What Is Social Entrepreneurship? Simply Explained

In a world where it often feels like everything revolves around money, especially in business, it's easy to think that's all anyone cares about. But that's not the whole story. 

Some people choose to put others and the planet before profits, challenging the norm and creating something truly impactful. These are social entrepreneurs—the ones who, as Bill Drayton famously said, "are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry." So, what is social entrepreneurship? The answer might just change how you see business forever.

What Is Social Entrepreneurship?

Social entrepreneurship is an approach that blends the goal of making a positive impact on society with the practical methods of running a business. It tackles social, environmental, or cultural challenges by using innovative business strategies to create solutions that benefit both communities and the world at large.

For instance, imagine a company that, in addition to selling products, uses its resources to combat food insecurity or an organization that reinvests its profits into creating education systems for underprivileged children. These organizations push beyond conventional boundaries, finding innovative solutions that drive systemic change. 

Unlike traditional business models that prioritize profits above all else, social entrepreneurship seeks to generate profit while directly addressing societal problems. In fact, social enterprises are generating around $2 trillion in annual revenue, all while creating a positive impact. It represents a shift in entrepreneurship where, instead of financial success, the bottom line is measured by the lasting impact on communities and the world.

There are around 10 million social enterprises globally, all sharing the common goal of prioritizing purpose over profit. The rise of companies like TOMS Shoes, which operates on a one-for-one model to provide shoes to those in need, or Patagonia, which fiercely champions environmental sustainability, shows that businesses can achieve commercial success while making a meaningful difference.

What Does a Social Entrepreneur Do?

A social entrepreneur is someone who identifies a societal need or an overlooked problem and takes action by developing a solution that is both sustainable and scalable. These individuals do more than just start organizations—they create movements aimed at making lasting, systemic change.

Their primary goal is to:

• Improve lives
• Empower communities
• Create long-term solutions to systemic problems

A well-known example of a social entrepreneur is Muhammad Yunus, the founder of Grameen Bank. Hailed as the father of microfinance, Yunus saw the devastating impact of poverty in Bangladesh and began offering small, no-collateral loans, particularly to women, to help them start businesses and lift themselves out of poverty. His efforts sparked a global movement, proving that entrepreneurial thinking can address even the most daunting social problems.

Social entrepreneurs, in general, are visionaries who aren't satisfied with small improvements. They imagine a world where:

• People can thrive without systemic barriers
• Plastic waste is reduced
• Clean water is accessible to remote areas
• Marginalized communities have job opportunities

Where others see insurmountable challenges, social entrepreneurs see opportunities for transformation, stepping up where others hesitate.

Key Characteristics of Social Entrepreneurs

Successful social entrepreneurs share several characteristics that empower them to create lasting change, such as being:

Purpose-driven

A deep sense of purpose fuels social entrepreneurs. They're not just in it for profits—they have a passion for solving a specific societal problem. 

Their personal mission aligns with their work, helping them push through challenges. For example, Yvon Chouinard, founder of Patagonia, built his business around his love for the environment, which influenced Patagonia's commitment to sustainability.

Innovative

Social entrepreneurs are always thinking outside of the box. They look for new ways to solve old problems, often introducing creative solutions that didn't exist before. 

Scott Harrison's Charity: Water is a great example of innovation in action, transforming how people donate to clean water projects by focusing on transparency and connecting donors directly with the projects.

Resilient

Facing difficult environments is common in social entrepreneurship. Whether it's overcoming financial barriers or dealing with bureaucratic hurdles, resilience is key. 

Blake Mycoskie, founder of TOMS Shoes, faced initial skepticism about his one-for-one model, but his determination has led to the model being adopted across various industries.

Collaborative

Social entrepreneurs know they can't tackle systemic problems alone. They actively seek partnerships with governments, non-profits, and businesses to increase their impact. These collaborations provide them with the resources and expertise they need to extend their reach and maximize their efforts.

Ethical

Trust and transparency are non-negotiable. Social entrepreneurs are held to high ethical standards, knowing that building trust is critical to their mission's success. 

Companies like Ben & Jerry's are a testament to this. They incorporate social responsibility into their business model while advocating for climate change, fair trade, and social justice.

Empathetic

Empathy allows social entrepreneurs to understand the real issues faced by the communities they serve. This deep understanding drives them to create solutions that truly make a difference, nurturing strong connections between their organizations and the people they help.

Resourceful

Often working with limited resources, social entrepreneurs are skilled at making the most out of what they have. They can stretch budgets, find creative funding sources, and adapt when faced with obstacles, ensuring their mission stays alive.

Types of Social Enterprises

Social entrepreneurship comes in different forms, each with its own approach to solving societal problems. But, in all forms, social entrepreneurs are committed to creating meaningful change, regardless of the scale.

Non-profit social entrepreneurship

Picture an organization where every dollar earned fuels the fight for a better tomorrow. Non-profit social enterprises reinvest everything back into their mission.

