 :: A social enterprise is not a charity. There is a clear distinction and it’s one that social entrepreneurs take incredibly seriously. Social enterprises are defined as ‘businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community, rather than being driven by the need to maximise profit for shareholders and owners’.
In other words, a social enterprise is a business that makes its money in a socially responsible way. These ventures are not necessarily formed to reinvest all profits into the communities. Social entrepreneurs can make a tidy profit themselves, but the point is, their business models also benefit others. Famous social enterprises include The Body Shop - Anita Roddick, The Big issue - John Bird, Fifteen - Jamie Oliver, FruityFaces - Paige Allen and responsibletravel.com – Justin Francis.
These companies complete alongside other businesses in the same marketplace but use business principles to achieve social aims. Social enterprises prove that having a social and environmental conscience can go hand-in-hand with achieving financial success.
A few things all social enterprises have in common are:
• They are directly involved in producing goods or providing services
• They have social aims and ethical values
• They are self-sustaining and do not rely on donations to survive
Social entrepreneurs have a vision of strong social purpose combined with entrepreneurial drive. They focus on robust businesses that can be highly responsive to customers and compete in the marketplace – but driven by a public service ethos and a cast-iron commitment to social goals. They believe that there is significant opportunity to boost not only society, but also the economy, through the social enterprise approach.
Speaking at the 2008 Social Enterprise conference, British Prime Minister Gordon Brown said:
“In the past, the objective for any country – and any government – was twofold: building social cohesion and achieving economic growth. Today, there is a trinity of aims: fairness, prosperity and environmental care.
“If economies are to flourish, if communities are to become more closely knit, and if we are to take care of the natural environment and the resources on which economic activity depends, we must find new and more equitable ways of doing business that are better suited to the times we live in now.”
So there you have it. Social enterprise is the business structure that will allow success to stand side-by-side with ethical purpose. Simply put, a better way of doing business and one that must flourish for the good of society.
••• Generating a profit
The purpose of a social enterprise is to make money, which in turn, can benefit areas of society. As a social entrepreneur, you may choose to reinvest all the business’ profits back into the venture. This is where the not-for-profit tag comes in, but it’s a misleading term. Not-for-profit doesn’t mean profits aren’t made; they’re just not made for the benefit of the company directors.
However, even if you choose to withdraw some of the profits for financial gain, as long as the primary objective of the business is to benefit a social group, it can still be classed as a social enterprise.
Striving towards making a sustainable and increasable profit should influence every aspect of a social enterprise, even if it’s not the overriding priority or purpose of the venture. Social enterprises have a strong future but they need the financial stability to back them up. Relying on donations is not an option.
Social enterprise has really come into its own over the last decade or so. The average social enterprise employs 10 people but nearly half employ fewer than 10, 38 per cent employ between 10 and 49, 11 per cent have 50-249 employees and two per cent employ more than 250. Traditionally, sole traders are few and far between in the social enterprise community. Location-wise, the vast majority of social enterprises are located in urban areas.
Most social enterprises operate in the health and social care sector - around 33 per cent. This is mostly related to day-care, childcare, welfare and guidance, as well as accommodation services.
However, a big growth area for trading social enterprises has been the rising popularity of FairTrade products – the biggest example of which is coffee company, Café Direct.
There are now more than 3,400 FairTrade retail and catering products available and the industry as a whole grew by 81 per cent between 2006 and 2007. :: |
