How To Start A Social Enterprise
Grow Your Business, Not Your Inbox
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A social enterprise is an organisation that serves a social and/or environmental purpose, generates income from business activities and reinvests its profits back into driving its mission.
Examples include African Schools of Excellence (provide world-class schools to poor communities at a low cost); Hands of Honour (upcycles waste and provide employment for former drug addicts and ex-convicts); and my own social enterprise, Nkazimulo Applied Sciences (helps young people become scientists regardless of their background).
Some people say most of the profits should be reinvested into the mission, but others say a worker is worth their wages.
Doing business differently
Social entrepreneurship is a different way of doing business. Previously, few people cared about whether a company did good or not. Today, food outlets that serve healthy eating options are growing their market share because consumers now care about their health.
Farming responsibly opens the growing market that cares about the environment. More people care about the quality of education South African children have access to and support the efforts in this area. This is where social entrepreneurs can make a real, sustainable difference.
The entity can take any legal form, from a non-profit organisation, to a private company, a trust, or adopt a hybrid structure. Each has its pros and cons. Social enterprises take attributes from commercial entities.
They generate income from business activities. They also take attributes from non-profit organisations and government departments by tackling challenges previously addressed by these organisations, such as poverty, inequality, poor education and unemployment.
They run more efficiently, and are more accountable and transparent than public sector organisations. They are less dependent on external funding than non-profit organisations and charities. Worldwide, there is not enough grant funding for all the non-profit organisations looking for it.
Sustainable social models
An important element of successful social entrepreneurship is social impact monitoring and evaluation. The enterprise must constantly improve on delivering its mission and communicating the results of the impact to all its stakeholders.
Measuring impact may seem difficult. How can you tell a child became a doctor because they had access to lab facilities they previously had no access to? Maybe they were influenced by another factor. There are several tools to help a social enterprise focus its activities on outputs that will lead to the intended outcome which can then be measured.
These outputs become inputs that form a series of outcomes that, together, achieve the intended overall impact and become indicators the enterprise measures. Instead of measuring the number of learners who become doctors, the measure is the number of learners with access to lab facilities where none existed before. This is better than looking at the number of lab facilities provided, which is an input.
These tools are called Logic Models. Demonstration of impact communicates why an enterprise should be supported by stakeholders. The use of Logic Models envisions the bigger picture and identifies other players to collaborate with to achieve collective impact.
Thompson Reuters Foundation reported that South Africa comes third in Africa after Egypt and Nigeria as the best place to be a social entrepreneur. This is very encouraging and is much needed in not only boosting the economy but addressing social and environmental issues.
In action: Using a logic model to prove your impact
A logic model is a visual representation of how day to day activities of an organisation relate to their overall mission or long-term goal. The model is key in deciding what to measure for impact evaluation. It has six components:
- The current situation: The problem being solved.
- Inputs: Resources used to address the problem.
- Outputs: Activities and services delivered by the enterprise.
- What outcomes will come about because of the inputs?
- External factors, or circumstances in the environment that influence the problem but which the enterprise has no control over.
- Assumptions that are conditions needed for the success of the programme.
Involve all stakeholders in drawing up a logic model. The different perspectives help draw a complete picture. Impact measurement indicators are then based on these inputs and outcomes.
Logic models link inputs, outputs and outcomes and ensure that the correct indicators are monitored and measured as an enterprise achieves its mission.