Before I jump in to point out why a social enterprise fails, let me first clarify a frequently asked question: what is the social entrepreneurship definition?
While there is no set in stone definition available, my Business & Sustainability Consulting firm, Vyugam, defines social entrepreneurship as follows:
Vyugam calls it Social Entrepreneurship if a primary role of entrepreneurship is to create positive impacts in people's lives, protect non-human beings on the planet, and ensure humans have access to basic needs.
Here are a couple of social enterprise examples for you: Tesla, led by a famous entrepreneur Elon Musk, Beyond Meat by Ethan Brown, and there is only a hand full of successful entrepreneurs who succeeded with social entrepreneurship ideas. Why only a handful? That's precisely why I wrote this article and, in fact, why I founded Vyugam.
There are three primary reasons why social enterprises fail.
Reason #1: Resource Gap Kills Passion
Social Entrepreneurs get their new business idea out of a passion for solving a big problem in their society. Passion and determination may not be sufficient to run a successful social enterprise; they need business skills. In reality, social entrepreneurs have to compete with traditional for-profit businesses and corporations. Vyugam is a team of specialists in specific business management skills, and as a bonus, we put people and the planet before profit, just like every social entrepreneur! Vyugam fills social enterprises' resource gaps.
Alone you can do so little. Together, we can do so much. Inspired by Helen Keller's wisdom.
Reason #2: Lacking Clear and Persuasive Communication
The creative approaches that social entrepreneurs take to solve social and environmental problems are often overlooked or underestimated by their potential customers, investors, suppliers, and employees. For the past few decades, people's mind was conditioned only with the concept of the linear economy rather than the circular economy. Vyugam understands how a for-profit business succeeds by using clear and focussed communication. Being a social enterprise ourselves, we know social entrepreneurs thought process better than anyone else. Vyugam helps social entrepreneurs to communicate ideas and stories clearly and concisely that their target audiences want to hear.
People listen when you tell what they wanted to hear, not when you say what you wanted to tell.
Reason #3: Distractions and Failing to Get Important Things Done
Teams within social enterprises often suffer from a lack of coordination and focus compared to purely-for-profit businesses. Profit being the strongest or only driver from all directions of a for-profit organization, it is easy for them to organize the team to work towards the common goal: money. The increasing number of social and environmental problems disrupts the focus pithing the teams of social enterprises. As a result, they struggle to achieve immediate goals to solve more significant issues in the future. Vyugam doesn't just understand this constraint but also knows how to inclusively structure the project team and get things done while enhancing the team spirit. We are professionally trained, inclusive project leaders and not just traditional project managers.
Focus means saying no to 100 other great ideas. Inspired by Steve Jobs's wisdom.
Is this my original idea? Of course, not! I believe in learning from others and not to stop learning. I got inspiration from these articles (Harvard Business Review, Stanford Social Innovation Review, and We Forum) to curate the information that benefits you.