Successful and social capitalists have been referred to as corporate-social venture-ers, world changers through private enterprise, and community changers. While not a new term to people who practice in the starting a non profit sector, social entrepreneurship is not a term that is ordinarily used among the majority. Though the term seems simple, many people still have no clue. Aspiring entrepreneurs most often have no frame of reference with these types of business owners and when trying to start a social-based business, usually in the form of a nonprofit, they disregard basic business principles in their model and instead adopt the outdated profit-less charity approach.
The word ’social entrepreneur’ has been in use ever since the mid 1900s and represents a person who uses business principles to accomplish some community purpose or impose some public change, rather local or international. Based on information from the IRS.gov Master File, of the estimated 727,000 plus registered charities eligible to receive donations tax deductible, the bulk, about 55%, earned $0 income last year. As evidenced by the sheer number of registered nonprofits, people have the interest to start social ventures. What is missing is the knowledge and monetary capital to make them successful.
With the advent of record unemployment and employee frustration, grants as a home-based business can likely be a feasible employment option while simultaneously resolving some of our principal social troubles. While often connected with the term nonprofit, social entrepreneurs don’t have to be consumed with the aggravations of formal legal structures, reporting, and record-keeping. These companies can function as sole-proprietors and LLCs.
Social entrepreneurship is the pattern that current and new charities must use if they are going to survive. It requires a shifting in the way we have generally thought about charity delivery. In my occupation as a nonprofit business trainer, this thought is a difficult one to accept. People instinctively want to offer their services and products for free with no real plan for generating income. They assume they’ll get grants and that these gifts will sponsor their work. Nine times out of ten, this doesn’t happen.
The model is very different in terms of product and service delivery. Where charity work is frequently thought of as a absence of monetary reward, social entrepreneurship joins together the science of business enterprise with the science of social change. This business model offers people the opportunity to earn a living, living one’s passion. More than likely developing such an project will entail starting from the ground up. There are numerous best-practices that aspiring business owners can use to build successful, profit-generating businesses. Here are a few:
1. Project income and expenses first; if a profit is not probable, go back to the drawing board.
2. If a profit is plausible, create a detailed business strategy with market research, SWOT analysis, and promotions plan.
3. If you choose to form as a 501 c 3 nonprofit, don’t include grant income in your projections until you’ve been in business for two years.
So before choosing to begin as a not for profit, explore a for-profit venture with a social twist. You may find this alternative to be the most ideal fit.
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