These ventures aren't merely surviving on donations; they're making every penny count, whether it's saving endangered species or building sustainable communities.

Community social entrepreneurship

Imagine stepping into a neighborhood long overlooked, where hope seems scarce. Here, social entrepreneurs dive in, focusing on job creation, healthcare, or education for the people who need it most. 

One such example is Bayani Brew, a Filipino company that supports rural farmers by investing part of its profits into housing and livelihood programs. Enterprises like this work closely with locals in order to transform communities from within.

Transformational social entrepreneurship

Think bigger. Transformational social entrepreneurs see the cracks in the system and aim to fix them at the source. They don't just treat symptoms; they seek to rewrite the rulebook entirely. 

Just like Grameen Bank reimagined how impoverished communities access credit, these innovators tackle the roots of societal problems and pave the way for massive change.

Global social entrepreneur

Now, zoom out to a global scale. These entrepreneurs address monumental challenges—like ensuring clean water or fighting climate change—that impact millions across borders. 

Take Water.org, for example, which delivers safe water to communities worldwide. Their solutions don't just solve problems—they're scalable, adaptable, and built to ripple across continents.

How to Start a Social Enterprise

Starting a social enterprise begins with but requires much more than just passion. It demands strategy, resilience, and a sharp understanding of business and social impact. If you're ready to turn your vision for change into a reality, these are the steps to get you started:

Identify a problem and define your mission

Great social enterprises don't just happen; they begin with a clear purpose. So, what's the burning issue that keeps you up at night? 

Homelessness, climate change, education inequality—focus on a specific problem you care deeply about. Your mission statement should capture this passion and point to the solution you'll offer. 

Let's say you want to tackle homelessness—your mission might revolve around creating affordable housing or providing job training that gives people the tools they need to rebuild their lives.

Conduct market research

Never rush into solving a problem without first doing your homework around that problem. Before you launch, understand what's already being done and where the gaps are. 

Who are you serving? What do they truly need? Knowing your market helps you find your unique angle—something that will make your social enterprise stand out. Maybe there's a need for affordable housing solutions, but no one's addressing job training. Find that sweet spot where your work can have the biggest impact.

Choose the right business model

Every social enterprise needs a structure that supports its mission. Will you be a non-profit, a for-profit with a social mission, or somewhere in between? 

A non-profit model might allow you to focus solely on impact, while a for-profit model gives you financial flexibility. The decision is crucial, as it will guide how you operate, raise funds, and grow your impact.

Secure funding

Every dream needs fuel. For social entrepreneurs, securing funding can be one of the biggest hurdles. You'll need to explore various options—grants, donations, impact investments, and even crowdfunding platforms like Kickstarter. 

But remember: funders want to back a mission they believe in. So, make sure to articulate your WHY clearly and show potential investors the lasting change their money will support. Simon Sinek's advice in Start with Why rings true here—people don't just invest in what you do; they invest in why you do it.

Build a strong team

Recognize that you can't, and shouldn't have to, do it all alone. Find and surround yourself with people who share your passion and create a team that brings complementary skills to the table. The best teams are those that think differently but are united by a common goal.

Develop a sustainable strategy

A social enterprise isn't just about creating impact—it's about staying around long enough to see that impact grow. Create a solid business plan that ensures sustainability. How will you generate revenue? Will you sell products, rely on donations, or build partnerships?

Your strategy needs to align with your mission so that your work has a lasting effect without sacrificing your purpose.

Measure impact

It's also not enough to say you're making a difference—you need to show it. Social enterprises are judged by the tangible impact they create. So, set clear metrics for success. 

If you're providing clean water to communities, for instance, track how many people you've helped and the health improvements you've triggered. These measurable results are what set successful social enterprises apart.

Stay resilient and adapt

You will face obstacles—some small, others huge. But that's all part of the journey. The important thing is to stay resilient and be ready to adapt when things don't go as planned. 

Markets shift, crises happen, and solutions may not work as expected. What separates successful social entrepreneurs from the rest is their ability to pivot and find new paths to their goals.

The Bottom Line

Starting a social enterprise is certainly no easy feat. However, it's something that can lead to incredible, long-lasting change.

Anyone who is ready to take that next step and develop the leadership skills necessary to drive such impact and meaningful change should consider joining the César Ritz Colleges' Master's in Leadership program. It's designed for individuals who are passionate about leading with purpose, equipping you with the tools to create sustainable change and inspire others to follow your vision.

With the right plan, the right people, and the right mindset, you can build something that not only changes lives but changes the world.

Frequently Asked Questions (FAQs)

What is the function of social entrepreneurship?

Social entrepreneurship aims to solve societal problems through innovative, sustainable business models that create lasting social impact.

What are the 4Ps of social entrepreneurship?

The 4 Ps of social entrepreneurship often include people, planet, profit, and purpose, but variations like partnership or passion can also be used. The focus is always on balancing social impact, environmental responsibility, financial success, and the organization's mission.