Social entrepreneurs seek to provide practical, sustainable approaches to problems in society through their businesses. There are plenty of ways to do it – donating part of profits like Tom’s Shoes or employing disadvantaged workers like Snowday, for example. It’s also common for social enterprises to focus on giving back to the local communities in which they work. These businesses seek to make a profit, but their business models are also focused on helping to create social change.
Case Study: Stewards Market, SOAP
An excellent example of social entrepreneurship is the company started by former baseball player-turned stockbroker-turned entrepreneur, Rowan Richards. Richards founded the Chicago-based non-profit Stewards Market to deal with pressing social issues. At Accion, we have the pleasure of working with Stewards Market and assisting them as they develop new social enterprises in the area. According to Richards, “We’re trying to provide what we truly believe is a legitimate solution of training that will lead to employment, and the big picture is actual ownership.”
Stewards Market partners with local schools and entrepreneurs to help start new social enterprises. For example, Stewards Market is the birthplace of Sustainable Operations And Advocacy Partners (SOAP). SOAP collects liquid toiletries (like soap and shampoo) from local hotels and recycles both the plastic and the soap into new hygiene products, which are then donated to a local homeless shelter. So, they’re reducing hotel waste, employing at-risk youth to run the business, and providing hygiene products to the homeless.
Types of Social Entrepreneur Models
We just discussed Richards’ social entrepreneurship organization and how he’s helping both the community and individuals with his innovative ideas. Richards is not the only social entrepreneur who has sought to bring about social change through their business.
Other social entrepreneurs have sought to create new inventions or spearhead new technology, all with the goal of social betterment through their business models. There are several social entrepreneurship business structures / models:
A non-profit organization generally runs on donations (although some sell products or services) and is dedicated to a specific cause. The money they bring in is used for their cause – research on curing children’s cancer, for example, or providing clean water to villages in Africa – rather than distributed to shareholders.
Sole Proprietorship, Partnership, Or Corporation
You don’t have to be organized as a non-profit to be a social entrepreneur. You can simply make it a part of the way you do business. As long as your business is privately held (rather than publicly traded), you’re free to do as much social good as you can. Note that publicly traded companies may have more limitations.
Delaware, the center of corporate law, has recently approved a new type of corporate structure: the benefit corporation. This is an official legal structure designed to contribute social good as part of its business model. Benefit corporations are legally required to do the social good they promise to do – regular corporations and other structures are not necessarily held to these standards.
There is also an independent organization that offers a “B-corp” certification to social enterprises. Your business (with any corporate structure) will need to meet a number of qualifications in order to get this certification. Note that it is unrelated to being a benefit corporation, despite the similarity of the names. A B-corp certification does not confer any legal rights or responsibilities but can signal to your shareholders and customers that you’ve committed to social entrepreneurship.
Starting Your Own Social Enterprise
If you want to start your own social entrepreneurship venture, we have some expert tips for you.
1. Don’t Overcommit Right Out of the Gate
It’s better to start small and build from there than bite off more than you can chew and crash and burn. Since your business model will be uniquely your own, you may be tempted to try and make a huge impact right from the outset. While that’s admirable, it’s best to take your time and pace yourself.
You’ll be learning a new business model, a new business, and maybe new inventions or technology. Take the time to get to know your business and your product and you’ll be better able to roll with the punches and build your company the way you want to.
2. Clarify Your Purpose
What is your ultimate goal? In your wildest dreams, what is the problem you will solve by building your company?
Sometimes you need to refocus on your goal so you can create the best possible strategy to get there. You may also need to be flexible and reinvent your path along the way. By clarifying and focusing on your purpose, you’re more likely to actually achieve your goal.
3. Seek Expert Advice
The social enterprise landscape is still fairly new and untested. If you’re planning to start a social enterprise, consider speaking to a lawyer and a financial planner to make sure your ducks are in a row.
The Bottom Line
Social entrepreneurs have the exciting job of creating a business model that solves a social problem. Many social entrepreneurs started their ventures as passion projects, but over time have reaped the rewards of running their own business. If you want to be part of the social entrepreneurship movement, know that this worthy goal is certainly within your reach. Who knows? Your company may even change the world!
Accion loans to these community-minded entrepreneurs were made possible thanks to support from The Hartford, which is focused on helping neighborhood businesses thrive.