Like the superheroes of the business world, social entrepreneurs find solutions to social problems by starting a new business solely with the intent of solving an issue facing society. Some people in social entrepreneurship have focused on bringing electricity to rural areas while others focus on finding new ways to educate girls in areas where women are traditionally underserved.
The sky is the limit when it comes to social entrepreneurship, which means you never know what type of new venture you’ll see cropping up next.
Whether you have a social cause you care about and want to create a business around, or are looking to get into social entrepreneurship any way you can, this guide can help you get started. We’ll provide a social entrepreneurship definition and social entrepreneurship examples, as well as walk you through some of the things you should consider before starting your new business.
What Is Social Entrepreneurship?
Simply put, social entrepreneurship is when an entrepreneur or a startup decides to create a business around solving or helping to solve a social, cultural, or environmental issue. These issues can be local or global, and the term social entrepreneurship can apply to a variety of businesses of different sizes and missions. You’ve likely come across social entrepreneurship whether you realized it or not. Here are some social entrepreneurship examples:
Social Entrepreneurship Examples
In addition to the social entrepreneurship examples mentioned above, some other examples include providing banking services to underserved areas, or bringing water to drought-stricken regions. A famous social entrepreneurship example is the shoes and accessories company TOMS, which started out as a company that donated a pair of shoes to a child in need for every pair bought through their site, and has since expanded their services to eyesight, water, and more. Another well-known social entrepreneurship example is charity:water, which delivers clean drinking water to various countries around the world who would otherwise not have access.
The social entrepreneurship definition may be simple, but becoming a social entrepreneur means setting out to tackle a complex problem. Social entrepreneurship itself can be difficult to successfully make a living by, and launching a social enterprise has some specific considerations you’ll want to consider. Here’s what you should keep in mind:
Social Entrepreneurship: How to Launch a Social Enterprise
Here are just some of the things for you to consider and decide on before starting your new social entrepreneurship.
Do Your Research
This is true for anyone starting a business, not just social entrepreneurship. Before you start a social enterprise, you’ll want to heavily research so you know exactly what you’re getting into. Learn more about the market to decide where there is the greatest need, and if you have the expertise to tackle it.
Research can include everything from reading news articles and books to conducting interviews, exploring neighborhoods, learning from other businesses similar to what you have in mind, and more.
Choose an Issue
Chances are good that if you’re involved in social entrepreneurship, you already have an issue in mind that you’re passionate about. This should be an obvious choice for you to form your social enterprise around. If you’re passionate about the work you’re doing, it will feel far less like actual work, and more like doing good and creating change.
Your initial research should have revealed whether there is an opportunity for you to enter the market, as well as what other businesses exist in the space, if any. You’ll want to make sure that whatever issue you do choose to combat, you can access resources and people to help you gain insight that you might not have from your point of view.
Do your due diligence and speak to those who you’re hoping to help, those already working in the industry, and others who want to get involved. In other words, do more research—this time about the specific need you want to serve. Keep in mind you won’t be able to do it all on your own, you’ll need to find other people to help you run your business, which may mean hiring other employees or consultants.
Choose a Business Entity
Social entrepreneurship, while noble, is still a business at the end of the day. And as such, you will have to follow the same procedures to set up your social enterprise as any other business. It may not be fun, but it will be necessary to conduct your business legally and effectively. One of your first orders of business will be to choose which business entity you’ll use to structure your business. There are a number of business entities out there to choose from. Social entrepreneurship will often lead to structuring your business as a nonprofit, which is a corporation formed primarily to benefit the public interest rather than earn a profit. However, everyone’s needs are different, and your business entity will have legal and financial implications, so it’s important to choose the most advantageous one for your circumstances.
There are certain benefits that come with each entity, and some are better suited for social entrepreneurship. For example, if you want to have a business partner, you might choose to start your business as a limited liability partnership, or maybe a limited liability company if you want to minimize your risk exposure. You should consider consulting a business attorney if you’re unsure which business entity to choose, or to ensure you’re choosing the best one possible.
