In my first article, we learned about what social enterprises were and highlighted some I admired. The second article focused more on the impact social enterprises make. This is the third and last article of the series and I’ll explore if social enterprises are to stay or are they just an entrepreneur trend.
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Are social enterprises here to stay?
I want to start with a quote from the movie Poverty.Inc.1
“People have the internal capacity to rise out of poverty. But they do so only when they have certain key things, many of us take for granted: like legal protection from theft and violence, justice in the courts, the ability to get titles to ones land, freedom to start and register a business, and links to wider circles of exchange. The difficulty is that this ladder to prosperity is missing in many places around the world and the current system creates incentives for governments not to build these ladders.”
This quote is very powerful to me because it shifts thinking. It highlights elements beyond our personal control which we take for granted. Yet these elements have a massive impact on our independence, development and prosperity. When you approach poverty and social causes from this angle, it is clear that we need to change our approach.
Instead of donating free goods or services, making people dependent, we need to focus on creating partnerships and opportunities to encourage people to be independent. Nobody grows or comes out of poverty when they are dependent. By giving them tools, networks and funding to create something, they can support themselves and others around them. This has the ability to create a positive ripple effect.
How can we launch initiatives that support this?
Can we give people in developing countries education, connections and networks to grow and establish themselves? How do we create successful partnerships? Entrepreneurialism and education are an important way forward for this and that’s why I think social enterprises are here to stay. This doesn’t mean there won’t be any challenges along the way.
Challenges for the social model
One of the biggest challenges for social enterprises is that the novelty has worn off.2 Ten years ago it was a new story and a new angle to promote your product by attaching a social cause to it. That novelty is gone. It is, of course, still a good story and one to be shared, but it won’t attract the same amount of attention as it used to. It also appears that people don’t buy for a social cause to start with.
Daniel from Thankyou.™ once mentioned that he used to think, if his products were the same as the competition3, people would buy his repeatedly because it had a better cause attached to it. This appears not to be the case. To get commitment and loyalty, the product must be better than the competition. Having a better product where the consumer discovers that profits go to a good cause will drive brand loyalty. However, just like with any other brand, you have to win consumers on product first.
…just like with any other brand, you have to win consumers on product first.
With the popularity of this model, there are, unfortunately, negative side-effects.4 Companies have used a social cause or the buy-one-give-one model as a means to improve their own profits but have not donated (all) funds as promised or have not supporting the cause they highlighted. Consumers who have had a bad experience like this might be cautious and unwilling to support another company with a social cause.
While discouraging in some ways, I think these challenges show that the model is maturing. With that, they can improve for the better. By evolving the model we will learn more and faster how best to support and contribute where needed.
Look at the examples from my first article, TOMS and Thankyou.™, they’ve been around for many years now and keep developing and changing their way of support. Do they still make mistakes? Perhaps. But they listened and improved where possible, because they want to make the biggest impact they can.
Make social enterprises a positive force
I think social enterprises might have started as a trend, but they’ve also proven they can make a positive impact. Many people launch their own business and are looking for a bigger purpose in life, it’s a natural development to try to merge them. The question is how to do this best.
As with anything, I would say it’s important to do your homework. Investigate what you want to accomplish and look, in detail, at what exactly you will support. Make sure any and all partners you work with or support, have the same values and objectives as you. Look into the following questions to make sure you want to stand by the answers.5
- Do you give away products or services for free that will potentially take away business from local enterprises?
- Will the support you give create jobs or partnerships for local businesses?
- Does your support encourage new businesses to launch?
- Do you offer connections or a network to local businesses to expand their market?
- Do you provide easy accessible funds for loans of expansions?
Lastly, when launching your business and attaching a social cause to it, basic business principles still apply. You win people over with your product or service first.3&5
- Quality of your product or service is at least similar, but preferably better than the competition
- Authenticity of your connection with the cause you support is crucial
- Transparency of distribution of funds is essential to build trust
I’m excited to have started my social enterprise journey to contribute where I can and share my experiences with you. If you want to make a difference, just get started. What social cause do you care about and how can you contribute in that field? All you have to do is take the first step.
To find out more about Karin and her business EATSingapore, read 12 Fantastic Restaurants in One EATSingapore Keepsake Book.
The views and opinions expressed in this article are of the author and do not necessarily reflect the view of vanillabeige.com or its founders. Assumptions and reviews of companies discussed in this article are based on open source information only. This article tries in no means to have an answer for the complex questions of what impact social enterprises have or how governments/NGO’s/aid-agencies/social enterprises should be run – it’s merely an attempt to understand it better and share this with others.
Images have been sourced from stocksnap.io unless otherwise credited.