What is Social Enterprise?

pexels-photo-27406Social enterprise is a great sector for people who want to make a difference in the world while also generating revenue. Social enterprise is a popular type of business, but there is a lot of debate over the exact definition of social enterprise.

 

Social enterprise is a revenue-generating process that has two goals. One of the these goals is to achieve social, community, cultural, economic or environmental outcomes, and the other is to earn revenue. A social enterprise can be operated by a non-profit organization or a for-profit company.

 

Many social enterprises look and operate in the same way traditional businesses do. However, there is one key difference that is below the surface. Social enterprises have a social mission at the core of their business, and generating revenue plays a strong supporting role. Essentially, a social enterprise works first to make change in the world and second to generate income.

 

Like any business, a social enterprise requires capital. The investment of capital can come from a number of motivations. Often, the motivation for investors is the desire to create this social or environmental change. In the case of a for-profit organization, the motivation is usually to generate a financial return on one’s investment.

 

Typically in a social enterprise, financial investors do not simply invest just because of what they will gain. They want to invest for some sort of movement for the common good of society. Investors will in turn get financial benefits, but in many cases their objective is more than simply to generate money.

 

So how exactly does a social enterprise work? To understand how a social enterprise is unique, we need to first look at the conventional for-profit and non-profit business model and then compare them to social enterprise.

 

In a for-profit organization, investments go into a company and the company delivers a product or service to the market. Revenue is generated from sales, and investments are extracted. The greatest financial benefit possible is generated from the business. In a conventional non-profit, capital is invested and the business operates in order to create some kind of social good. If the funding stops, so does the work to help the community. A social enterprise differs from this because a revenue is generated and this revenue helps to sustain the enterprise. The original investment of capital is withdrawn and can then be used to expand the operations of the business or to fund other social enterprises.

 

A social enterprise is a system that helps a company sustain itself while also fixing a problem in one’s community or society. Overall, social enterprise is a brilliant way to ensure that a company can stay on its feet and provide a top notch service while also making a difference in the world.