It is only by emphasising the business side of social enterprise that the social mission can be achieved. (
http://www.theguardian.com/social-enterprise-network/2014/feb/17/social-enterprises-must-prioritise-viability)
Dan Zastawny
Too many social enterprises prioritise their social aim over becoming a viable business and achieving financial sustainability. This approach is flawed as more money equals more social impact. Social businesses exist to make money and do good, however it is only through emphasising the business side of social enterprise that the social mission can be achieved.
For example, national social enterprises, such as Jamie Oliver's Fifteen or Divine Chocolate, and local social enterprises such as Exam Central and Shenley Lane Community Association are successful because they operate in a way which understands that making money enables their mission to be achieved. This is true for all economic sectors, however the survival of the fittest determines who lives to trade another day, and for social enterprises, in particular younger ones, this means there is a necessity to put the enterprise before the social.
The idea that income must come before impact may sound like common sense to many social entrepreneurs. However the recent
Social Enterprise UK Survey found only 32% of social enterprises cited trade as their main source of income with the general public, and out of those social enterprises seeking finance 89% sought grants rather than loans.
These two points highlight a lack of widespread understanding in the sector about what it means to be an "enterprise". The reasons behind the lack of enterprise amongst social businesses are varied but at the core there tends to be an unfamiliarity with the idea of trading and operating in a market. Amongst many social enterprises there appears to be a desire to be social without being enterprising – an oxymoronic mind-set which ultimately hinders their ability to achieve their mission.
One-third of social enterprises are in their first three years or trading, a period which many small businesses describe as a make or break period. These young social enterprises should be aiming first and foremost at becoming established. It may be that grants, crowd funding and bonds play a role in getting an organisation off the ground, however they will not be able to sustain it in the long term. Once social enterprises have a diverse and stable set of income streams they are better placed to have greater social impact.
The more sustainable and successful the enterprise is, the more sustainable and successful the social aspect will be. This logic applies whether organisations achieve their mission through the people they employ, services they provide, products they produce or simply the investment of profit in to the social mission. The dynamic and empowering image conjured up by the term social enterprise needs to be reflected in the way that social enterprise operates.
Enterprising social businesses have a huge role to play in acting as pioneers to others in the third sector. Increased demand and decreased income in the sector has directly resulted in many charities beginning to trade.
This puts them in a hugely similar position to many social enterprises – except that they are likely to be even less inclined, experienced and interested in generating traded income. The chance to have free capital, rather than ring-fenced, grant allocated capital, should be a huge motivator for charities.
In a sector which is adapting rapidly to the economic environment, organisations need to follow the examples of true trading social enterprises in order to operate fully in the interest of their beneficiaries.
Sustainability of income and social mission is the ultimate objective for social enterprises and this should be evident in every decision taken. The third sector as a whole has much to gain if organisations begin to put enterprise before social.
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