Essay: Running a successful social enterprise

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  • Subject area(s): Business essays
  • Reading time: 5 minutes
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  • Published on: January 16, 2019
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  • Number of pages: 2
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Social and business enterprises are not black and white in their differences, they share many characteristics and values that are interchangeable however there are certain traits in how each business is run that can distinguish them. The main difference is their objectives and aims; a social enterprise is created by recognising a social or environmental problem that needs to be tackled and then creating a venture to address this issue (Austin, Stevenson, Wei-Skillern, 2006), for example acknowledging that ex-convicts struggle to find jobs once they are released and creating a business that focuses on hiring these ex-offenders. The social enterprise’s priority is addressing the social problem whereas a business enterprise’s priority is to maximise profits and please shareholders, this could be through responding to market opportunities and gaps (Chahine, 2016). This relates to how each enterprise measures the success of their business; a business enterprise would through increasing profit and providing growth for shareholders whilst a social enterprise would measure success based on the social impact they are trying to achieve.
Each enterprise also differs in what they do with their success, such as what they do with their profits. According to Social Enterprise UK (2012), for a company to be considered a social enterprise, over 50% of profits must go towards solving the social issue or reinvestment into the scheme. On the other hand, a business enterprise has the freedom to use their profits as they wish, whether for individual reward or business expansion. Business enterprises also have more freedom to change; they have the flexibility to adjust with the market and evolve over time whereas a social enterprise is relatively restricted by their social mission which may affect their ability to grow and adapt.

As well as differences in the characteristics of the enterprises there are also differences in the characteristics of the individuals who set them up. Business entrepreneurs are often driven by individual success and gain through making money or becoming a household name. Alternatively, a social entrepreneur is driven by other people’s’ needs rather than their own, this is why they choose to start a business that makes a difference to society or social challenges and personal financial gain is less important to them. However due to social entrepreneurs reasoning to start a business, it could be suggested that they are less business savvy than a traditional entrepreneur and therefore may be less likely to succeed unless they seek professional advice.***

Like any start-up, an enterprise must learn to manage its stakeholders including the customers, shareholders, and employees. It can be difficult to please all of these influencers and a social enterprise has the additional important aspect of creating a social impact. The social entrepreneur must find the right balance between pleasing these stakeholders and their main priority of changing a social or environmental challenge. It could be suggested that the pressure from other stakeholders could create drift in the social enterprise’s aims and the entrepreneur may become unavoidably focused on pleasing these other stakeholders thus diluting the original intent of the social impact of the enterprise. For example, in 2002 Jamie Oliver created his social restaurant Fifteen with an aim to give young, unemployed the opportunity to work within the restaurant business. However, since then only two other venues have opened to expand this programme and in 2016 there was fear that the Cornwall branch was struggling and considering having to let members of staff go (, 2016). This suggests that the enterprise was not doing as well as initially expected. It is clear that the restaurant world is very competitive and cutthroat with many other establishments failing to succeed, including Jamie Oliver’s other business Jamie’s Italian which announced that they would be closing over 30% of their venues this year (Farrell, 2018). Considering this, all three Fifteen’s are still in business at present so it could be suggested that the founders had to stray away from the social aspect of the enterprise in order to keep the restaurants open. This may have been through jobs cuts or reinvesting a proportion of profits into the company rather than to the charity foundations as originally planned.

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