The Ultimate Guide to Setting Up a Social Enterprise in Singapore
10 min read
There’s been a rising wave of “woke” consumers, with 73% of young people willing to spend more to buy goods with a sustainable or social cause. Do you identify with this growing trend of conscious consumerism, and want to start a business beyond just profits, and fueled by purpose? Here’s a business model you can consider adopting: the social enterprise.
Social enterprises are essentially businesses that promote specific social objectives. Profits are used to fund their social causes. You can do so much more than just volunteer for your favorite cause; you can create your own! You can touch lives like Hello Flowers!, a studio that employs local women who are unable to work and equips them with entrepreneurial skills. Or you can start a sustainability business like Handprint that helps others positively impact the planet by planting trees.
Have a business idea in the social enterprise sector that will fund a cause you’re passionate about? Read on to see how you can make it a reality, with our ultimate guide to setting up a social enterprise in Singapore. We bring you 7 actionable steps on how to start a social enterprise and 5 skills that a social entrepreneur needs.
Overview:
What is a Social Enterprise?
Social enterprises are entities formed as businesses that solve societal needs through their commercial activities. The aim of a social enterprise is to use its profits to maximize its impact on society. It applies traditional, commercial strategies to define clear social goals that bring about improvements in human and environmental well-being, rather than merely making profit for shareholders.
This is however different from a nonprofit business that directs all revenue towards achieving the mission it was founded for. A social enterprise uses the money it makes from selling a good or service towards furthering a cause beneficial to the society.
A social enterprise is very similar to a charity or nonprofit organization (NPO) and the distinction may not be instantly clear. Both organizations are rooted in doing social good, yet, the path taken to reach their goals are different. A major divergence is how money is acquired. Nonprofits obtain money through fundraising efforts, charitable donations, and sometimes from the government. A social enterprise raises funds by selling products and services to the public. Also, social enterprises are registered as businesses and recognized as entities regulated by ACRA. Charities are registered with the Commissioner of Charities under a separate license.
How to start a social enterprise in Singapore
There’s no doubt you’ll find operating a social enterprise an exciting and rewarding journey. Indeed the prospect of doing something with a positive social impact is enough reward for some. Nonetheless, here are some key things to bear in mind as you consider undertaking this journey in Singapore.
- Identify your social cause and the community you’ll support
It’s true that there are so many worthy causes to champion, from social and family development, to sustainability, to animal welfare. But as a social enterprise, you need to be particular about the issue you want to tackle and how to go about it. What touches you the most? Have you been impacted or has someone close been directly impacted by a particular social issue? Once you’ve narrowed your options, identify what you can do to help. It is effortless to keep motivation when you can relate to and understand the social issue you’re tackling.
- Select the business model and product/service you would like to sell
A number of different business types can operate under the canopy of a social enterprise, and as such, you need to identify how you want to operate. While 69% of social enterprises in Singapore are for-profit Private Limited companies, 12% are Sole Proprietorship, and 9% are Limited Liability Partnership. Explore the best way to set up and more on the different models here.
After selecting a sustainable business model best suited to your aim, carefully consider what product or service you can sell to foot your bills. Even with all the passion in the world to tackle a social issue, your business won’t survive if you can’t pay the bills. So what would you like to sell? Who is going to buy it? How stiff is the competition? Be thorough while compiling marketplace research for your business plan, as your business survival and growth depends on it.
- Incorporate your company
Once you’ve selected your business model, you are ready to incorporate your social enterprise. The main things involved in incorporation include reserving a name, listing directors, stating your registered address, registering with relevant government bodies, and naming a corporate secretary.
Appointing a corporate secretary can be done in-house or outsourced and is mandatory to ensure your company is always properly advised on relevant statutory issues. If you’re worried about keeping compliant with local laws, you can use Sleek’s corporate secretary services to do it for you. That way you can focus your full attention on the cause and getting your business set up. If you want to unlock all the information needed to incorporate and manage your business, feel free to download our one-stop guide to starting your business in Singapore.
- Maintain crystal clear accounting
Despite all the intent to do good, social enterprises are still just like any other business. And like any other business, the importance of proper accounting cannot be overstated, as healthy finances ensure your efforts are long-term and continuous. Your finances and expenses should be well documented, especially as you don’t want to be accused of mismanaging funds that should go to social causes. One way to easily manage your finances is to integrate digitalized accounting services like Sleek. You can read up on our simple, transparent accounting services here.
- Apply for licenses or certifications in Singapore
Pay attention to licenses and certifications needed for your business to be compliant. For instance, you are required to register with the Commissioner of Charities before you can carry out fundraising activities within the social enterprise sector. Whether your social enterprise is a retail shop, a restaurant, or anything in between, you will most likely need industry-specific licenses in order to operate. For an extensive list of licenses and permits you may need, you can read this guide to permits and licensing in Singapore.
- Secure funding
Although social enterprises aim to be financially self-sustaining, once the incorporation and certifications are done, the world of funding will truly open up for your business. Generating revenue as a social enterprise in Singapore is easier than a lot of other countries, thanks to strong governmental support to encourage growth in the sector. The sector is taken so seriously that an agency, raiSE, was set up as a Centre for Social Enterprise in Singapore. By registering with them, your company is thus given access to different grants and schemes that are uniquely available to social enterprises. An example of such a grant is the $100,000 seed grant under Venture for Good (VFG).
- Serve the community
Now that you’re all set, don’t lose sight of the primary concern – your positive social impact. You can have a massive impact in the community with the help of programs embedded in your corporate structure. Make connections, collaborate and work with other businesses with Corporate Social Responsibilities (CSR) programs that align with your mission. Your social enterprise can assist society in supporting and empowering others.
What skills does a social entrepreneur need?
Succeeding as a social entrepreneur goes beyond simply using profits to tackle social issues. A social enterprise is structured like a traditional, commercial, entity, with a business model, consumer base, and revenue streams. These revenue streams require delicate management to go back into the initiatives of the enterprise while also creating self-sufficiency in their operations. It should therefore come as no surprise that an aspiring social entrepreneur needs particular well-rounded skills to be successful in starting up a social enterprise.
- Eye for unjust social issues
Perhaps the most crucial skill to possess is the ability to notice and identify a social issue. A social entrepreneur’s journey starts from recognizing a social issue that affects a segment of the society.
- Identifying business opportunities
Not only does a social entrepreneur set social objectives, the ability to carve out a business opportunity that will benefit all parties and grow your business must also be present. This is crucial as such opportunities usually need to be creative and innovative.
- Willingness to directly get involved
Direct engagement is important to bring about the changes the social entrepreneur wants to establish. A successful social entrepreneur should be able to relate with those affected directly, this is the best way to understand and work on what needs to be worked on.
- Effective communication skills
For your business to truly make an impact, it is important to effectively raise awareness, and motivate people towards their vision. For a social enterprise to thrive, the entrepreneur has to be capable of inspiring belief and raise support through effective communication.
- Commitment to social justice
A social enterprise faces many challenges. Without commitment and passion to social justice, achieving the goal becomes nearly impossible. For a social entrepreneur to be successful, they must be passionate and persistent enough.
Why you should start a social enterprise in Singapore
Social enterprises play a crucial role in trying to correct some of the social injustices suffered in society. They are also rising in popularity and relevance. There’s no easier place to impact society than Singapore. The government is so supportive that a whole organization was set up to provide advisory services, resources, and training to ensure social enterprises thrive and become successful. Self-sustenance is encouraged by building capacity and providing numerous financing options.
At Sleek, we understand not just your passion, but also the importance of creating an inclusive society. Let us help you bring your vision to reality, incorporate your business with us.
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