Our work as business and performance coaches has led us to work with all sorts of entrepreneurial people, including traditional entrepreneurs, social entrepreneurs, and world-impacting charity CEOs (who often see themselves as entrepreneurs).
Yet, our discussions have led us to conclude that the definition of social entrepreneurship isn’t that obvious and that it has a surprising impact on many conversations.
Long things short? While traditional entrepreneurs tend to see themselves as problem-solvers and money-makers, social entrepreneurs have different ways to describe their role.
Some see themselves as typical entrepreneurs fueled by a social mission. Others see themselves as being a lot more than entrepreneurs. And some go as far as saying that their mission makes the term “entrepreneur” inapplicable to them because, well, they are nothing less than visionary game-changers who thus can’t be compared to money-focused entrepreneurs.
Interestingly, however, most agree with the idea that they have entrepreneurial minds, hence the previous distinction is often troubling. In particular, it raises questions as to what the social entrepreneurship concept should, or should not be about.
So, what is social entrepreneurship doing that classic entrepreneurship doesn’t do? And how can you make the most of your skills if you see your business as a social entrepreneurship kind of business? Let’s clarify.
First: Entrepreneurship Definition
The starting point, naturally, is to give a definition of Entrepreneurship. In a previous article (see What is an Entrepreneur?), we defined an entrepreneur as someone with an entrepreneurial mindset, who wants to make a difference for themselves and for others by building a viable business model around a team.
Some will operate capital-intensive activities, but others won’t.
Some will see themselves as startup owners or as small business owners.
And some will identify themselves as social entrepreneurs.
Next: Social entrepreneurship definition
From a pure semantic standpoint, social entrepreneurship therefore brings a social aspect to entrepreneurs’ problem-solving skills.
Indeed, social entrepreneurs often describe themselves as people on a mission to create change, whether that change is social, societal or environmental.
To them, the point is not to just run a business for money-making purposes, it is to leverage capital, people, and technology to make a difference out there.
As far as social entrepreneurship is concerned, generating profit isn’t the goal, but helping communities in their daily lives or creating a lasting positive impact on the world are.
To that extent, a business can be ethical and serve people instead of merely creating a zero-sum value that pollutes, destroys, and dooms society.
What is a social enterprise?
What is a social enterprise then? Well, in a nutshell, social enterprises are the business materialization of social entrepreneurship initiatives.
In line with the above, they are enterprises (as in, legal structures) that have a mission to create social and environmental good.
This doesn’t mean that social enterprises and social entrepreneurs don’t generate innovative ideas, new products, revenues and profits, economic growth or economic development, however!
This idea is very common but it is a misconception and, in fact, it is probably the reason why the topic sometimes seems so complicated (not to say controversial).
Social enterprises (like normal businesses) depend on their ability to build viable business models and to create sustainable income streams. Without these, they wouldn’t be able to afford their premises or to pay their staff and invest for the benefit of their cause. Right?
The difference is this one: while in a typical business the point is to generate as much profit as possible for the shareholders, social enterprises rather focus on generating profit that will be used to pay teams, and that will be reinvested fully or partially, into the mission to solve a real social problem.
In case you have a problem with the very notion of profit, then look at charities instead. Indeed, these are not allowed to redistribute any profit whatsoever, and might this be a relevant alternative.
They act as social enterprises because they need an economic model, yet their purpose is only to serve and profit isn’t a part of their vocabulary so all the money made is brought back into the mission.
In short, a social enterprise is:
- A business structure that turns social entrepreneurship into a concrete and positive impact by reinvesting profits into the cause it defends
- An organization that aims to leverage the power of viable business model creation to create sustainable solutions for people and the environment
Social entrepreneurship examples
Looking for social entrepreneurship examples? Simply look around you.
Perhaps your local coffee shop is one of those organizations that hire people with a handicap or gives a second chance to those who were excluded from society, for one reason or another.
Perhaps your previous employers donated money to a green organization that plants trees on their behalf, to compensate for their CO2 emissions.
Perhaps you donated money yourself to an organization that builds solar panels in Africa, to support one community or another.
And of course, your fair trade tea and coffee bags are also produced by social enterprises whose goal is to redistribute profits and turn international trade into an engine for human and environmental change.
The common point between these enterprises is this one: in each of those social entrepreneurship examples, profit is healthy because a viable business model creates a form of financial sustainability which in turn generates a positive and long-lasting impact on society.
