Explained: Social Enterprise

October 20, 2022

Social Enterprise

Conventional business models are in many ways outdated. In order to make a true impact in the world, many businesses are going for a double and even triple bottom line approach to measure their success. Going beyond the money metric might feel like uncharted territory for many entrepreneurs and company leaders who trained under a more traditional model.

If you’re ready to get your toes wet with something more meaningful, keep reading. 


What is a social enterprise?

There are many forms that a social enterprise may take, but the primary qualifier is a for-profit organization that sells services or products that alleviate social problems. Social enterprises resolve an unmet need in the market they serve.

Unlike a non-profit organization, a social enterprise is structured to turn a profit, but the mission and impact they make with the solution they offer align with a social cause or challenge. 


How is a social enterprise different from a traditional business?

Social enterprises have a goal to simultaneously create social impact and financial sustainability whereas the traditional business model is only concerned with maximizing profit and pleasing stakeholders.

A social enterprise may use marketing techniques and strategies, similar to a traditional business, but the alternative structure and mission of the organization with a focus on making a social or environmental impact is what sets one apart from the other. 


How do social enterprises work?

There is no limit to how a social enterprise can be structured. There are many forms and some of the most common models are community compensation, where a sliding scale may be offered to serve a wider number of people who may be unable to pay the standard rate by encouraging those who are able to pay a higher price. 

Another common way such an organization may be structured is to serve as a distributor or connector to a greater market to create a wider reach and greater impact. Cooperatives, which are typically funded and owned by a large pool of people who benefit and use the services and offerings provided by the company is another common structure. 

One of the first models of a social enterprise that began gaining popularity in the early 2010s is the donation model. In this structure, the company sells a product or service and consistently donates money or other means to support a caused aligned with the company’s mission and offering. 


In the restructuring of the workplace post-2020, consider these ideas for your future or existing business to create a greater ripple effect for the people of now and future generations. 

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