Social Enterprise Information
Social enterprise, known by other names such as ethical business, is a type of business strategy that centers around a mission or ideal in addition to a specific profit strategy. These businesses work to influence society in a particular way, but still operate like a normal business and are traded like other corporations.
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Definition
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Essentially, a social enterprise business is very much like a nonprofit organization, except nonprofits are in a separate business class and do not produce revenue like normal businesses, depending on donations, funding, and grants to pay for their services. Social enterprises operate in the nonprofit field, but are traditional businesses trying to make money, seeking out the best of both worlds by adopting an ethical viewpoint while maintaining revenue.
Examples
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Some social enterprise businesses focus on the environment and sell eco-friendly products or services to people, making money but holding as their primary goal the betterment of society and the Earth. Other social enterprises may raise awareness of AIDS, poverty or child slavery by selling certain products or managing the flow of information and funds to nonprofit organizations while making a profit themselves. Some large nonprofit organizations create social enterprise, for-profit sectors so they can have a more established flow of income.
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Legal Aspects
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There are often legal benefits associated with starting a social enterprise. While the United States government does not grant loans to start businesses, a social enterprise can usually claim tax benefits for a variety of work, especially those involved in eco-friendly technology or other products the government has created business tax benefits for. Unless the company is part of a nonprofit organization, there is no special filing required for a social enterprise business, because it is more of a strategy than a class of company.
Benefits
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Most social enterprise business specialize in improving one aspect of society and so have a built-in target market that is much easier to find and appeal to than the markets of more nebulous business strategies. This saves money in analysis and advertising techniques. Social enterprise is also seen in a positive light by both consumers and investors, which can help the business raise capital and develop revenue more easily.
Considerations
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Social enterprise businesses are rarely required to prove their social ideals and practices. Some businesses enter into social enterprise for the revenue benefits without intending to help society itself. These businesses appeal to consumers who care about these social ideals, but the businesses are profit-driven and use social enterprise purely as a marketing strategy. This can lessen the impact of true social enterprises, and without careful examination, consumers may have trouble telling which is which.
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References
- Photo Credit business image by peter Hires Images from Fotolia.com
