For-Profit Companies With Social Missions
For-Profit Companies With Social Missions: Marketing For Social Enterprise
For centuries, doing business in a free-market economy meant that profit was the WHY. The only thing that mattered was the bottom line. Thankfully, the 21st century has ushered in a shift in attitudes. That shift has led to changes in WHAT we do, HOW we do it, and WHY we think it’s worth doing. There’s no better proof that these changes are here to stay than the emergence of social enterprises.
Social enterprises straddle the lines that traditionally separated the private, public, and non-profit sectors. They do so to address gaps that existed under the old way of doing things. A social enterprise balances profit-seeking with social impact and environmental sustainability. Social enterprise opens up possibilities for traditional non-profits and for-profit companies as well as new start-ups.
WHY would an organization want to embrace the social enterprise model?
Read on to find out:
When social enterprise makes sense
What the biggest challenges facing social enterprises are
and
How marketing strategies can help overcome those challenges
Instead of pursuing profit at any cost, a social enterprise sets strategic goals and embraces specific tactics. That ensures the organization’s success doesn’t come at the expense of society or the future. WHAT a social enterprise does can be almost anything but it is usually something that went undone by companies operating under a profit motive. HOW a social enterprise does what they do is socially responsible and environmentally friendly.
What Is Social Enterprise?
In other posts, we’ve talked about Cause Marketing and Mission-Driven Marketing. We’ve talked about how consumer preferences have both motivated and reinforced the moves that organizations have made to do well by doing good. Too often, terms like Corporate Social Responsibility get used as a broad umbrella over all of the exciting things going on. It’s worth knowing what the terms used in mission-driven marketing mean. Otherwise, how can we be sure that we mean what we say?
A social enterprise is a particular type of business model. It’s closely associated with the idea of a Public Benefit Corporation designation. But the two terms aren’t interchangeable. Before we jump into a discussion of the challenges that face social enterprises and how marketing can help avoid or overcome them—it’s worth digging into the details of exactly what we’re talking about.
Defining Social Enterprise
The Social Enterprise Alliance points out that the concept has been evolving rapidly in recent years. They offer the following definition: “Organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach”.
Compare that to the definition put forward by the Corporate Finance Institute. They state that social enterprise “refers to a business with certain social objectives as its primary goal while using a commercial structure to run the organization”.
These definitions focus on the balance between market forces and a socially beneficial WHY. They are inclusive of but not exclusive to organizations with B Corp. status.
UpCounsel defines a Public Benefit Corporation (B Corp) as a specific legal tool. Companies can use it to “create a strong basis for long-term mission alignment and value creation”. In effect, it is a specific choice an organization can make about how it incorporates when it files articles of incorporation.
The Social Enterprise Business Model(s)
Turning back to the Social Enterprise Alliance (SEA), we learn that social enterprises can “span the spectrum of nonprofit to for-profit entities”. They go on to say that their organization recognizes three general business models under the umbrella of social enterprise.
Opportunity Employment Model: This model describes organizations that make employing people who face barriers to mainstream employment the core of their mission.
Transformative Model: This model describes organizations that make products or deliver services that create social or environmental impact.
Donor Support Model: This model describes organizations that make support for one or more nonprofits that address certain unmet needs a pillar of their mission.
According to the SEA, these three types of business models have one thing in common. They are “triple-bottom-line” organizations. That means that they simultaneously pursue profits, social impact, and environmental sustainability.
If you’re in the process of launching a start-up, the common business models might be all you need to know. They let you steer your own project in a direction that is better for your local community or the planet.
If you work at an established organization, you are probably wondering how social enterprise can help. Looking at WHAT they do, HOW they do it, and WHY can help your team go further down the path of doing well by doing good.
The Opportunities Within Social Enterprise
The process of starting up, or transitioning to, a benefit corporation involves specific legal steps. It comes with specific legal benefits. These include sales opportunities, legal protections, and raising capital. It’s not something that we can go into here or something that you should evaluate without the input of legal counsel.
We won’t get into the technicalities of B Corps. We can say that becoming a social enterprise creates certain specific opportunities for traditional nonprofits, start-ups, and businesses.
For Traditional Nonprofits: The social enterprise model is something they can take advantage of to complement their existing programming in ways that advance both their social mission and their financial sustainability.
For Start-Ups: Social enterprise is an opportunity for newly formed organizations to lay out a business plan and strategy that has both social impact and financial sustainability at the core.
For Traditional Businesses: Social enterprise allows companies to officially include social impact in their operations and elevate social impact to an equal position with financial gains.
Is There Anything New About a Company With a Social Mission?
A company wanting to make the world a better place and make money isn’t new. However, the recognition of social enterprises as a new and growing sector of economic activity is fairly recent. The growing popularity of “impact investing” on the capital side and “conscious consumerism” on the revenues side make it an attractive choice for a lot of businesses.
Companies in any industry that want to conduct business in a responsible manner and include their employees and community in the drive for positive change can embrace the social enterprise model. A company or organization that is committed to an environmentally sustainable business plan can create social change at home or around the world.
Companies that make social impact the focus of their mission enjoy numerous benefits. When a company cares about the quality of life of its team and customers, it gets brand awareness and a positive reputation. Finding partners, customers, investors, and employees should be easier for a company that wants to make a difference.
