Social enterprises face a unique set of challenges as they navigate economic viability as well as their commitment to a social purpose.
Social enterprises share properties with both businesses and not-for profits (NFT). If businesses are traditionally profit-first, and NFPs are characterized as mission-first or purpose-lead, then social enterprises are somewhere in the middle, combining aspects from business, like revenue from sales and market responsiveness, with elements of NFPs, such as being built on a social mission and a community focus.
According to Sally Osberg, president and CEO of the Skoll Foundation, and Roger Martin, former dean of the Rotman School of Management, “to succeed, these ventures must adhere to both social goals and stiff financial constraints. Typically, the aim is to benefit a specific group of people, permanently transforming their lives by altering a prevailing socioeconomic equilibrium that works to their disadvantage”.
Based on the complexities arising from balancing both mission and profit, it’s no wonder that many social enterprises, and the social entrepreneurs who shepherd them, face challenges along the way.
Challenges For Social Enterprises
In interviews with current social entrepreneurs, academics, and social enterprise consultants, a number of common themes emerged as challenges uniquely encountered by social enterprises.
The Cost Of Passion
CEO and Principal Consultant of CRSE Group Carmel Riley shared, “our biggest challenge is protecting our mental health and wellbeing – our whole heart goes into every intentional action every day”.
Riley went on to explain the personal costs faced by those who follow their passions: “we are skilled at overcoming obstacles and navigating grassroots change in a way that the system cannot do, however, if we do not have means to prioritize self-care, it comes at a personal cost”.
Pulled In Both Directions
Dr Jon Hewitt, RMIT University researcher of fashion-based social enterprise, noted “social enterprise leaders often grapple with balancing social and commercial goals, navigating limited resources, and building consumer trust”.
Adding to this theme, founder of 3P Impact Alan Taylor said, “these challenges are compounded by societal attitudes that prioritize profit over purpose, often reducing mission-driven work to a ‘cost’. This view overlooks the profound losses (environmental, social, and cultural) that occur when purpose is undervalued”.
Working within a profit-driven economy forces social enterprises to compete against lower cost and sometimes unethically sourced products and services.
From Intent To Action
More importantly, those interviewed provided actionable recommendations to move from good intentions to impactful action.
Collaboration and Community
“The best way is through collaboration—no single leader or enterprise possesses all the skills needed to deliver every outcome, stated Susanna Bevilacqua, Founder and Director of Moral Fairground. “By taking intentional action in partnerships and leveraging the strengths of others, social enterprise leaders can achieve greater impact together than they could alone.”
The importance of collaboration was noted by all of those interviewed. Taylor added the following: “no matter how capable we are, we can’t do everything alone. A connected community provides support to lift us when we’re down, unblock us when we’re stuck, and help solve challenges we can’t tackle on our own”.
Personal Wellbeing
Other advice to social entrepreneurs focused on self-care and wellbeing. Riley advised, “be unapologetic about nurturing and protecting your wellbeing first, in order to be available for others”.
To further look after for yourself and noting the importance of community, Riley added, “recognize the intensity of your passion can have unintended consequences and distance others. You need to find ways to temper your passion in a way that brings people along with you”.
Balancing Profit And Purpose
While there may be many challenges for those who balance profit and purpose, there is also great opportunity for social impact. With these tips from social enterprise founders, researchers, and consultants, aspiring social entrepreneurs can take action to build up their communities, engage in collaboration, and ensure their own wellbeing.