One of the great things about being an entrepreneur and a business coach is that it gets you to talk with a wide range of people who share one character trait: they want to make a difference.
Some do it because they want to make money, others do it because they want to change the world. In all cases, they want to fill a gap left unconsidered by the market.
That all sounds great, but in reality, one topic keeps coming back again and again in the various discussions I have: many social entrepreneurs insist on saying that they are not the same because, well, they are “social” entrepreneurs. And accordingly, they insist on being treated differently.
They demand discounts on what they purchase because, well, their enterprise is a social one so it’s fair to make an effort.
They want to raise more funds at a discounted rate, because the purpose is social and deserves to be supported.
They refuse to talk in terms of profit because, somehow, the word seems incompatible with the social nature of their enterprise.
The problem is that this type of discourse sends the wrong message to entrepreneurs and funders who know what the reality of entrepreneurship is like. And it isn’t something you want to inflict on your business.
Because like it or not, but a social enterprise is just that: a business. With upgrades, for sure. But still a business. And accordingly a social entrepreneur is also just that: an entrepreneur. With a different set of principles, for sure, but still an entrepreneur.
Read also: What is the definition of social entrepreneurship?
If you are looking to give your social entrepreneurship potential a boost, this article was written for you. Warning, the following discussion can be a sensitive one!
Social entrepreneurs need a value proposition, a USP, and an offer.
First point, just telling people that you are a social entrepreneur with a great social enterprise won’t be enough to get you anywhere. Successful social entrepreneurs know better!
First, because there are tons of other great social entrepreneurs with great social missions out there, and money isn’t going to just fall from the sky.
Second, because whoever you serve (call them clients, end-users, beneficiaries or whatever you like) will need to choose you over the competition. And that takes a strong value proposition, a unique selling point (USP), and a sharp offer.
Your value proposition is what describes the difference you make out there. Social innovation for a new world? Solving social issues? Funding social impact through impact investing? Initiatives for successful social and economic development? Or something related to energy environment and other social venture ideas?
The Unique Selling Point is what makes your value proposition relevant. And the offer is whatever you have to sell to whoever wants to pay.
For instance?
Impact HK, a leading NGO we coached in Hong Kong while it grew from 5 to 35 staff, is pulling people off the streets and saving lives (punchy value proposition).
Beyond just feeding people they also give them facilities to bring them back to a community life whilst giving them jobs through a variety of social enterprises (Unique Selling Point).
And their offer to paying supporters takes various shapes, from charity walks where donors participate physically and financially, to larger donation programs companies and banks can fund to support the community (and benefit from a notoriety effect, it goes without saying).
The social entrepreneurship potential of this organization is huge!
Social entrepreneurs need a business model.
It goes without saying, but the above implies that social entrepreneurs like normal entrepreneurs must think in terms of business models before anything can happen. Their social entrepreneurship potential depends on it!
Acting takes effort, time, people and money, which means the organization has to find a way to pay for the expenses.
Some will rely on donations. Others will rely on business operations and will allocate profits to the funding of the cause instead of paying dividends to shareholders.
Either way, being able to run the operations in a sustainable way takes some strategic thinking and whether you are an entrepreneur, or a social entrepreneur makes no difference. That’s called business modelling.
Social entrepreneurs need to make profit.
I used the word profit a few lines above, in case you haven’t noticed.
I did that on purpose, because in my experience the term is often problematic. Especially for those social entrepreneurs who do things to change the world (and society) and believe that profits paid to shareholders are a curse.
Except that the issue isn’t profits. It’s what you decide to do with them. And that’s precisely where your social entrepreneurship potential lies.
Again, social enterprises require walls and desks, and they depend on people to run the operations professionally. They therefore have to pay for those costs (basic costs, really), which means they need to generate an income that is significant enough to cover the baseline.
Is that enough? No, it’s not, because generating an income that just covers the baseline means there is no extra cash available to fund your development.
You can’t invest in larger buildings.
You can’t hire more people (and be attractive about it).
You can’t fund any marketing investments.
You can’t keep money aside for darker days.
To fund whatever development-related initiative, you will need extra money, which is where profit comes into action. That means profit is your gas power reserve, but it doesn’t make the word ‘profit’ a dirty one.
To get there, however, you need to think in terms of business modelling. You need to consider what money has to go out in order to deliver on your promise, and you need to find ways to make at least as much money come in to make it work, plus your investment capacity-building power (aka the profit on your operations).
There is one alternative if you don’t like the profit-based model I just described: it’s called being a charity (or maybe a foundation?) and it depends on donations rather than on profits. It still requires a kick-ass value proposition, a USP, and a relevant offer your donors will find relevant and attractive.
3 tips to boost your social entrepreneurship potential.
You got the point, no need to expand more on the logic. Still, here’s a couple of tips (three, actually) you can use to get your social entrepreneurship potential to the next level.
1. Don’t get carried away with the ‘social’ tag
Again, social entrepreneurship in itself is not a value proposition. It describes a mindset and a principle-based approach to entrepreneurship where the profits are invested in the cause instead of being paid to the shareholders.
So, don’t get carried away by your ‘social’ tag because it won’t help you turn your social entrepreneurship potential into a success reality.
Instead, push your value proposition and your USP further. And build an offer people want to sign-up and pay for. That’s the core part of any enterprise, the social aspect will be an add-on to that.
2. Keep boosting your entrepreneurial skills
Second, keep boosting your entrepreneurial, management and financial skills. Whether your cash comes from selling a product/service or from donations, your job is to make the model viable and sustainable.
That means one thing: while holding on to your social principles as hard as you can is super important, your job is to keep the organization going.
That implies keeping an eye on the cashflow. That implies thinking in terms of hiring and investment capacity-building. And that implies thinking in terms of business planning in general.
Boosting your entrepreneurial, management and financial skills is beyond essential!
3. Surround yourself
Third, surround yourself with a variety of people – social entrepreneurs with a social focus first, but also business and profitability-focused people who can keep your attention sharp as far as the business side of your social enterprise is concerned.
That could be a committed accountant, a smart CFO, entrepreneur mentors, and of course a business coach with a social commitment. Book a call with a business coach on the Impactified platform and get yourself the push you need to bring your social entrepreneurship potential to its best!
