To become financially viable in the long term, all types of businesses—whether traditional ones or social enterprises—rely on sustainable strategies that will translate to profit. But these are not possible without some level of profit, the main demarcation between a purely charitable organization and a community-oriented enterprise.
The Guardian reported that the growth of social enterprises is impressive and laudable from the point of view of the larger community, which, more often than not, turns to the private sector for aid. Economically speaking, however, some of these businesses fail to adopt the elements of what makes for long-term growth—something that worries potential investors who aim to strike a balance between making a social impact and making a profit.
If a business is not viable, it becomes an option between donating and investing without expecting any returns, which is also tantamount to charity.
Unlike profit-oriented firms, social enterprises have the primary goal of helping the disenfranchised members of the society, Investopedia stated. These are typically founded by activists and entrepreneurs who are working for a cause, trying to make a positive difference—take for example the case of Emily Mathieson’s homeware business, Aerende.
Mathieson started the craft in 2016 without even having a concrete business plan—not even aiming for it to be a business. But as the days went on, Aerende just happened to grow in servicing disenfranchised people who had suffered from traumatic experiences or physical-psychological challenges. Her employees include survivors of human trafficking and the intellectually challenged. She was able to grow her revenues by 400 percent in just 18 months. It seems economically sustainable while also having a positive impact on society.
Aerende is more of an exception than a norm. As it is today, a number of socially oriented firms are caught between a rock and a hard place. Many of them have a limited guarantee as they lack the financial and marketing capacity to be publicly offered so as to solicit capital from would-be investors. Also, they do not qualify to apply for grants the way these funds are provided to charitable organizations.
Based on a report made by entrepreneurship foundation UnLtd, about 71 percent of entrepreneurs are barely able to make a living from their ventures. They are also struggling to find economically sustainable sources of revenues for their organizations. Meanwhile, another 60 percent are having some challenges in accessing appropriate finance, including credit.
These difficulties are obvious to a handful of would-be entrepreneurs, but in the same report, one in four people who want to establish a business wants to build a social enterprise. A challenging path awaits those who seek to create such an establishment, but there are ways to a thriving outcome.
One way of ensuring the success of a social venture is to dream big but remember that it takes time to be at the top so start small and go for progress, per Inspire2Enterprise. The big ideas like ending world hunger or empowering women may still be part of the general direction of the organization, but scaling down the operations will make goals more achievable through one community at a time.
According to Stanford Social Innovation Review, another strategy to guarantee the economic viability of a small business is to have alternative sources of income that can support the enterprise. Having a job or having a purely for-profit endeavor can help in injecting additional capital. This will be crucial in the early stage of development, especially if credit and investments are not accessible.
Banking tech trends to watch for in 2019
Here are some of the top banking tech trends for 2019 that you should be aware of and what you...
How AR and VR are changing EdTech
Here’s why augmented reality and virtual reality are becoming useful tools in the EdTech sector and how educators and students...
5 great real estate markets for investors in 2019
These five real estate markets have great potential in 2019, and investors should take note and assess how these markets...
US government shutdown halts federal funding for critical rebuilding needs
A US government shutdown is paralyzing the country, and here’s how it’s affecting rebuilding needs.
More shareholders could sue Alphabet over alleged Andy Rubin cover-up
One shareholder sued Alphabet for the economic loss incurred from how the company mishandled Andy Rubin’s sexual harassment case in...
- Sponsored4 days ago
The fight against cybercrime makes cybersecurity the top investment choice for 2019
- Business5 days ago
How blockchain can solve the broken link of supply chain logistics
- Business4 days ago
Mark Zuckerberg to hold public debates on future of technology
- Business3 days ago
San Francisco Giants’ home turf renamed Oracle Park in $200M deal
- Featured3 days ago
Dividend calendar – what is it good for?
- Business4 days ago
Consider this first before attempting to sue Amazon
- Business5 days ago
Brand building is key to success in the cannabis marketplace
- Featured4 days ago
The pros and cons of having Members Exchange