There’s a new type of entrepreneur in town. Give a big welcome to the social entrepreneur; pioneers of social enterprises that, according to the UK government, represent at least 70,000 businesses who together contributed something like £18.5 billion to the UK economy in 2011 alone.
It’s a movement that is growing fast and is active in a huge range of areas. Last year, Hiscox sponsored a graduation ceremony for the Big Venture Challenge, which recognised some of the country’s up and coming social entrepreneurs including a company developing specialist activity products for people with dementia, a car club operator providing a network of community car clubs across the UK, and an app that transforms the way people manage their health conditions.
It’s clear that social enterprises are growing in popularity but, as an entrepreneur driven by more of a social purpose than simply trying to make profit, how easy is it to launch your own social enterprise?
What exactly is a social entrepreneur/enterprise?
According to the School for Social Entrepreneurs, a social entrepreneur ‘is someone who works in an entrepreneurial manner, but for public or social benefit, rather than simply to make money’. Furthermore, says Social Enterprise UK, businesses that social entrepreneurs – social enterprises – set up must have a clear social and/or environmental mission set out in their governing documents and generate the majority of their income through trade, while reinvesting the majority of their profits.
What’s your big idea?
The first challenge then is to come up with a business idea that fits the social enterprise definition. What’s your big idea? Social entrepreneurs are active in a wide range of areas whether it’s providing employment for people living with disabilities for example, or healthcare delivery in poorer parts of the world. The possibilities are limitless but must fall within the basic premise of social entrepreneurship; tackling social problems or trying to effect social change, as opposed to being purely profit making.
Of course, you might already have a specific idea or business that fits that criteria while for others, who are attracted to the idea of social entrepreneurship but don’t know where to start, one area worth exploring is social franchising. Just like commercial franchising, you take an idea that already exists and enter into an agreement with the franchisee to replicate the business model. The European Social Franchising Network is a useful source for tips and advice.
Where will the finance come from?
As with any business, financing can be one of the trickier obstacles. The good news is that funding for social enterprises is gradually becoming more available. Specific initiatives like the Big Venture Challenge can be a good place to start. And more advice on where to find funding is available from the Big Society Capital which, while it doesn’t directly invest in social enterprises, lists a range of funds that will.
Marketing your social enterprise
A common problem for social enterprises is to believe that their business, because it’s focused on the common good, will sell itself. Unfortunately, the old rules of marketing still hold sway; your product or service will still have to stand up against the competition and your focus must be on targeting the right customers with the right message, which might not necessarily be one around the social benefit of what you do. Here’s an example of a couple of businesses who, as explained at the Social Enterprise World Forum, learned that to first sell the cause, you must first sell the product.
What different risks do I face as a social entrepreneur?
In many ways the risks are just the same as a business set up purely for profit purposes. You still have obligations if you have employees to have employers’ liability insurance, while public liability insurance is just as important (volunteers ‘working’ for you can incur the same liabilities for your business as a paid employee). Other insurance cover such as for your premises and any office contents is also important.
Just because your business is a social enterprise does not mean that people will not sue you if they believe they have suffered as a result of your negligence, which can mean that professional indemnity insurance is also an important consideration if your social enterprise provides advice.
A purpose for profit
More ideas and inspiration for the budding social entrepreneur can also be found from ClearlySo and from the Guardian. If you have an ambition to put something back in to society through business and your entrepreneurial flair, the only limit is your imagination. Go for it.
To find out more about the different types of business insurance you might need visit Hiscox’s business insurance page