What does it take to start a Social Enterprise and is it okay to choose the ‘for profit’ model?
In this blog article, we provide a tip or two on how to start a for-profit social enterprise.
The ‘for profit’ model is primarily operating a business with a plan to make a profit.
Unfortunately, over the years, some for-profit businesses have gotten a bad reputation through poor choices and greed and its tarnished the very word: profit. As it happens, even non-profit organisations have to be cash flow positive, i.e. profitable or have access to enough funds to survive.
Entrepreneurs want to profit from their investment. They take on the commercial risk with startups and plan to get them on course to profitability as soon as possible.
Profitable businesses or businesses nearing profitability are more valuable, and their positive financial status attractive to investors. While most social enterprises used to be ‘not for profit’, entrepreneurs are finding opportunities and ideas to commercialise and create a business with a social conscious. Their startups are eco-friendly and striving for a profit, but with services or solutions that do good.
When Is A Business A Social Enterprise?
In the real sense of it, social entrepreneurship is usually an entrepreneur who starts businesses that provide solutions to solve environmental, social or cultural issues. Alleviating poverty with health care or the construction of homes for the homeless are some examples.
For-profit, social enterprises in abundance are game-changers insofar as more seasoned entrepreneurs are open to commercialising ideas and taking the usual risks, for a favorable outcome. It’s a win-win and takes just a few extra steps to start a for-profit social enterprise.
Starting A For-Profit Social Enterprise
Starting a business requires research, a business plan, advice, legal compliance, risk management and so on. You’ll also need to have answers to these two questions:
What’s your social purpose?
A clear mission statement is fundamental for any startup, and you can use it to attract interest in your business. Customers buy on emotion, and they can be your salespeople, so it’s crucial they buy into it. Workers and investors also need to come onboard and believe in your mission.
Articulating your mission is a mission all within itself. It’s not easy explaining what you want to achieve and how it should make other people feel, but it’s what you need to do so it is memorable and easily recited by all who read it.
What’s your market?
Who is it you want to help, and why do you want to it? Is it a service or a product or both, and what will it do? Figuring out what your business can sell will require an in-depth understanding of the market, and it’s PEST analysis challenges.
Research competitors and seek to understand where the gaps are in the market. Conduct your own surveys with a few questions at a time and arrange meetings with your intended audience, as well as suppliers and advocates. If this is your first venture into a new market, it will be thwarted with more risk than you’re used to, so being prepared is the key to success.
When you are stepping out as a first-time social entrepreneur, choose your products or services wisely and if it’s feasible, find some familiar territory. Bring on board people you can work with, and know how you operate. The solution and the market may be different this time around, but the fundamentals of creating a for-profit business are the same.