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05/10/2018 Matt

Social Entrepreneurship: 4 Types of Social Enterprises

The topic of entrepreneurship has become increasingly common in the last decade. Many business leaders even bemoan the idea that it has become a fad, something cool, a status of sorts. However, one area that has benefited from the increased attention given to entrepreneurship is that of social entrepreneurship and building social enterprises which look to better society or solve a particular challenge within a community.

This expanding branch of entrepreneurship has given birth to new lingo which should be clarified. Giving clarity to the words being used and the models practiced aids in how entrepreneurs develop their ideas by providing a clear vision they desire to see achieved.

Social Entrepreneurshipis a mindset. It is the “Why” in the business approach. Those organizations or businesses who focus on the problem knowing the solution is one owned by the community. Social entrepreneurship is generally using socially innovative means to address the problem mobilizing communities in a different way.

Social Innovationis about the idea which can transform a community. These are the new steps and new paths people walk to address old problems. Good innovation is creative, transformative, and does not drain the resources of a community. The ideas are generally reproducible even with minor modifications.

Social Enterprises are the business models used to carry out the ideas and accomplish the vision. There are a variety of models that can be used to address social ills within a community, however, not all are equally useful for a particular problem. It is important that the model chosen is something sustainable and fits the values of the community and involves their participation in solving the problem.

Types of Social Enterprises

Awareness

There are a variety of social enterprises and entrepreneurs who seek to bring awareness to a particular problem, cause, or a second brand solving a social issue. These enterprises attract a larger attention to draw out help from a community that may exceed the local community. In one sense, awareness brands crowdsource solutions to solve the social challenge.

Nonprofit

When most think of nonprofits, they do not consider this to be a “business” model. However, a nonprofit can be sustainable while not turning profits. A nonprofit does not have to exist solely on gifts from donors. While many do, the work of a business and earned income can go towards sustaining the business practices, paying salaries, and giving toward the causes it is seeking to address. In most countries, nonprofits benefit from tax breaks and less restricting business laws making it an agile form of social enterprise.

For Profit

For profits are businesses who have a stated goal to increase their profit margin, yet still maintain a social goal. Clothing companies which create an increased transparency in the textile industry are examples of this. A specific example is Everlane. They maintain the focus of transparency in practices and pricing to ensure fair pricing and fair wages. Businesses such as Everlane similar to an Awareness Brand, yet turn a profit to reinvest in the social cause. The business is not only sustainable, but thriving.

“One for One”

The “One for One” model has been made famous by brands such TOMS and Warby Parker. Blake Mycoskie traveled to Argentina in 2006 and saw the hardship of children without shoes. This struggle led him to introduce a simple show model that was efficient, durable, and affordable. For every pair of shoes sold, they give a pair to a child in need. TOMS operates as a for profit and has expanded to address other social issues such as affordable eye care.

We address the power of social entrepreneurship here. If you wonder about starting a business and have difficulty deciding if it fits the social model, ask yourself, “What problem am I solving? Does my solution relieve pain within the community?”

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