A social enterprise is an organization that operates like a business but with two notable exceptions: Its goal is to make improvements to human or environmental well-being, and instead of generating profits for shareholders, execs reinvest their profits in the business to further this social goal. A social enterprise can either be a for-profit or nonprofit organization, and according to 2012's Great Social Enterprise Census, there's a pretty even mix of the two types in the U.S. If you're thinking of launching a social enterprise, learn about the specific aspects of this type of business. We have five tips for aspiring entrepreneurs with a social conscience:
Focus on Your Mission
Don't slap the "social enterprise" label on your business because of its buzz-worthiness. Take the time to fully understand what it means. You aren't doing business as usual and then donating a percentage of the profits to a charitable cause—that's just corporate philanthropy. A true social enterprise adopts social and environmental initiatives as its primary mission, and then figures out how to contribute to those with a sustainable monetary enterprise.
Hire Flexible Staff With an Entrepreneurial Spirit
Hiring talent for a social enterprise is a tricky thing. You need to convince would-be employees to trust you, invest their time and leave potentially better-paying jobs to support your cause. Look for people who can bring creativity and innovation to the workplace. You'll likely get a mix of nonprofit workers with passion and corporate veterans tired of pursuing the almighty dollar. Hire employees who can come up with a creative approach to solving a business dilemma, and you'll get the best of both sectors.
Get Used to Fundraising
In your first year, it's likely you won't be raising millions of dollars for your cause, but you can begin building a large donor circle. Start with family and friends, because these connections could lead you to community-builders and philanthropists who would be excited about your venture. The challenge will be to find people who want to make an immediate impact and then effectively demonstrate how their dollars could have a measurable impact on your cause.
If you're looking to generate initial seed money, consider these options:
- Take advantage of social investment funds to pool together various resources. A good place to start: The Nonprofit Finance Fund.
- Some foundations provide seed-stage and growth-stage grants that don't need to be paid back. Two to try: The Skoll Foundation and Ashoka.
- Sell future payments from an annuity or structured settlement for a lump sum of cash now. The industry leader: J.G. Wentworth.
Use the Media to Your Advantage
Positive media attention will help you gain support from potential donors, backers and community leaders. Don't try to launch a new business while developing media contacts and pitching story ideas at the same time. This is the time to
hire a public relations pro.
Measure Your Impact
Learn how to articulate your successes to supporters, funders and the general public. Detail associated costs, number of lives impacted and accomplishments in a way that highlights your social enterprise as a smart investment. Using these measures will help retain and grow your investment pool.
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Paul B
