What is a social enterprise? What does it do? What is it for? Why is it necessary? What can it achieve?
Journalism has five W’s (Who, What, When, Where, Why) that form the basis of how to gather enough information on a story to present it credibly as fact to the world. It’s a useful tool, akin to the ‘Rule of Three,’ used in debate to cut out loose data and unhelpful points that don’t advance you argument.
Rhetorical flourishes and ‘frameworking’ a piece aside, I’d argue social enterprise itself has to get its facts straight from the outset. Every social enterprise has, at some point, to answer to it’s own personal set of five W’s. It’s not often helped by floods of acronyms (“are we a CDFI, a SIFI or a CDO? Can we get in on that CSR project money?”), latent blue-sky doublespeak, (“is our Community Empowerment Scheme going to deliver results on it’s own, or are we going to try to synergise our operations with the existing social economy in the area?”), or just plain gobbledygook ( “we’re a next generation, cost effective, world class, high performance, value added outcome kind of social business”).
See what I did there? The rule of three is important to cut waste out, and it’s a lesson a lot of social enterprises could learn from. Your customer won’t be impressed even if you PR guy is turning a pretentious phrase faster than a grad student’s first local newspaper article. It’s by no means an easy task for some social enterprises, but if you can’t define yourself in one sentence you’re going to struggle to do it for investors and customers. So even before you sit down and sketch out a business plan, have that one phrase in mind – it’s more than a marketing tool, it’s 90% of your customer’s first impression of you.
As I noted above, ‘social enterprise’ is a term with wide margins. The dust has by no means settled on what precisely defines a social enterprise, just a loose set of principles. Ask yourself these questions;
1) Is your product or service ethical? Is it produced fairly, sold on honestly, and benefits a community rather than individuals?
2) Does your business benefit society, or a community that needs help? Can you truly measure the impact it might have?
3) Is your company structure oriented towards delivering equitable benefit to someone other than yourself or your co-founders?
The number of equivocating words—”benefit,” “community,” “ethical,” “impact” are some —in those questions is a measure of how far social enterprises still have to go in pinning down in black-and-white terms what is and isn’t a social enterprise. Using the above criteria Starbucks might well qualify – and yet there are a vast range of different business models out there to choose from. John Lewis, a U.K. department store, is entirely owned by its workforce and has the striking motto “Never knowingly undersold.” Is it a social enterprise? Well, yes —and no.
Perhaps a better description is the older term: a “cooperative.” These are the prototype social enterprises of the last century, set up to deliver some benefit or other to their members. By most measures the ones that have made it still qualify as social enterprises : large social enterprises with huge turnovers and wide profit margins. The key to their success has been to set a social goal and stick to it, be it a percentage of profits, employee ownership or a rolling raft of ongoing social investment. Building up trust in an organisation means not just following the latest fair wind, and a soft touch on the tiller once you’ve put to sea.
So, define yourself concisely, ask yourself the difficult questions and set your goals up as long-term or ongoing. Sound business advice that makes the difference in a purely commercial setting also holds true for social enterprise – it’s all very well saying you want to change the world, when you could end up just another impressive flash in the pan.
The rules change when you move on to the next question; why is your organisation necessary? This is easiest of all for traditional companies to answer – to make a profit, dummy! Everything else, from investing in wind-farms to sponsoring marathons, can be counted in their budgets as “marketing expenses”. Social enterprises have the opposite problem – they can be set up specifically to invest in a certain area, with profit coming as a necessary but distinct second. It may be wise to examine the fundamentals of your social enterprise with a highly critical eye, and from a commercial perspective. After all, if you can’t generate revenue effectively – what money will you have to invest in social welfare or environmental projects? Twinning profit and social impact together as the most important aspects of your business is the start – try to look at profit as the spring that feeds the river. The necessity of your business is keeping that river flowing, and unlike purely commercial organisations your first priority isn’t always to make that spring generate more water year on year.
Metaphors sufficiently butchered —let’s look at that final ‘W’—What can you achieve? The urge is to say confidently “anything I put my mind to!” and of course, it may be true in a wider sense, but simply put, you’ll be setting yourself up for disappointment if you don’t clearly define what you can realistically achieve. Multi-million dollar business that started in garages do exist, but they’re rare beasts, and face it —unless you’re planning to create a wildly successful ethical search engine or a fair-trade social network, these aren’t models you’re going to work with. If you’re serious about creating a social enterprise prepare for long hours of grant-searching and drafting investment proposals. The truth is that a lot of investment avenues out there focus on either traditional business or registered charities, finding the exceptions —and convincing them this is worth their money —is a lot harder than you think.
Beyond that feel free to dream, but go one better: put it down on paper. Measuring your success is double edged—all very well scribbling revenue targets until year dot—how much of that is generating a tangible social impact? Remember what you’re in this for – and have a clear idea of who’s benefiting ( Here’s a tip: it usually isn’t just you).
Joe Casey is a Marketing & Business Development Executive at Giveacar Ltd, the UK’s largest charity car donation company.