Want to be an Entrepreneur? Know First What is Social Enterprise!

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Want to be an Entrepreneur? Know First What is Social Enterprise!

Want to be an Entrepreneur Know First What is Social Enterprise

The term social enterprise has recently become popular in the business world. A social enterprise or also known as a social company is defined as a business that has certain social goals that support its main purpose.

Social enterprises seek to maximize profits while maximizing their benefits to society and the environment. The profits they get are generally used to organize or fund social programs.

Understanding Social Enterprise

The social enterprise concept was developed in Britain in the late 1970s to counter the domination of traditional commercial enterprises. Social enterprises are at the crossroads between the private and voluntary sectors. They seek to balance financial benefits and social goals. Some of the activities in question include: providing housing for low-income families, providing free job training, providing access to clean water, and so on.

The source of funding is usually obtained from the activity of selling goods or services to consumers, although some of the funding is also obtained from grants. Given that the main goal of social enterprises is not to maximize corporate profits, they operate differently when compared to conventional companies.

Getting the maximum profit is not a top priority, but sales performance still plays a very important role in the sustainability of social enterprises.

Consistent sales activity is the key differentiator between social enterprises and traditional charities which rely solely on funds from other parties to fulfill their social mission.

With this kind of goal, it does not mean that social enterprises are not profitable. However, their priority is to reinvest profits into their social mission, and not share profits with shareholders.

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The Organization for Economic and Development (OECD) identifies social enterprises as highly participatory companies. In social enterprises, generally, policymakers are actively involved and have only a few employees.

Special Considerations

Employees of social enterprises come from various backgrounds, but priority is given to those from marginalized groups such as workers who have been unemployed for a long time, those who have worked but are not properly paid, and members of marginalized groups.

Social enterprises can provide a living wage, which in most cities is above the regional minimum wage. Sometimes, hiring employees from marginalized groups of society is also the social goal of the company.

Social Enterprise vs. Social Entrepreneur

Social enterprise (social company) is different from social entrepreneurship (social entrepreneur). A social entrepreneur is someone who tries to provide new solutions that can solve problems in society using existing business strategies and techniques.

In other words, social entrepreneurs seek to find innovative and operating ways to bring about change, while social enterprises are formed to achieve business goals and meet community needs through their commercial activities.

Example of a Social Enterprise

Many social enterprises have succeeded in maximizing the increase in social welfare. For example, Warby Parker is an American eyewear retailer that donates glasses for every unit sold to someone in need.

om’s, a California-based retailer, also donates a pair of shoes for each unit sold to children in need.

How? Are you interested in building a business based on the social enterprise concept?

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