Chapter 3: Developing the Social Enterprise Concept PDF

CHAPTER 3 Developing the Social Enterprise Concept Introduction Social enterprises trade to tackle social problems & challenges: to improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they...

CHAPTER 3 Developing the Social Enterprise Concept Introduction Social enterprises trade to tackle social problems & challenges: to improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. So, when they profit, society profits. Social enterprises are dynamic, progressive businesses that we can all learn from. They experiment, innovate and have the advantage of being able to draw upon best practice in the voluntary sector, as well as the entrepreneurial flair that exists in the best of companies.  Essay “Social enterprise lies at the heart of the social economy. Social enterprises are businesses that trade in the market for a social purpose and what differentiates them is that their social mission is as core to their success as any potential profit. There are broadly speaking three common characteristics: Explicit social aim Commercial activity Social ownership There is a clear social purpose The venture will aim to There will be community which drives the organization derive a significant portion accountability either through a or business. This explicit social (more than 50%) of its co-operative structure or aim is core to the activities, income from commercial management by voluntary rather than incidental. Any contracts or the sale of trustees. profit that the business makes goods and services to a is reinvested into the purpose market. The organization of the social enterprise. may still however generate income from a variety of other sources such as local government grants or donations etc.  Entrepreneurial readiness Gaining investments Improve the social condition Scaling-up (start-up costs may be of low-income people higher) Regenerate communities A very broad range of Create employment stakeholders opportunities Difficulties Benefits 4  Entrepreneurial readiness Double aims of equal Mixed funding importance: Open and responsible explicit social and/or - environmental aim decision-making and commercial aim and - governance activities Create employment Offer service to communities Innovative use of resources - scarce, limited, rare 5 Communicating the social enterprise mission statement It should be clear and succinct It should explain: What the enterprise will do How it is entrepreneurial Why it is important This should occur before planning activities A mission statement has goals and measures of progress towards goal 3 -6  Essay What a mission statement should specify What the enterprise will and will not do How it creates and measures value How an enterprise innovates or adapts How success will be measured 3 -7  Essay Benefits of a good mission statement It provides focus Social entrepreneurs can stay on target as they develop the concept It helps to attract support As a marketing tool, it brings other resources into the enterprise For example, volunteers, donors, partners 3 -8 The initial XYZ mission statement Has only a general description of what XYZ will and won’t do Does present a measure of social value created It’s not clear if it’s an innovation Overall goal is too broad 3 -9 The revised XYZ mission statement More specific about the organization’s intended actions More clarity about how it is an innovation More specific measures of success 3 - 10 How do social enterprises make money? By selling goods and services in the open market, social enterprises reinvest the money they make back into their business or the local community. This allows them to tackle social problems, improve people's life chances, support communities and help the environment. So when a social enterprise profits society profits. From social mission to business model Business model – a plan for how the mission will be achieved and how the enterprise will create value A general description of how the enterprise will operate: Its mission Its strategic resources Its partners How it will serve its beneficiaries Figure 3.1 shows this for Boaz and Ruth 3 - 12 Figure 3.1. Business model of Boaz and Ruth Client Vulnerable Job/life Commercial rehabilitation population training enterprises Community development Founder’s expertise and energy Highland Park residents and businesses Richmond residents and businesses Local government 3 - 13 Business model description for Boaz and Ruth Its mission is to provide training and economic development activities More than one kind of strategic resource Donations, volunteers, government support The founder’s attributes and history Partners are other community entities Foundations, residents, business Service interface is commercial enterprise 3 - 14 Threats to business models Demand side threats A product or service that finds no market – people don’t want it Its value is not accepted by clients Supply side threats Too much capital needed, or too much ongoing cost to sustain itself Either threat can derail an enterprise 3 - 15 Many social enterprises fail Persistent lack of income is a common reason A supply explanation would be that costs are too high A demand explanation would be that revenues are too low Both flaws can be examined in the business model 3 - 16  Social: aims, values, objectives Social Objectives Social Aims Social aims that are specific, Social purpose beyond measurable, realistic and may profit making that is core have targets attached to to the activities them. 17 Social: aims, values, objectives What are values? participation & empowerment equality environmental sustainability; good, safe, satisfying, interesting work fair pay and good employment practices self development, skilling, education and training ethical behaviour a commitment to communities safe, healthy, good quality, user focused products and services transparency and trust co-operation between enterprises. 18  MCQ \ T or F Ethical behaviour in business Ethical behaviour Unethical behaviour Honest accounting and tax calculation; Using insider knowledge or confidential Paying suppliers on time; information for personal gain; Providing quality goods and services; buying poor materials and equipment because Keeping your promises; there is some kind of payoff from the supplier; Treating members, staff, customers and side-stepping rules and regulations, such as suppliers with courtesy, dignity and respect; health and safety, because it is cheaper and more Conserving natural resources and protecting convenient to do so; the environment. miscalculating invoices and hoping customers won’t notice; providing misleading information in order to win contracts; making false claims about products or services; adjusting business expense accounts in order to make a personal profit. 19 Co-operatives: Values ▪ Self-help ▪ Self-responsibility ▪ Democracy ▪ Equality ▪ Equity ▪ Solidarity In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.. 20 There are many types of social enterprise: WISE- Recycling, employability training