The Path to Social Change: Social Entrepreneurship
Social Entrepreneurship 101
Social entrepreneurship has become a hot topic. But what exactly is it?
Unlike the typical business entrepreneur, who is often motivated by profit and growth, social entrepreneurs prioritize doing good. They seek to change the world in their own unique way. Here’s how they do it:..
1. Identify a Problem
Identifying and fully understanding the problem you wish to solve is essential. Many social entrepreneurs utilize a variety of techniques to encourage discussion and generate insights that can help them develop effective solutions. Oftentimes, they will ask individuals to complete activities such as problem tree analysis and other forms of group brainstorming.
Using these tools can help them find ways to resolve a particular problem that have not yet been addressed by the market. For example, a social entrepreneur may want to help people in developing countries with limited access to clean drinking water by providing them with solar pumps so they can harvest their own water for the family and their livestock.
Other examples of social entrepreneurship might include the creation of mobile apps that let individuals report issues like burst pipes, power lines down or patterns of traffic accidents to city officials. This type of social entrepreneurship combines the passion of a charity with a business model for maximum impact and success.
2. Design a Response
Social entrepreneurs prioritize societal impact over financial profit, creating unique solutions to address social problems that may not fit into the traditional structures of government or business. They use innovative approaches to create transformative products and services that can be used by a variety of people, leveraging technologies like mobile apps and conscious consumerism.
For example, the renowned outdoor apparel brand Patagonia was founded by Yvon Chouinard to protect the environment. By designing eco-friendly materials, minimizing waste, and supporting environmental initiatives, the company promotes sustainable practices in its own operations as well as in those it reaches out to.
While some social enterprises focus exclusively on creating transformative products and services, others are more hybrid. The social enterprise Little Sun, for instance, created solar-powered lamps to be sold in areas without access to electricity. The company then donates a portion of the proceeds back to communities in need. This helps to balance revenue and mission goals and is a good example of the moral empathy that many social entrepreneurs display.
3. Create a Business Plan
As with any other business, social entrepreneurs need a plan that shows how they are going to make money. The financial plan should detail how much it will cost to develop, start up, and offer services or products and what revenue they expect from these activities. It should also clearly state how much money they will need to break even and become financially sustainable.
In addition to the above, the plan should include an analysis of any regulations and licensing requirements. This includes environmental, labor, and taxation laws.
The social enterprise should also highlight how its products and services have a positive impact on society or the environment. This could be in the form of a story or examples, such as Patagonia’s commitment to eco-friendly materials or Solar Sister’s mission to empower women entrepreneurs through selling solar powered appliances. This may also be a part of the marketing strategy. Alternatively, the social enterprise can create a program called “1% for the Planet” to donate a percentage of its profits to environmental organizations.
4. Find Funding
For social entrepreneurs, finding funding is often a difficult task. It can be challenging to find investors that are willing to take on the risk of backing a business with a double bottom line.
One way that social entrepreneurs can help to lower the barrier of entry for potential investors is by demonstrating their business model’s impact and financial sustainability. This will give them the credibility and trust to attract more upfront investors.
It’s also important for social entrepreneurs to identify the people they want their venture to benefit and focus on the most urgent needs. This helps to narrow down the target market and can lead to more focused marketing efforts.
For example, TOMS shoes is a mission-driven company that gives away 1/3 of their profits to support community development. They have helped provide eye care, water purification and other necessities to people in need around the world. TOMS is just one of many examples of companies that are creating change through the marketplace.