A social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being, it’s connected with how to maximize social impact alongside profits. Through the efforts and commitment of creating value, selling goods and services in the open market, social enterprises however reinvest some portion of the money they make as profit back into the local community. This allows them to tackle social problems, improve people’s life chances, support communities and help the environment. So when a social enterprise profits society profits.
Creating a social business has many similarities to building a traditional business, but inspiration is usually drawn from a different place.
Social enterprise ideas, unlike conventional business ideas, typically result from a desire to solve a social need; similar to how many non-profit and charity organizations find their beginning.
Traditional business ideas can also come from identifying a social need. But, the difference between a social enterprise idea and a traditional business idea is the motivation of the entrepreneur. The primary motivation for a traditional entrepreneur is more-often-than-not a desire to make money; a social entrepreneur is driven more by a passion to solve a social problem, and only chooses to use business as a mechanism to solve these problems.
Because of the different motivations that drive the two types of entrepreneurs, we must consider that their businesses will function a bit differently. We often hear the business world talk about focusing on the bottom line business practices that lead to increased monetary profitability. In comparison, social businesses focus on double – or triple – bottom line business practices that lead to social, environmental AND economic profitability.
The future of the African continent is realistic in proportion to the attention, support and emphasis placed on social Enterprises, in other words our collective growth hinges on the development of strong institutions that supports social enterprise initiatives.
Are social enterprises charity organizations? If the answer is no, how then do social enterprises makes profit?
Here’s some of the most common business model frameworks we see successful social enterprises using:
Cross-Compensation – One group of customers pays for the service. Profits from this group are used to subsidize the service for another, underserved group.
Fee for Service – Beneficiaries pay directly for the good or services provided by the social enterprise.
Market Intermediary – The social enterprise acts as an intermediary, or distributor, to an expanded market. The beneficiaries are the suppliers of the product and/or service that is being distributed to an international market.
Market Connector – The social enterprise facilitates trade relationships between beneficiaries and new markets.
Independent Support – The social enterprise delivers a product or service to an external market that is separate from the beneficiary and social impact generated. Funds are used to support social programs to the beneficiary.
Cooperative – A for profit or nonprofit business that is owned by its members who also use its services, providing virtually any type of goods or services
Now let’s look at our list of 22 Awesome Social Enterprise Ideas!
Business Model: Fee for Service. Example: Create a food market that sells food to low income communities at a discounted price. Discounted food is donated (or purchased very cheaply) from food suppliers and other supermarkets, who cannot sell the food themselves for a variety of reasons such as approaching expiry dates, dented cans, and product mislabeling.
2. Used Textbooks for Social Change
Business Model: Cross-compensation and Independent Support. Example: Partner with student groups/clubs to collect used textbooks at the end of each semester. Students donate their used textbooks. Some of the textbooks are re-sold to students at the college/university of their collection source; some of the textbooks are donated to students in need at underserved universities in the developing world. The profits are split between the student groups/clubs, program administration costs, and any remaining funds are used to support social programs in developing communities.
3.Online Socially Conscious Marketplace
Business Model: Market Connector. Examples: Help underserved artisans sell their products to the world by building a platform that makes it easy for them. Artisans can either manage their online store directly, or the platform can act merely as a listing service that connects the artisans face-to-face with buyers. Revenue is created by either charging listing fees directly to the artisan, via a commission on goods sold, or built-in as a premium fee to the buyer. Profit generated can be used to fund social services that directly affect the artisan communities.
4. Sustainable Water
Business Model: Fee for Service. Example: Build small water purification stations in communities in developing countries using off-the-shelf products. Initial funds to build it can come from traditional charitable methods, or through debt/equity financing; the communities can be partial owners (or full owners, if using cooperative business model). Ongoing costs to maintain and staff the water station come from sale of purified water to its beneficiaries, but at near break-even levels, costing almost nothing for the beneficiaries.
Business Model: Market Connector. Example: Create a platform for individuals and organizations to lend money directly to entrepreneurs who would otherwise not get funding, such as those in the developing world. Charge a small fee to cover the operational costs.
Business Model: Market Connector. Example: Build a platform for social entrepreneurs to find groups of funders. Similar to the Micro Lending platform, but lenders take a promise of something in the future in return for ‘donating’ a bit of money to the Social Entrepreneur’s project now. Charge a small fee to cover the operational costs of the platform.
7. Baking/Cooking for a Social Cause
Business Model: Employment and Skills Training. Example: Open a bakery/restaurant or another food-providing establishment that focuses on building employment skills for underemployed groups, such as at-risk youth or former drug addicts. The profit from sales of food and beverage go to wages, training, and social betterment programs for the staff-beneficiaries.
8.Efficient Wood Stoves for rural Areas
Business Model: Cross-Compensation. Example: Millions of women in developing countries suffer from cardiopulmonary diseases as a direct result of breathing in wood smoke on a daily basis. Build a more efficient stove to solve this problem. Sell the stoves at or above market rate to those who can afford it, and use the money from the sale of the stoves to partly subsidize the cost for those who cannot afford it.
