Introduction to social enterprise


Social Enterprise is the new way of cooperation between people all over the world. Back in time, history has shown us that in order to gain something, you had to take away land or resources from others to live prosperous. But now, every person is dependent on each other. If our neighbors live better, then we eventually have also better standards of life.

Today’s reality is to work for the benefit of everyone so that we become stronger together as humanity. The social enterprise goal is not solely to make profit but also to provide people in need with job positions and opportunities, to be useful to the society and have an important impact on others. The purpose of this idea is to maximize the efficiency and quality of living and everyone on the planet.

Even after observing the need and establishing the target audience, we should continue our ideation process. At first, you might want to brainstorm with your team. What kind of a business would solve this problem? Start taking notes of the worst, most expensive and innovative ideas. The goal for you is to generate a large quantity of them. Later, the team can filter and choose the best ideas, even prototypes, or test them, if possible. However, you should remember to set up a deadline for the process. Too much ideation might leave your team overwhelmed and it often happens that the creation of the project seems to be much more difficult than it is.

Don’t be afraid to speak up

When you and your team is done with defining the needs, as well as finding the best business idea, it is time for writing a business plan and a marketing plan. A business plan is a document containing business goals, the methods on how these goals could be reached, and a time frame. In a marketing plan, we include similar factors.

In fact, all you need for starting a social enterprise is a great idea, a strong desire to help change the world and, of course, some money. Question is, what are the possible ways to get the funding to start up your social enterprise. Here are few ways you can to that:

1. Grants and investment funding 

There are some charitable, philanthropic and government bodies who offer grants and who do not expect a financial return. Some social enterprise models may generate sufficient profits to make them attractive targets for traditional equity and debt investment funding as well. Sources of investment funding include:

  • Angel investors: wealthy individuals interested in making investments
  • Seed funding firms: companies that invest small amounts of early-stage capital in startups
  • Venture capital funds: companies that pool and invest large amounts of money in emerging businesses

2. EU grants

Social innovators interested in finding funding opportunities from European Commission programs have to submit their ideas based on specific programs. All you have to do is find which program fits you best. The Commission helps social enterprise to access fundings up to 500.000 € from the EU Program for Employment and Social Innovation (EaSI).

Also, social enterprises are being supported under the European Fund for Strategic Investments (EFSI) Equity instrument, mostly through, funds linked to incubators/accelerators and co-investments with social Business Angels. Furthermore, the Commission co-funds projects focussing on boosting the development of the demand and supply side of social finance markets in Europe.

The Commission also supports social enterprise via the European Social Fund. Some of the EU funding programs are Horizon 2020, European regional development fund, European social fund, Cohesion fund, European agricultural fund for rural development, European maritime and fisheries fund and others.

3. Crowdfunding

One of the popular and effective ways for raising your money is crowdfunding platform. It is based on funding a project or venture by raising small amounts of capital from a large number of people. It is an especially good method for smaller businesses with social purpose that do not need so much money to get started. The most important thing for such type of getting money is sharing your story and making investors feel like they are part of something. Some crowdfunding platforms are Kickstarter, GoFundMe, Indegogo and others. But not all crowdfunding platforms are the same and before you choose one you have to do the research which one is the best for your business plan.

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.