Why have so many people risked everything to start new businesses, when more than half of all new businesses fail within five years? Until the late 20th century, the answer was simple: the lure of riches and being your own boss. However, a new generation of social entrepreneurs is combining social and environmental concerns with wealth creation. Today, more and more people are finding innovative ways to make capitalism work for them, their communities, and the environment.
Many social entrepreneurs still dream of making money and being their own boss by forming sole proprietorships or traditional corporations, while others join non-profit cooperatives. However, they are all united by a single purpose: to improve the world, whether through environmental or social advances. Despite altruistic goals, social entrepreneurs are just as driven and ambitious as conventional entrepreneurs to deliver innovative solutions.
For example, social entrepreneurs build low-cost shelters for the poor with recyclable materials, develop affordable solutions to widespread health problems, create clean water systems for drought-stricken areas, bring educational resources to remote regions, promote the arts among the disadvantaged and develop efficient means of transporting goods and people over rough terrain.
Social entrepreneurship success stories abound, such as Wendy Kopp, who launched Teach for America, a highly successful movement to eliminate educational inequality in the nation by enrolling the most promising college graduates to teach in low-income communities. Since 1989, Teach for America has recruited, trained and supported more than 17,000 recent teacher graduates for two years in economically depressed districts.
Mimi Silbert, founded Delancey Street, one of the nation’s leading residential self-help organizations, working with everyone from the illiterate and homeless to drug addicts and ex-convicts. Delancey Street equips those who have hit rock bottom with marketable skills in just six months. The organization is financially self-sufficient, with most of its funding coming from businesses founded by Delancey Street graduates, such as moving companies, restaurants, and delivery services.
While there is no single path to becoming a successful social entrepreneur, the following five steps provide a roadmap that can greatly increase your chances of success:
1. Find a cause that inspires and has a profitable solution
The first, and perhaps most important, step to becoming a successful social entrepreneur is to identify an environmental or social ill that motivates you to act. However, that’s only half the challenge; the other half is finding a profitable solution to the problem. Even non-profit organizations must survive financially, so you need to ensure a continuing means of financing your venture. It’s worth noting that government grants come and go, while income from the sale of products and services tends to be a more consistent source of money.
2. Create a solid business plan
Whatever form of social entrepreneurship you wish to pursue, certain elements must be present for it to be successful. Research shows that poor planning and insufficient financing are the top two reasons businesses fail. Fortunately, creating a well-researched and carefully thought-out business plan can go a long way toward ensuring success. Creating a business plan forces you to consider your organization’s fundamental mission and goals, as well as who you want to serve, your unmet needs, and how to organize your marketing mix to meet those needs. Additionally, a good business plan provides operational details, financial forecasts, and explains how to monitor performance and adjust course accordingly.
3. Secure funding
Undoubtedly, the most important challenge facing a social entrepreneur is finding the necessary financing to launch and maintain a new company. In addition to traditional sources of capital and loans, social entrepreneurs can seek help from the following organizations:
- Ashoka provides financing and support services to social entrepreneurs
- Echoing Green offers seed capital and support to entrepreneurs with pioneering ideas to achieve social change.
- The Skoll Foundation invests with social entrepreneurs primarily through its Skoll Entrepreneurship Awards and connects them with key people and resources who can further their causes.
- The Tides Foundation partners with social entrepreneurs to advance economic, social, and environmental progress through a variety of efforts, including fiscal sponsorship.
- The Schwab Foundation identifies, connects and works with selected companies to promote specific social entrepreneurship initiatives.
4. Be smart when implementing your plan
Since social entrepreneurs are cash-strapped, with little or no money to finance their operations, marketing, and service delivery, they must exploit the least expensive and most effective strategies and tactics. Most importantly, social entrepreneurs must efficiently find the people and communities they seek to serve and identify their unmet needs.
This is where social media marketing comes into play. Social media marketing enables organizations to identify and engage with their constituents, access feedback, gather valuable feedback, and influence sentiment about the organization and its offerings. Social media platforms include everything from blogs and video sharing to social networking and social bookmarking.
To use these freely available social media platforms wisely, social entrepreneurs must decide which platforms are best suited for their purposes and how to use them productively. This means designing a social media marketing campaign, setting clear and measurable goals, investing time to familiarize yourself with the platforms and participants, creating compelling content, monitoring campaign results, and making adjustments as necessary to succeed.
Done right, social media marketing provides a cost-effective way for social entrepreneurs to network, find support, influence constituents, form collaborative efforts, and establish an image of trustworthiness, integrity, and security.
5. Monitor for success
The focus of social entrepreneurship, whether for profit or not, is social change. Therefore, the evaluation process should assess the progress made in achieving specific environmental or social improvements. Clear and well-defined objectives greatly simplify measuring the impact of a program on its intended ecosystem or on the recipients.
In addition, it seems appropriate to evaluate the leadership performance of the social entrepreneur. After all, that individual is at the heart of social entrepreneurship, acting as an advocate, champion, and steward of a driving vision to improve the environment or society. Therefore, evaluating the leadership, management and spokespersonship capabilities of the social entrepreneur is essential to guarantee the sustainability and ultimate success of the company.
Finally, as with any startup, the economic performance of the organization must be analyzed using the same methodologies applied to traditional for-profit businesses. Although profit may be a secondary or even non-existent consideration for some social entrepreneurs, each business must receive or generate enough funds to survive, if not thrive.