Social Enterprise: Why doing good is good for your business
10 minute read
Social entrepreneurs are creative and passionate individuals who want to bring about change. They are leaders who identify a specific societal problem and feel deeply driven towards finding a sustainable solution for it. Unlike charities or non-profit organizations, social enterprises can seek profit with a primary goal to create a social impact on the community at large.
Interested in effecting change in your entrepreneurial journey? Here’s why doing good can be good for your business.
Overview
- How social enterprises are different from non-profit organizations
- Social enterprises in Singapore
- Tips to building a social enterprise
- Essential skills required to become a social entrepreneur
- Passion to create a better world
- Frequently Asked Questions
How social enterprises are different from non-profit organizations
Social enterprises | Non-profit organizations |
May or may not depend on external funds for their functioning. As they aspire to be self-sustainable, they mostly sell goods or services that promote a social, economic, or environmental cause. | Not financially independent and rely on funding or charitable donations from external sources, including companies, individuals, or even governments to function. |
Can focus on earning profit for its shareholders and owners, but they are free to make a choice between not-for-profit and for-profit structures depending on their business model. | Not-for-profit entities |
Can be both private and public in its operations. | Always public in its operations. |
Limited by shares | Limited by guarantee. |
Taxed at a normal tax structure. For sole proprietorship or partnership structures, it is taxed under individual income tax rate from 0% to 22%. | Enjoys income tax exemption as a registered charity |
Social enterprises in Singapore
With that, here are some key examples of social enterprises in Singapore that are making a difference in their respective sectors.
- Fashion & retail sector: Fairmarch is an example of a social enterprise that offers a marketplace for “socially and environmentally responsible products, empowering businesses that have a socially driven mission”. They want to raise awareness for social and environmental issues and encourage inclusive practices for the disadvantaged and differently-abled.
- Health & social services: Centre for Psychotherapy is an organisation that believes in social responsibility and aims to make counselling and psychotherapy services accessible to everyone.
- Household services: Anisya, a registered social enterprise with RaiSE, aims at eliminating the debt burden on Foreign Domestic Workers (FDWs) when they seek jobs. While promoting employment freedom and empowering workers, it also helps employers make informed choices.
- Health and wellness: The Prosthetic Company is a social enterprise that specialises in prosthetics and orthotics services in Singapore.They run a mobile lab, which the brand says is “equipped with maintenance tools, uniquely designed for flexible operation in various applications, locations and conditions”.
- Food & Beverages: DON8URI is an F&B social enterprise that aims at providing employment to deaf individuals. To promote greater inclusion, they even conduct sign language workshops.
- Education and training: Angels of Impact offers funding and technical assistance to women-led community-based enterprises to help fight poverty for marginalised communities of ASEAN countries, with a focus on women and indigenous-led regenerative enterprises.
Tips to building a social enterprise
Starting a new business is not an easy task and is even more difficult when wanting to create a social impact and earn profits for its stakeholders. Here are some simple tips to keep in mind to launch a successful social enterprise:
- Identify a cause and look for its solution: To begin with, you need a sharp pitch for your business. Ensure it is clear and easy to understand. Your brand needs to focus on one clear mission and work dedicatedly towards it, only then can you convince individuals, governments or organizations to invest in your idea and be a part of the social change.
- Choose what kind of products/services you want to sell: There are a variety of business types that fall under the umbrella of a social enterprise, so you need to identify your sector and decide on a structure and a model for how you want to operate. After selecting the right model that is in alignment with your goal, consider what product or service you are willing to sell to pay your bills.
- How will you manufacture the product or give the service?
- Will providing the service or building a product need to hire people or can some of it be outsourced?
- How tough is the competition?
Do detailed research on the marketplace, as the growth and survival of your brand depends on it.
- Be sure of your market: It’s imperative to know the market you’re selling for. A few basic questions that a social entrepreneur needs to keep in mind:
- Is there a market for what I am selling?
- Who is the target audience?
- Who are the competitors?
- What will be your brand’s highlight that distinguishes it from the rest?
- Be sure of your market: It’s imperative to know the market you’re selling for. A few basic questions that a social entrepreneur needs to keep in mind:
- Is there a market for what I am selling?
- Who is the target audience?
- Who are the competitors?
- What will be your brand’s highlight that distinguishes it from the rest?
- Calculate your finances: Before you launch your business, you need to understand your expenses and get an estimate of how much money it will take to start your business. Additionally, entrepreneurs need to have a realistic expectation of when revenues will catch up to costs. You might have to suffer losses for a year or two, or perhaps longer, and you’ll need money to get by. Have rainy day funds, speak to family and friends or angel investors for guidance. Look for financial calculators online that could help you plan and manage your financial goals.
- Hire staff that believes in your goal: If you’re setting up a new enterprise, you need to engage people who think entrepreneurially and believe in your company’s mission. Hiring the right employees and engaging companies that will help you in advancing your clear social goals always pays off and here’s how you can do it.
