As the founder of a social enterprise, I have found there still seems to be some confusion about what exactly a social enterprise is. Many individuals often confuse social enterprise with a non-profit organisation.
So what exactly is a social enterprise?
According to The Centre for Social Enterprise:
“A social enterprise is a revenue-generating business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community, rather than being driven by the need to deliver profit to shareholders and owners.”
Contrary to popular belief, social enterprises are not a new phenomena. In fact, this type of business has been around for ages, but it’s only in recent times that it has acquired the name it is currently known by. Back in the day, social enterprises were known as ‘cooperatives’ in the UK or ‘philanthropic organisations’ in the United States .
Over the last decade, social enterprises have gained some traction in the marketplace, partly fuelled by the success of similar ventures. Here are a few reasons why Social Enterprises (SEs) are on the rise.
Baby boomers scarcity mentality
One of the main reasons why social enterprises are taking off is partly due to the scarcity mentality of the baby boomers during the 80’s. These individuals’ fear of not having enough created a deep desire within them to create wealth and hang on to it at all costs. Back then, corporates were only interested in profit and so the planet suffered, people suffered. That’s why many corporations have gone now or are experiencing great hardship. This has cleared the way for altruistic entrepreneurs with a drive to promote change in society. It’s not longer all about the money.
The need to connect
Humans have an innate need to connect with each other and this fact is becoming more evident with the continuous upsurge of social enterprises not just in Australia, but the rest of the world. Sociological studies have proven that social connection improves one’s psychological health and physical well being. In fact, one study showed that social connection strengthens the immune system and increases the chances of longevity by 50 per cent.
Is it then any wonder that more and more entrepreneurs are yielding to the call of connecting and helping humanity and society in general?
The massive impact
On a world wide scale, social enterprises employ up to six percent of the working population and contribute to GDP in the region of hundreds of billions. In Britain, SEs contribute more than £24 billion to the economy and employ approximately one million people. In the USA, these enterprises employ more than 10 million people and account for more that $500 billion in revenue.
According to a 2010 report published by Findings Australia Social Enterprises Sector (FASEs), there were approximately 20,000 social enterprises in Australia which employed approximately 56,000 people. There is, however, no doubt that the number has grown since that time and the economic impact has strengthened.
The multi-billionaire’s tip
There’s an old adage that says, “Love only grows by sharing. You can only have more for yourself if you give it way to others.” This year, multi-billionaire entrepreneur and CEO of Virgin Atlantic, Sir Richard Branson, dished out some advice to fellow entrepreneurs. Branson said that entrepreneurs should “not focus too much on money”. He added that only businesses with a purpose beyond profit will succeed. This one tip may have contributed to the increase of social enterprises and even renewed the zeal of entrepreneurs to do more to benefit society.
More successful than SMEs
Although making a profit is not the primary objective of social enterprises, there are staggering statistics to prove that starting a social enterprise is much more profitable than a Small or Medium-Sized Enterprises (SME). A survey conducted in the UK showed that 38 per cent of social enterprises experienced an increase in turnover compared to 29 per cent of small and medium sized enterprises. This statistics give credence to Richard Branson’s statement that “only those businesses with a purpose beyond benefit will be successful.”
Businesses are getting back into the heart and soul
Famous children’s author, Charles Dickens said, “No one is useless in this world who lightens the burdens of another.” More and more businesses are getting back to the basics of helping society and its people. This can be attributed to the increasing dissatisfaction with just making a profit. Social enterprises, like my own, all over the world are helping to create change that is leading to positive outcomes for the less fortunate among us. In addition, people appreciate generosity and businesses who are charitable earn a lot of respect and support from consumers.
With the massive impact of social enterprises, there seems to be no end to their continuous growth. And who would want to stifle such a movement that is generating good will and giving purpose to so many people? I, for one, will never stop trying to make a difference to those who need it most through my own businesses and hope to see the rise in SEs continue.
Do you know of other inspiring social enterprise – share them with us in the comments below!
Kathy Wong, founder of Soul Republic and Moeloco, has a burning passion to inspire a community of individuals, encourage them to hope, to live their dreams, to create change and take meaningful action in the world around them. After many years running her own highly successful design business, Kathy felt unfulfilled and knew that she needed to reassess her daily work and life.
Through her social enterprise, Moeloco, Kathy is not just inspiring others to make a difference in the world, she is facilitating it through her ‘buy one, give one’ business model. Every product sold by Moeloco directly benefits a child in need through the Hope Foundation. Visit www.moeloco.com for more details and inspiration.