Create a Business Plan
Social entrepreneurship may start with a dream, but you’ll need to articulate those grand ideas into a formal business plan to officially start a company. The research you did when deciding on what kind of social enterprise to launch will come in handy when writing a business plan, but you’ll also want to include more specifics, such as a company overview, market analysis, a marketing plan, and a financial plan and projections. Make sure you have a grasp on the issue you’re hoping to help fix, and that you have a clear plan and vision for how you will help, because you will need to clearly spell this out in your business plan if you want to convince others (and yourself) that this is a viable business venture.
Your business plan should also include details like your business entity, so getting this squared away beforehand is crucial. Your social entrepreneurship business plan—besides serving as a helpful guide for yourself as you start this endeavor—will also be a requirement from potential investors if you seek funding (more on that below), as well as potential partners. If you’re not sure how to best organize your ideas, business plan software or a business plan template can help make the process as seamless as possible.
Of course, when you are trying to tackle an important societal issue, you need funding. And because your ideal customer for your social entrepreneurship initiative may not be affluent, then you often have to turn to other funding sources to get your venture off the ground and probably to keep it going, as well. Keep in mind, the business entity you choose might impact what type of funding you are eligible for.
There are plenty of places you can turn to find funding for your new venture. Here are just a few of your options:
- Crowdfunding – Crowdfunding has become a popular buzzword lately, with funding campaigns for projects like bringing back the popular kid’s show Reading Rainbow making national headlines. But crowdfunding is also a way social entrepreneurs can raise money from friends, family, colleagues, and virtual strangers. The upside to crowdfunding is that the amount of potential lenders is limitless. The downside is that unless your business is very novel or can grab headlines, you have a small chance of raising significant amounts of money. And many crowdfunding platforms will return donations if your campaign doesn’t raise the full amount you initially asked for. One key to crowdfunding is to generate buzz by making your pitch interesting, unique, or heartwarming. Try posting a video showing some of the people your social venture will help. If you’re interested in crowdfunding as a way to raise money for your business, check out the granddaddy of all crowdfunding platforms – Kickstarter, or look into more targeted platforms like StartSomeGood or Fundly.
- Foundations dedicated to social entrepreneurship – Because social entrepreneurship businesses are out for social good, they may qualify for grants and other funding that you often hear about going toward nonprofits. Start at the Foundation Center’s website to learn about specific grants your business may qualify for. Do keep in mind that grant writing can be an involved and in-depth process. The Skoll Foundation is so dedicated to identifying and cultivating social entrepreneurs that they even host the annual “Skoll Awards” for social entrepreneurship. Check out their website to find out if you qualify for funding. There are also grants out there for all types of different businesses and business owners, like small business grants for women.
- Traditional business and non-bank loans – While social entrepreneurship may qualify your business for nonprofit funding because of its social aspect, it is still a business at the end of the day, which means you can also apply for more traditional forms of business funding. Even if you are a social entrepreneur, don’t discount business bank loans, merchant cash advance loans, and other forms of small business fundraising that more traditional for-profit businesses rely on. Additionally, you may look into finding investors for your business if traditional bank loans aren’t the right fit. And if you do structure your social enterprise as a nonprofit, you may also want to look into a nonprofit business credit card.
Social Entrepreneurship: The Bottom Line
All of the steps listed above are important for you to figure out when starting your new social entrepreneurship, but it’s hardly where the to-do list ends.
There are plenty of more steps for you to complete as there would be with any new business. You’ll have to register your company to pay taxes (unless your business is a nonprofit, which will be tax-exempt), get any licenses or permits, hire your first employees, get insurance, and so much more.
But after completing the steps above, you’ll at least have a solid plan and foundation to rely on while taking all of the other steps to create more good in the world. No social entrepreneurship started out as a giant, and it will take time to gain momentum and get your bearings, but remember why you started and how many people you’re helping and you’ll be reinvigorated to keep your social enterprise going.