- Apply for licences: Get registered with the Commissioner of Charities before you take up any fundraising activities. Whether your social enterprise falls under the category of beauty and wellness, F&B, or home services, or community services, you need industry-specific licences to operate and offer your goods and services.
- Focus on revenue generation: Although social enterprises aim to be financially self-sustaining, there is no harm in securing funds from external sources. To lend financial support to social enterprises in Singapore, raiSE, a Singapore-based agency, was established as a Centre for Social Enterprise. Once registered with them, you can gain access to various grants and schemes that are specific to social enterprises.
- Maintain clear accounting: Your finances and expenses should be meticulously documented, especially if you don’t want to be scrutinised and accused of mismanaging funds intended for charitable purposes. Integrating digitalised accounting services such as Sleek is one way to simplify financial management.
- Tap on social enterprise grants: For the new and established social enterprises that are registered/ intend to register under the Companies Act or Co-operative Societies Act and need funding, raiSE offers the VentureForGood (VFG) Grant, supported by the Ministry of Social and Family Development. One can apply for up to $300,000 in grants. Be it seeking financial support for your business, adoption of digital solutions, tax subsidies or angel fundings in Singapore, here’s all that you need to know.
Looking for a step-by-step way to start your social enterprise? We’ve got you covered in our comprehensive guide to building your social enterprise here.
Essential skills required to become a social entrepreneur
A successful social entrepreneur thinks beyond simply making profits while fighting social injustices. A social enterprise typically has its own business model, consumer base and finance streams that require efficient management to make it self-sufficient and sustainable. To be successful in starting a social enterprise, an aspiring social entrepreneur must have a diverse set of skills:
Ability to identify social issues
The ability to identify a social issue is one of the most important skills to have. The journey of a social entrepreneur begins with identifying a social issue and offering creative solutions to combat it.
Capability to look for business opportunities
Apart from setting social objectives, a social entrepreneur should be able to harp on business opportunities that can help in advancing your social goals. This skill doesn’t come easy. You may get passionate about a social cause, yet not know how to identify a business opportunity there.
Ability to network
Direct engagement is important to bring about the changes the social entrepreneur wants to establish. A successful social entrepreneur is one who understands a cause at its grassroots level and is able to connect with those who are directly impacted and is able to address the issue.
Powerful communication skills
For your business to create a buzz in the market, it is important for an entrepreneur to be capable of inspiring belief and raising support through powerful communication and networking skills. Social entrepreneurship is all about working for the betterment of society. Be a good collaborator and help spread the word about the cause you are working for.
Motivated and driven despite setbacks
A social entrepreneur needs to be driven and stay true to their mission of fighting a social cause, while making the brand self-sufficient in its operations. Self-sufficiency is attainable once the brand has earned enough profits, and it can be put back into supporting the social mission of the organisation.
Passion to create a better world
Social entrepreneurship allows you to pursue your passion for positive social change and compassion while also creating business opportunities and making a difference in society. It is a win-win situation for both the individual and their organisation because by transforming your company into a social enterprise that works to improve society, you gain a competitive advantage over others while also earning some good karma.
In Singapore, social enterprises exist in nearly every sector from health and wellness to education and training to home services and food and beverage. Majority of social enterprises in Singapore (51%), serve low-income individuals and families. Social service organisations (42%), people with special needs (40%), vulnerable youth and children (34%), and women and girls (31%).
Social enterprises are businesses beyond just profits that promote specific social objectives. So if you have an idea that you believe can make this world a better place and has the potential to generate revenue for your business, Sleek can help you bring your vision to reality by managing your backend operations. Contact them for more information.
Frequently Asked Questions
What is social entrepreneurship? Is it different from running a charity organisation?
A social entrepreneur is someone who prioritises social good while pursuing financial gains to support their brand. They employ commercial tactics to address social and environmental challenges.
A social enterprise may be a for-profit or non-profit organisation. Usually, any revenues made by the enterprise are reinvested to advance their claimed social goal or assist their neighbourhood.
Does the government in Singapore provide funds for the same?
Both new and existing social enterprises that require capital to either start up or expand their operations can apply for a VentureForGood (VFG) grant supported by the Ministry of Social and Family Development through the Singapore Centre for Social Enterprise (raiSE). Grants of up to S$300,000 are available to applicants. To qualify for the grant, a social enterprise must have a clear and compelling mission that intends to transform society as well as a credible business case that includes details about the business’ potential scale, market analysis, product differentiation, pricing, prospective rivals and long-term business plans.
Social businesses often make money through trading goods or services. They can apply for grants just like charities, and they can receive investments in the form of equity or seed money just like commercial businesses. Crowdfunding, community investment funds, and competitions are additional means through which social entrepreneurs might raise money.
