In recent years, social enterprise businesses have gained an increasingly prominent foothold in the commercial landscape. According to the Social Enterprise Alliance, social enterprises are “organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach.” Social enterprise businesses are cause-driven operations that use methods and missions often associated with nonprofits – just as nonprofits sometimes employ enterprises to further their missions.
The profiles of social enterprises have grown as countless examples of successes emerge, such as when Muhammad Yunus received in the Nobel Peace Prize in 2006 for the bank he founded, Grameen Bank, which provides small loans on easy terms to people in poverty.
For entrepreneurs and other businesses considering the social enterprise route, it is essential to weigh your options and opportunities and to consider whether you’re interested in operating a social enterprise for the right reasons. Fryed Egg Productions can help you explore your options and examine your mission. Here are some basics about social enterprise businesses and their value.
Approaches vary
For a social enterprise, you want to build in a component that allows your customers to be partners with you in solving a real-life challenge. Social enterprises choose one of three key ways to do that. One is called opportunity employment, and it emphasizes employing people who face obstacles to employment. An example is fashion company ABLE, which seeks to employ women who often lack opportunities. A second model is the donate back approach, which involves a business donating to those in need. Well-known examples include TOMS, which donates one-third of its profits, and Warby Parker, which distributes a pair of eyeglasses for every pair that is purchased. A third model is the innovation one, which focuses on businesses offering a transformative product or service that offers a positive impact. A local example is Plant City-based NuCycle Energy, which takes materials normally destined for a landfill and transforms them into clean, cost-effective alternative fuels.
Authenticity first
From a strictly marketing standpoint, social enterprises are very effective. People want to be emotionally attached to your brand and your company. Social enterprises can build powerful brand loyalty. However, it can’t be about “strategy” for it to be effective – it has to be authentic. Consumers are very discerning about when your brand’s commitment to social good is real and when it is a business tactic – or even worse, a farce. They want to be a true part of the solution and not just a customer for someone pretending to be. If you are a social enterprise or are considering becoming one, you must take a strict accounting of your motives and your willingness to follow through on it, especially if your resolve is tested during a challenging business period. The social mission cannot take a back seat in tough times. You want to be prepared to tell the story behind your mission – why you are doing it, why it is important to you – so that people can build a connection to that mission and understand where you are coming from.
Balancing need with profit
Social enterprises need to be in touch with where genuine needs exist so that they can work to fill gaps that need to be filled. That means you need to seek areas where your business can make a true impact with benefits that are both effective and appealing to your customers. If your social enterprise is directed toward a cause without a striking need or interest to your target audience of customers, then the impact will be dulled and it will be difficult to be successful. Social enterprise businesses seek to strike a balance between their social mission and their need as a business to make a profit and grow. No matter how important the social mission, a social enterprise business is still a business and needs to be successful in order to support that mission. For that reason, your contribution to a cause needs to be realistic, viable and sustainable.
At Fryed Egg, we help organizations develop and incorporate new strategic efforts to build their constituencies, bring in vital revenue sources and support their missions. If you want to learn more about how Fryed Egg can help, contact us at (813) 478-0494 or [email protected] or visit www.FryedEgg.com.