Understanding Social Enterprises
You might be thinking that social enterprise is nothing more than a development of new programs for business management education. But the reality is that most companies have a mission statement. Companies try to balance getting paid with positive change for their employees, their communities, and the world.
So, what does a shift toward social enterprise really mean to an organization when you get down to brass tacks? It gives management permission to make choices based on what’s right instead of what’s most profitable. It gives every employee a role in programs, projects, solutions, and services that seek to make the planet a better place for their customers and their community.
While becoming a Public Benefit Corporation requires specific steps, becoming a social enterprise might not take anything more than a recognition of WHO you are, WHAT you do, and WHY. If your company is already finding ways to improve the world, embracing the social enterprise model is a change of degrees. It mostly comes down to how you tell your story.
The Biggest Challenges Facing Social Enterprises Around the World
Not long ago, a user on Quora asked about the biggest challenges facing companies with social missions. The answers provided by Andrew Forman, a Co-Founder of the purpose-driven performance platform Givz, ended up being published on Forbes.com. They’re worth bringing up here because they help to underline the importance of storytelling to the success of a social enterprise.
Forman begins by pointing out reports that support the growing influence of social entrepreneurship and social enterprises. He notes that pursuing the model allowed him and his co-founder to attract the best employees and scale more quickly—among other benefits.
At the same time, Forman acknowledges that forming a social enterprise wasn’t without challenges. He identifies the three that he feels every social enterprise needs to be prepared for and alludes to some of the ways to overcome them.
Overcoming Peoples’ Suspicions
It shouldn’t be hard to believe that a company that wants to get paid also wants to make the world a better place. Unfortunately, for many people, it is. This can be true for employees, customers, investors, and partners, The whole idea of doing good AND making money as equally important can make some people wary.
Forman pointed out that research conducted by marketing professors found that “people don’t think companies can make a profit and support a social cause at the same time”.
Fortunately, there are ways to overcome people’s suspicions. As marketers, we know it has nothing to do with rational proof. It isn’t about the WHAT and the HOW. You overcome people’s suspicions with the WHY at the center of your brand story. Make your mission a resource. Use it to create connections and convince partners to truly support your programs.
Aligning With Investors
Impact investing and angel investors are signs that change is taking place. But according to Forman that doesn’t mean that attracting funding for a social enterprise is smooth sailing. He notes that social enterprises will face challenges convincing potential investors and partners that they can balance two objectives.
Forman says impact investors tend to favor one side of the equation or the other and that few can maintain the balance it takes to succeed at making money and making a difference.
Forman mentions “some horror stories involving stressful arguments and even loss of funding”. We feel that the approach to demonstrating impact that we talked about in a recent blog post points the way through. This is a potentially challenging aspect of social enterprise funding but it’s another area where storytelling can help.
Getting By
Forman points to a final challenge. He suggests that employees, partners, customers, and investors aren’t the only ones who have concerns about maintaining the balance between getting paid and making a difference in the world.
He acknowledges that “perhaps the biggest challenge is personal for the people running social enterprises”. He goes on to say that he’s had sleepless nights thinking about how his own financial situation would be better if he wasn’t focused on social impact.
But in Forman’s discussion of what keeps him going, we find the exact elements that make a great brand story. He talks about the benefits of being fueled by a desire to make a real difference. He mentions the pride that comes from the opportunity to share that mission with his team. He acknowledges the excitement that comes with every note from a stakeholder. The WHY is what it’s all about.
The Takeaway
It doesn’t matter whether your company has a mission that seeks social impact in your own community or halfway around the world. It doesn’t matter what industry you’re in.
If more companies accept responsibility for the world’s future: people’s suspicions will fade and investors will learn to appreciate the benefits of being partners with responsible organizations.
Companies like Givz, provide rational proof that the social enterprise model can work.
The challenges facing a company that pursues social impact aren’t going to be solved on the level of WHAT and HOW. Effective storytelling looks for solutions on the level of WHY.
Your Company’s Mission Needs the Support of Effective Storytelling
A social enterprise business model is a great way to start up an organization that embraces social responsibility. It’s also a way to transition an existing project to a sharper focus on the goals.
At the same time, social enterprises have to overcome certain challenges that never come into the picture for traditional companies or nonprofit organizations.
The challenges that face social enterprises aren’t simply about resources or technology. They’re challenges that have to do with inspiration, aspirations, and belief.
They’re the kinds of challenges that storytelling can solve more effectively than any other approach.
A Company Needs a Brand Story
It doesn’t matter whether your company consciously chooses to embrace the social enterprise model or not. The direction that marketing and branding are moving in reinforces the idea that companies need a mission.
Put that mission at the heart of the stories your organization tells. Make it clear that you are an example of responsible industry that can make money, protect the planet, and achieve impact.
Make the Story About the Mission
One of the biggest benefits of being a social enterprise is that no matter what industry you’re in, you’ve got a great story to tell.
Businesses that choose the social enterprise model can become well known for their responsible and sustainable approach to making money.
Argonaut Productions Can Help You Tell Your Story The Right Way
We’ve worked with businesses in a lot of different industries. We know that WHAT you do and HOW you do it are important. But every good story starts with WHY.
When you join our crew, you get a partner. We are truly committed to supporting your mission and increasing your ability to make an impact.
Every relationship starts with a phone call. Introduce yourself and let us know what you want video storytelling to do for your company. We’ll work with you to find the best way to tell your organization’s story and show corporate impact.