Economic models are as important for traditional businesses as they are for social enterprises, in sum.
Some social entrepreneurship examples:
- Humanitarian enterprises made possible by a viable business model
- Fairtrade initiatives committed to redistributing profits to those who produce the food
- Environment protection initiatives leveraging market opportunities to fund CO2 compensation schemes
What is social entrepreneurship doing that classic entrepreneurship doesn’t do?
So, what is social entrepreneurship doing that classic entrepreneurship doesn’t do? Well, impact, of course.
On the one hand, the entrepreneurial aspect of a social enterprise allows it to leverage market powers and business strategy. On the other hand, generating a profit unlocks resources that can be made available to fund progress without relying on charity donations.
In the end, the difference between traditional entrepreneurship and social entrepreneurship is therefore that while in the former, profit is an endless target, in the latter it is mostly a means to an end – fair distribution fuels investments while making a difference in the field.
Last point here – corporate social responsibility is a trend aimed at showing how businesses do good out there. Still, in many cases, the initiative is mostly a facade type of management program and should not be interpreted as social entrepreneurship.
Just because a company wants to look socially responsible and environment-friendly doesn’t make it a social or environmental actor committed to creating positive change, and it certainly doesn’t make it a social business either.
Social entrepreneurship definition:
Overall, the definition of social entrepreneurship is threefold:
- Social entrepreneurship involves developing new ideas to create social change and solve environmental problems
- Social entrepreneurship leverages capital, people, and technology – like any other business venture
- However, social entrepreneurs reject the idea of purely speculative and zero-sum value business
- And, overall, it depends on social entrepreneurs’ ability to build viable business models that bring financial sustainability to the equation.
What is a social entrepreneur?
Even though we explained the notion of social enterprises earlier, let us finish with a brief comment on what is a social entrepreneur, and on what it takes to be a successful social entrepreneur.
From a pure business perspective, entrepreneurs are characterized by their ability to solve problems, and of course by their ability to build sustainable business models around the solutions they create.
Logically, social entrepreneurs are therefore very similar to this definition. Their success depends on the same factors as any other entrepreneur, BUT their main driver isn’t money – it is to make an impact on the world and use money-making to that very end.
Social entrepreneur definition:
A social entrepreneur is an entrepreneur who…
- Knows how to identify problems and come up with solutions
- Knows how to create viable and sustainable business models capable of turning those solutions into durable change-makers.
How to maximize your potential as a social entrepreneur?
Now as far as maximizing your impact potential as a social entrepreneur is concerned, we have four suggestions to make (and there’s more on our Accelerated MBA blog, of course).
One, find out what your absolute superpower is. Beyond merely identifying the environmental and social issues you want to tackle, figure out what you will be excellent at doing. Make sure that you find a cause that gives you a vision you can rely on for the next ten years, and use that to put yourself on a clearly formulated mission people will remember and broadcast.
Two, don’t get too excited about the semantic differences that sometimes push social entrepreneurs to see themselves as being better than traditional entrepreneurs. Focus on the social part of the job title if you want to, but see the first part of it as a skillet you need to leverage and embrace it.
Three, well, make sure that your entrepreneurial skillset is at its top level. Invest in yourself, spend time on building a robust and viable business model that can generate sustainable cash flows and profits you can use to serve your client the best you can. There can be no impact with a properly fuelled engine.
Four, surround yourself with people who can challenge your thoughts and get you a step further with each and every discussion. Booking a performance coaching session can help!
Four ways to maximize your potential as a social entrepreneur?
- Learn about your ultimate superpower and turn it into a vision and a mission
- Embrace the entrepreneurial spirit of social entrepreneurship
- Create the engine you need to fuel your social impact (business model, cash-flow predictions, business plan, etc.)
- Surround yourself with people who can challenge you with every new discussion
Takeaway: social entrepreneurs reinforces the general concept of entrepreneurship
To wrap up, and against the controversial idea that entrepreneurs and social entrepreneurs are distinct beasts, we at Impactified, believe that social or not, an entrepreneur is a visionary individual on a mission to solve a problem, with means they fight very hard to obtain.
Sometimes the outcome is business, sometimes the outcome is social and environmental. Still, in essence, entrepreneurs and social entrepreneurs share a common entrepreneurial mindset: they want to solve problems and create durable and sustainable value.
And you, what difference do you make?
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