year ending March 2018. As well as this the company has stopped 150,000 bottles being manufactured, and their next aim is one million!
Indeed, while the company gains recognition for their innovative plastic bottle movement, the entire business is based on the idea of social enterprise. Certified climate neutral, cruelty-free and a living wage employer, the business is also a startling example of how successful these start-up social enterprises can be and the buying potential they have on the market.
It seems then that there is no reason why social enterprises cannot also be completely profitable and new companies certainly seem to be catching onto the potential of setting up a business that also does a lot of good.