A couple of months ago, we decided to turn the high school entrepreneurship program we were running into a social enterprise.  We set ourselves a social mission ‘to inspire 1 million minds to think differently about their working life’, then we mapped out a business model that would best serve this social mission, while still meeting the key requirements of a successful business in being profitable, repeatable and scalable.

For several years, we have been strong followers and supporters of the Social Enterprise movements in the UK and US, in fact, Sam is a Graduating Fellow of the School for Social Entrepreneurs, so we have found it really interesting how many Australians are asking us the question ‘Why aren’t you a not-for-profit?’.

So we thought we’d use this blog post to explain, not only why we have elected to operate as a Social Enterprise, but why we believe that a huge percentage of the next generation of entrepreneurs will have a social mission as their core driver for their businesses going forward.

Purpose over Profits

One of the most satisfying moments we’ve experienced while running the Startup Apprentice program was when we asked one of our young apprentices whether he was going to continue building his application once the program had finished.  His reply:

“I might, but now I know how to start a business, I want to build something that will help people and change the world!”

The more kids we speak to, the more this theme shines through.  The next generation of entrepreneurs are connected to the world.  They have been watching and absorbing world problems from their social media feeds for years.  They don’t draw their business idols from the BRW rich list and they don’t want big houses and fast cars – they are for renting out on Airbnb and Uber!  The next generation draw their idols from TEDex talks, Youtube clips and blog streams, they love everyday people doing extraordinary things and aspire to be one of those people, this is why culture and social purpose will be at the core of their business models.

For us, creating a ‘for-profit’ company, which reinvests its profits into our social mission allows us to lead by example and show our students that you can run a profitable business and achieve positive social outcomes at the same time.

Sustainability

Why would a business which is operating primarily to achieve a social outcome decide to be a social enterprise rather than a not-for-profit or charity?

One word…sustainability.

NFP’s and charities primarily fund their activities through grants and donations – the ability for them to carry out their activities is heavily reliant on the generosity and support of individuals, businesses and governments.  Should access to funding be interrupted, it can hamper and even cease the business’ ability to deliver on their mission.

Social enterprises fund their activities through commercial trading – selling products and services to customers using the same principles as traditional business.  By generating their own revenue streams, their social mission is far less vulnerable to external government and fiscal changes and allows the business to grow and scale organically.

With lean business modelling being a key concept in modern business creation, the next generation can recognise that funding and grants, although helpful, do not generate the repeatable and scalable model of an effective global business.

Customer Focus

Drawing on the previous point, by not relying on the financial support of third parties, a social enterprise can truly focus on its own customers and their needs, without needing to balance them with the expectations and deliverables of the external organisations that support them.

Without the external influence, Social Enterprises can stay ‘on mission’ all the time and have the freedom to explore additional revenue streams, new areas of business focus and new opportunities unencumbered.

With innovation driving both social and business change at a rapid rate, the social entrepreneurs of the future recognise that the ability to adapt quickly is essential.

It’s our role as mentors to support and encourage this vision of theirs to create a sustainable social mission, not just for their social good but for the community’s social good.