9.Innovative Information Product
Business model: Cross-Compensation. Example: Create a baby blanket with information about how to take care of a baby, such as when to immunize, how big a baby should be at a specific age, and how often to feed the baby. The regions where baby education is scarce are the same regions where income tends to be low. Therefore, these blankets could be given freely to new mothers in low income areas, while they could be sold to new mothers in wealthier areas. Proceeds from sales would fund blankets and education for new mothers in poor areas.
10. Micro Power Generation
Business Model: Fee for Service. Examples: Provide micro-electric solutions for remote applications in the developing world. Two ways you could do this are to create a stand-alone power system from used, rechargeable batteries to power classrooms. Or, you could create a mini power power plant that uses bio-mass produced by the humans, plants, and animals of an off-grid village. These types of systems are very cheap to build and implement, and can be paid for on a fee-for-usage basis. This idea might also lend itself well as a cooperative.
11. Socially Conscious Consumer Electronics
Business Model: Fee for Service and Market Intermediary. Examples:Build a new kind of consumer electronic device; one that is built with conflict-free materials, provides fair wages to the workers who build it, offers a fair and transparent price for the end consumer, and does not engage in unfair consumer practices (such as locking smartphones, or creating proprietary software/hardware interfaces
12.Education Books on a Social Topic.
Business Model: Fee for Service Example: Create a book or other educational publication, whose benefit is easily understood and salable. Learning about the topic of the social education book should benefit the reader, such as a recipe book that focuses on recipes that promote sustainable food culture. The proceeds from the book are used to support education initiatives along the same topic and to group who will have the most impact and benefit. In the case of sustainable food preparation practices, the target education group would be chefs.
13.Technology to Attract Economic Development
Business Model: Fee for Service. Cooperative. Example:A small community normally doesn’t have much to offer a business, unless you make it a place that has the best business service in one area. For instance, you could create an internet service that is owned by the community and provides internet access at ten-times the bandwidth for the same price as those in another community would have to pay. The cost could be subsidised by the community, but it would attract high-tech businesses to locate in the community, fueling the local economy and benefiting everyone in it.
14. Beauty Products to Support a Social Mission
Business Model: Independent Support. Example: Partner with major beauty brands to sell their products as an online retailer. Convince them to provide their products to you at a favourable wholesale rate, and divert the profits to purchasing milk and baby bottles for distribution in the developing world.
15.A Virtual Factory of Computer Workers
Business Model: Employment and Skills Training. Example: Build an online community of computer workers, hired from underemployed communities. Train each of them to do one computer-related thing well (ie. writing functions in a particular programming language, translating code for a specific and common API, etc.) Combine dozens of them to complete a product, such as a website, for a client that would normally only require 1 or 2 people. Because each person is highly micro-specialized, the larger team forms as a virtual ‘assembly line’ to finish the project faster, cheaper, and with a higher quality standard than the traditional method of locally hiring or outsourcing a broad-range knowledge worker. Virtual assembly line workers enjoy employment with higher wages than they would normally receive doing menial work.
16. A marketplace for social good
Business Model: Market Intermediary. Example: Sell socially and ethically conscious products in a virtual or real environment. By purchasing these products from the producers, the social good flows-down the logistics chain to the beneficiaries, and consumers are able to find a bunch of the products they want in a convenient shopping format.
17.Exercise Equipment for social outreach
Business Model: Fee for Service and Cross-Compensation. Example:Sell a piece of exercise equipment that is simple to use and affordable. Promote the equipment as an alternative to full gym access to those who can’t afford it. Use profits and product to subsidize outreach programs that promote healthy living, thus promoting healthy living to two underserved groups: direct customers and outreach participants.
18.Educational travel company
Business Model: Fee for Service. Examples: Start a company that brings together travellers with experiences that provide an intercultural learning experience and a positive social impact on a local community. Profits are recycled back into the communities they affect.
19. Food for Philanthropy
Business Model: Independent support. Examples: Create a food company that provides an already needed/wanted product and use the profits to support philanthropic work. The company is easily scalable and can focus on just one product line/charity, or can be easily scaled to provide multiple food products and support a variety of charities.
20.Social products and employment creation.
Business Model: Employment and Skills Training, Fee for Service. Example: Source one or several social good products (clean cook stoves, affordable power solutions for rural communities , and hire an underemployed group to sell these products to their community on a commision basis. It’s both a distribution/marketing method, and a way to employ underemployed populations.
21. Water for Everyone
Business model: Cross-compensation. Example: Create a home water filtration solution that you sell to high net worth individuals , and use the proceeds of these sales to provide similar solution to the lower income earners . As a bonus, use environmentally friendly materials and processes in the creation of the product.
22.Micro-Giving for Easy Philanthropy.
Business Model: Cross-compensation or independent support. Example: Partner with businesses and have them donate micro amounts of products/money to a social cause for every transaction they enter. For example, set up a relationship with a baker. And for every loaf of bread they sell, have them donate a handful of flour (or monetary equivalent) to a food-aid organization in the developing world.
Do you have other great ideas that aren’t on this list?
Please leave a comment and let us know, because we love to hear about your new social enterprise ideas!