Similarities Between Social Enterprises and For-Profits

This post is the third in a series I will be contributing for my Business Model Designs for Social Impact course at Northeastern University. This is the course’s first time being offered and it is taught by Professor Gordon K. Admodza. In this series, I will be publishing my findings on different social innovators and the business models that are allowing their inventions to reach the people most in need. As a class, we define social innovations as sustainable, pro-poor solutions. You can read the other articles in this series here.

The Business Model Canvas, designed by Alexander Osterwalder, helps businesses and even social enterprises frame their business models. Click the image to zoom in.

Social enterprises are quickly definable as businesses with social good in mind. However, unlike most 501(c)3 not-for-profit companies, social enterprises operate with a business mindset. The Aravind Eye Care System and the Grameen Bank (I touched upon them in an earlier post), are examples of such enterprises — they work to support the poor but also do so while generating incredible revenues and profits. 

In order to become a highly effective social enterprise, the company as a whole must adopt a business mindset. Social enterprises, like any typical for-profit business, regularly and thoroughly study their cost structures and revenue streams (pictured above in the bottom portion of Alexander Osterwalder’s Business Model Canvas). Breaking even is, after all, what keeps a business financially sustainable and for both for-profits and social enterprises, effective strategy in these segments is what will make or break you.

For-profits and social enterprises both also work extensively on their key partner relationships. Good partners can provide investment capital and valuable business-to-business services. In the social enterprise space, it is especially important to have the right partners. Oftentimes, you are attempting to penetrate undeveloped markets in foreign countries, and like any corporation, you need to have the right partners to support your understanding of the area so you can design and market your value proposition effectively.

 

 

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