Social Enterprise is an increasingly popular form of business across the EU.
However, what is meant by the term ‘Social Enterprise’ and how it differs from regular business sometimes isn’t so clear. This article will help to clarify what social enterprises are and what separates them from other forms of business.
The key contents of this article include:
- What do Social Enterprises look like?
- What forms of Business can a Social Enterprise undertake?
What do Social Enterprises look like?
Social enterprises come in:
– All shapes and sizes
– Are set up and operated by a diversity of people irrespective of gender, religion, ethnicity,
sexual orientation, age
– Sell a variety of products and services
What forms of business can Social Enterprises take?
Social enterprises can be almost any type of business:
As you can see, some social enterprises deliver ‘social services’ – education, health care, care for the elderly, care for the disabled, environmental protection etc. and these are paid for by the customer.
However, other social enterprises might deliver public services e.g. they take contracts directly from the government and are paid by the government.
The fastest expanding type of social enterprise is one that trades in the market and uses their profit to do good and to make a difference rather than to use their profit to pay shareholders.
What is a Social Enterprise?
Now that we have covered what is meant by social enterprise, we will now examine in more detail the two key characteristics that define social enterprise, the Enterprise and Social elements.
Let us start with the words ‘enterprise’. Enterprise is another word for business. Business is activities that are related to trading and commerce. When you see the word ‘enterprise’, think business.
The aim of a business and enterprise is very simple:
- To sell services and products for more than it costs you to make them and in this way you
- make a profit i.e. you buy and sell and try to bring in more money than you spend.
- Well known global businesses include: McDonalds, Coca Cola, Apple, Google, Jaguar-Land
- Rover, however 86% of businesses are micro-businesses employing ten or fewer workers
- These can include things such as local shops, cafes, bars, app designers, musicians, fitness instructors and accountants.
If we now turn to the word ‘social’. This refers to activities such as:
- Spending a percentage of profit on good causes e.g. clean water supplies, literacy programmes
- Reinvesting profit in the local community for the benefit of the local community
- Reinvesting profit in your business so it grows and becomes sustainable
- Working to improve disadvantaged/marginalized people’s lives e.g. unemployed, disabled, refugees
- Buying, selling and operating a business ethically
- Transparent business, open
- Employing disadvantaged/marginalized people or locating your business in a disadvantaged area and employing local people
- Buy local, employ local, reinvest local
- Doing good for people, the community and the environment.
So, in simple terms, if we bring the two words together, ‘business or enterprise’ and ‘social’ we achieve a definition of social enterprise:
A. A social enterprise is a revenue-generating business with a twist. It has two goals: to achieve social, cultural, community economic and/or environmental outcomes; and, to earn revenue.
B. A social enterprise applies commercial strategies to maximize improvements in human and environmental well-being.
C. A social enterprise’s mission is at the center of business, with income generation as the means to achieve and support the mission.