Stakeholder-Minded Businesses Seek Long-Term Benefits
Social enterprises are making their presence known in the global and local marketplaces. While more people are getting familiar with some of these enterprises—which value profit as well as the environment and stakeholders including customers, workers, and community—they remain undiscovered by many, although they can affect this same crowd in a positive way.
As social enterprises work to gain exposure with the masses, they face unique challenges. Why do these entrepreneurs go on this path of high resistance? What benefits and advantages are they hoping to achieve? Keep reading for a look at three challenges and three advantages of social entrepreneurship.
Three Challenges
Lack of Recognition
Due to competition with household names in existing commercial markets, most people are not aware of existing social enterprises. With this unfamiliarity comes possible misunderstanding of the venture’s goals and values.
Complex Impact Measurement
To operate transparently while prioritizing social impact, these enterprises need accurate and current data that demonstrates their benefit. Most social enterprises currently reporting on their social impact are generally reporting outputs and outcomes, the products or services resulting from activities, and changes that are made through these activities. Some impact measurement methods are too complex and academic for an average social enterprise to use correctly. Institutions like investors and governments generally prefer reports that are easily understandable.
One option for businesses is the B Impact Assessment, which they can use to measure their impact on workers, community, environment and customers, and to become a Certified B Corporation.
Need for Regulatory Structure
As awareness of social entrepreneurship grows, changemakers in some countries struggle due to a lack of regulatory structure such as benefit corporation governance available in parts of the United States. A legal structure provides a clear label for social enterprises while improving recognition and acknowledgement. It provides clarity of the balance between financial and social impact, and it may improve access to capital.
Three Advantages
Achieving Social Change
The most rewarding advantage of being a social entrepreneur is the potential to have a positive impact on society by improving quality of life for people in their community. A social entrepreneur has the freedom to explore and create innovative solutions for change—and can inspire others to do the same.
Becoming a Positivity Magnet
When doing good, two things are likely to happen. Good and like-minded people are compelled to join you. And through this, others will feel a rising need to change. By operating transparently, social enterprises demonstrate positive change that’s evident to other organizations and people. Social enterprises create stronger connections with workers, who often feel a higher sense of personal fulfillment.
Having a Diversity Edge
Any business benefits from having an edge, and social enterprises can benefit from the selling point of positive impact. A 2017 international study from Unilever reveals that 33% of consumers choose to buy from brands they believe are doing environmental or social good.
Crucial in this is proper certification of social enterprises’ products. Consumers need clear understanding of benefits when purchasing from a social enterprise. And social enterprises need to “walk the talk” in transparent communication of the actual change achieved through consumer purchases.
Filling a Market Gap
As with any form of entrepreneurship, social enterprises face their share of challenges. But they are able to pursue the reward of achieving social change and a higher sense of personal fulfillment—as well as success that extends to benefit their community.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
The Challenges and Rewards That Social Enterprises Encounter was originally published in B The Change on Medium, where people are continuing the conversation by highlighting and responding to this story.
