Unlike most business ideas, social enterprise ideas basically stem from a desire to solve a social need; similar to how many non-profit and charity organizations find their beginning.
Traditional business ideas can also come from identifying a social need. But, the difference between a social enterprise idea and a traditional business idea is the motivation of the entrepreneur.
The primary motivation for a traditional entrepreneur is more-often-than-not a desire to make money; a social entrepreneur is driven more by a passion to solve a social problem, and only chooses to use business as a mechanism to solve these problems.
There are common frameworks that most successful social enterprises use, and this includes:
1. Cross-Compensation – where one group of customers pays for the service. Profits from this group are used to subsidize the service for another, underserved group.
2. Fee for Service – Beneficiaries pay directly for the goods or services provided by the social enterprise.
3. Employment and skills training – The core purpose is to provide living wages, skills development, and job training to the beneficiaries: the employees.
4. Independent Support – The social enterprise delivers a product or service to an external market that is separate from the beneficiary and social impact generated.
Funds are used to support social programs to the beneficiary.
5. Cooperative – A for-profit or nonprofit business that is owned by its members who also use its services, providing virtually any type of goods or services.
We’d now consider a few great social enterprise ideas:
Create a food market that sells food to low-income communities at a discounted price. Discounted food is donated (or purchased very cheaply) from food suppliers and other supermarkets, who cannot sell the food themselves for a variety of reasons such as approaching expiry dates, dented cans, and product mislabeling.
Used Textbooks for Social Change
Partner with student groups/clubs to collect used textbooks at the end of each semester. Students donate their used textbooks.
Some of the textbooks are re-sold to students at the college/university of their collection source; some of the textbooks are donated to students in need at underserved universities in the developing world.
The profits are split between the student groups/clubs, program administration costs, and any remaining funds are used to support social programs in developing communities.
Build small water purification stations in communities in developing countries using off-the-shelf products. Initial funds to build it can come from traditional charitable methods, or through debt/equity financing; the communities can be partial owners (or full owners, if using cooperative business model).
Ongoing costs to maintain and staff the water station come from the sale of purified water to its beneficiaries, but at near break-even levels, costing almost nothing for the beneficiaries.
Create a platform for individuals and organizations to lend money directly to entrepreneurs who would otherwise not get funding, such as those in the developing world. Charge a small fee to cover the operational costs.
Build a platform for social entrepreneurs to find groups of funders. Similar to the Micro Lending platform, but lenders take a promise of something in the future in return for ‘donating’ a bit of money to the Social Entrepreneur’s project now.
Charge a small fee to cover the operational costs of the platform.
Baking/Cooking for a Social Cause
Open a bakery/restaurant or another food-providing establishment that focuses on building employment skills for underemployed groups, such as at-risk youth or former drug addicts.
The profit from sales of food and beverage go to wages, training, and social betterment programs for the staff-beneficiaries.
Efficient Wood Stoves for Developing World
Millions of women in developing countries suffer from cardiopulmonary diseases as a direct result of breathing in wood smoke on a daily basis. Build a more efficient stove to solve this problem.
Sell the stoves at or above market rate to those who can afford it, and use the money from the sale of the stoves to partly subsidize the cost for those who cannot afford it.
Education Books on a Social Topic
Create a book or other educational publication, whose benefit is easily understood and salable. Learning about the topic of the social education book should benefit the reader, such as a recipe book that focuses on recipes that promote sustainable food culture.
The proceeds from the book are used to support education initiatives along the same topic and to group who will have the most impact and benefit.
In the case of sustainable food preparation practices, the target education group would be chefs.
Beauty Products to Support a Social Mission
Partner with major beauty brands to sell their products as an online retailer. Convince them to provide their products to you at a favorable wholesale rate, and divert the profits to purchasing milk and baby bottles for distribution in the developing world.
Food for Philanthropy
Create a food company that provides an already needed/wanted product and use the profits to support philanthropic work.
The company is easily scalable and can focus on just one product line/charity, or can be easily scaled to provide multiple food products and support a variety of charities.
Social products and employment for the underserved
Source one or several social good products (clean cookstoves, affordable power solutions for the developing world), and hire an underemployed group to sell these products to their community on a commission basis.
It’s both a distribution/marketing method and a way to employ underemployed populations.