Social entrepreneurship is a new trend, which seeks to solve social problems. To be a social entrepreneur you must first generate value for society. And so you will attract your audience and more opportunities!
Gone are the days when the search for profit and dizzying growth were the only concerns of a company, without presenting any type of objective for the common good of society.
Today, the social sector occupies a very important part of the market, bringing together that aim to unite profit, sustainable development and social value in the same activities.
Do you want to start investing in this aspect of your business, but don’t know what to do first?
In this article we tell you everything you need to know about social entrepreneurship!
What is social entrepreneurship?
At the center of the reason for the existence of any business, we find its value proposition, which seeks to add it and relate it to the products and services offered.
When we talk about social entrepreneurship, the idea and the action molds work in the same way.
The difference is that the focus of the business, in this case, is directly related to the solution of some social problem.
Social issues that can be worked on in entrepreneurship
The social problem chosen by the company can vary according to several aspects.
It can refer to a common situation in the place where your business operates, to a problem that affects several people or to something structural in conditions that are far from ideal.
These social problems can be related to issues such as education, health, human rights, environmental cause, homelessness, poor income distribution, and various other aspects of society.
Thus, a company that practices social entrepreneurship has, in its business development stages, to act in combating problems of this nature, contributing to the sustainable development of the community in which it participates.
How is profit in social entrepreneurship?
Unlike a Non-Governmental Organization (NGO) or a Civil Society Organization of Public Utility (OSCUP), the companies established in the social entrepreneurship model have the objective of obtaining profit.
The purpose of this search is to achieve a way of self-sustaining through the commercialization of its products and services, avoiding depending exclusively on donations or sponsorships from third parties.
In the division of organizations into sectors and products, which considers the State as the first sector, business as the second sector and non-profit organizations as the third sector, social enterprises could already fit into a “two and a half” category.
At the end of the day, social entrepreneurs have a mutual objective, profit and social welfare.
The idea of profit
The profit approach is one of the main differences between a common company and a social company. For the common entrepreneur, the idea of making a profit is what drives their business. Its proposal is to serve markets that can pay for its product or service and, thus, produce financial profit.
In common ventures, entrepreneurs and investors are expected to obtain personal gains in the financial sphere, with profit being the main motivator for sustaining the business.
In contrast, social entrepreneurship does not prioritize financial profits for its investors. And this happens because most of these investors are philanthropic or government organizations.
Therefore, unlike traditional companies, which seek to generate profits for investors and founders, social enterprises are intended to add value for a deprived part of the population that does not have the financial or political resources to achieve the benefits they want.
We can say, then, that the financial profits sought by social entrepreneurship are a means to achieve the final social objectives, functioning as catalysts in solving the problems they address.
How is social entrepreneurship in Latin America?
Over time, we have been able to see with emotion how the number of startups in Latin America has increased. Although it is true that, in general, Latin American countries are still far from the entrepreneurship figures recorded in North America or Europe, experts agree that in the coming years the region may experience significant growth in terms of entrepreneurship is concerned.
Chile, Brazil, Argentina and Mexico have a long history in the world of entrepreneurship. And whose stories are certainly worth admiring and noting.
There are several reasons why Chile is so high on the list. As such, it has always had excellent politics and economics for doing business, being a nation that has always embraced new business opportunities.
In turn, Brazil, one of the most enterprising countries in the world, today has about 17 million small businesses, a number that corresponds to 99% of all companies in the country. And it is known that it has a population of more than 200 million inhabitants, considering itself the largest market in South America.
But taking into account the Global Entrepreneurship Index (IGE) prepared by the Institute of Entrepreneurship and Global Development (GEDI). This annual report indicates that the most active Latin American country at an entrepreneurial level is Chile, which occupies the 19th position in a ranking led by the United States, Switzerland, Canada, the United Kingdom and Australia.
