Originally posted at Michipreneur.com. Michipreneur is an online publication built to empower entrepreneurs, encourage investment, strengthen small business, and foster talent retention in Michigan. We publish news, resources, events, funding information and more for Michigan startups and businesses.
Most courses on launching a social enterprise will begin with a lengthy discussion on defining social enterprise. However, a few minutes in and you will realize that defining social enterprise is a rather difficult task especially since leaders in the field have failed to pinpoint a universal definition. Moreover, I have learned that everyone who claims to have a definition also has the motive to define the practice of social enterprise.
However, I just cannot help myself. To help acclimate you to the concept of social enterprise, perhaps it is easier to begin with what it is not. Here is how I define what isn’t a social Enterprise:
Social entrepreneurs do not place profit above the needs of their stakeholders, which, oddly enough, does not mean that they do not make a profit.
Social enterprises are neither non-profits nor for-profits exclusively.
More often than not, their entrepreneurial solution to a pressing challenge is not one that is easy to solve with only an app or a line of code, yet technology and innovation in that sector play a pivotal role in furthering the mission of many social enterprises.
Among social entrepreneurs, there are typically no dreams of big exits or IPO’s – although that isn’t to say it isn’t a possibility.
To be a social entrepreneur – or the steward of a social enterprise – one generally identifies a passion, a problem, a market intervention, and gets to work implementing a solution not unlike other entrepreneurs. In fact, entrepreneurs are entrepreneurs regardless of their mission or industry.
What typically distinguishes a “social” entrepreneur from a “traditional” entrepreneur lies more in the way in which they approach business. It is common to see many entrepreneurs build businesses that generate a fringe social value however they do not identify as a social enterprise and vice versa. The “benefit” usually manifests more formally in the legal structure (articles of organization or incorporation), the business model, and the certifications or designations the company or nonprofit obtain (fair trade, organic, B Corps, etc.).
Additionally, a social enterprise can be proactive or reactive in the way they deliver their benefit. A proactive company might roll their mission into their legal structure, take strides to source products responsibly or locally, or perhaps their workforce is comprised of folks who would otherwise struggle to find gainful employment. Conversely, a reactive company might provide more of a “charitable benefit”, making their money first and then giving back, or perhaps employ a buy-one-give-one model. These types, however, are not mutually exclusive.
It is important to note that the social enterprise sector is ripe with innovation and nuance, very similar to other fields and disciplines. This is a growing field, and my guess is that as this trend continues, we will see a great deal of innovation namely through business models.
This is the first part of a three part series on how to launch a social enterprise, a for profit company with a social mission.