The other countries in the region that are among the 50 most relevant worldwide are Puerto Rico (41st place), thanks to the important economic and institutional link it maintains with the United States, and Colombia (47th), while Uruguay ranks 51st
The challenges of social entrepreneurship
Meanwhile, not everything is flowers for social enterprises. In most Latin American countries, there is still a lack of a legal framework that regulates impact businesses and the attraction of resources is still very weak, which makes it difficult to develop smaller-scale projects.
For this reason, the main social entrepreneurs still depend on donations or direct investments, turning many businesses into a hybrid between social enterprises and non-profits.
Despite the difficulties, the scenario is quite positive, since the concept is still relatively new in the countries of the continent and only in recent years has it begun to attract the interest and support of government institutions, such as ministries (Social Development, Planning, Industry), and large organizations.
5 social entrepreneurs to be inspired
Do you still have doubts about how social entrepreneurship works?
We then separate 5 !
1. Muhammad Yunus and Grameen Bank
One of the biggest names in social entrepreneurship, the initiative of Hindu Muhammad Yunus is a classic example of this type of ideology.
The problem that he identified was related to the restrictive conditions that the poorest Bengali population had to obtain even the smallest sums of credit in banks.
Unable to qualify for loans through the formal system, these people could only turn to local moneylenders, who charged stratospheric interest rates. The result of this was the aggravation of extreme poverty and the increase in the number of beggars on the streets.
Seeking to solve this serious situation, Yunus comes into conflict with the banking system, proving that the credit risk for loans to the poor population was extremely low.
As it did?
Lending 27 dollars from their own savings for 42, inhabitants of the small village of Jobra.
The loans were repaid in full and the Yunus experiment proved that, even with very little capital, the women invested in their own labor power, purchasing sewing machines and producing income from their efforts.
That income was enough to support them while paying off the loan.
Based on this logic, Muhammad Yunus founded the Grameen Bank, which was maintained through interest on loans. The originated capital was recycled to help other women in poverty.
Yunus’ attitude brought inspiration, courage and proof of the sustainability of a successful social enterprise. Known as “banker of the poor”, Yunus was responsible for creating the term “social entrepreneur” and was awarded the Nobel Peace Prize in 2006.
2. Nina Smith and GoodWeave International
Nina Smith’s female entrepreneurship is an example. Disgusted with the high rates of child labor in the carpet manufacturing sector, she created GoodWeave International, a social enterprise aimed at mitigating that problem.
Operating both in carpet production and manufacturing facilities, mainly in Asian countries such as India and Nepal, as well as in the European and North American consumer market, GoodWeave invests in efforts to raise awareness and distribute quality seals, which certify the non-use of child labour.
Through the efforts of Nina Smith, the international child labor rate in the carpet manufacturing sector has been reduced by more than 80%.
3. Jorge Nazer – High Group
This Chilean lawyer is the founder of Grupo Alto, a company that aims to prevent and reduce theft in stores and supermarkets, present in Chile, Colombia, Mexico, the United States and Spain.
Its business model promises to reduce crimes, change behaviors, and improve business losses, through three pillars: collection of information to find out who criminals are, where they live and how they steal, efficient criminal prosecution to achieve the pertinent sanction and a dissuasive marketing system that creates a control environment and helps prevent theft.
A well-known entrepreneur in Latin America, he has received numerous awards throughout his career, including the 2014 Entrepreneur of the Year award given by the Ernst & Young agency and the Avonni Innovation Award in the services category. His company managed to occupy the eighth position in the Great Place to Work ranking in Chile, which recognizes the best companies to work for.
4. Mariana Costa – Laboratory
Peruvian Mariana Costa is the founder of Laboratoria, a social entrepreneurship project that trains young, low-income women from Peru, Mexico, and Chile as programmers and experts in web development.
Costa, who studied International Relations at the London School of Economics and has a master’s degree in Public Administration and Development from Columbia University in New York, had previously worked on various social development programs in countries such as El Salvador, Guatemala, Haiti and Kenya. In 2015 she was selected as one of the 5 innovators under 35 in Peru, by MIT Technology Review.
In 2014, Laboratoria launched the first pilot program with 15…
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