Accelerating Growth in Social Enterprises — 3 key areas to focus when you are limited by resources
A case study on the Dutch Social Enterprises market
In general, working towards a good cause is hard, costly and time-consuming, but it is important and relevant to tackle societal issues with effective solutions.
In our modern society Social Enterprises are stepping in, to pursue both targets — providing social impact while generating profit.
From earlier on in my child hood I was fascinated by a local Social Enterprises that focused on this issue.
Finally, during my time in the Netherlands last year, I found out that there was a lack of awareness and development in the Dutch Social Enterprise Sector and devoted myself to the purpose of finding a solution for it.
In this article I am going to share some insights about my findings*:
- first of all, I want to clarify why Dutch Social Enterprises are lacking behind tremendously in comparison to other Social Enterprise sectors in the world
- and on which factors they have to devote their limited resources, to achieve the best growth possible.
But before we are going to dive deeper into the results and solutions of Dutch Social Enterprises and how to increase their social impact, I am going to clarify what distinguishes Social Enterprises from commercial ones.
A Social Enterprise thereby is a company with the goal to find a solution for a problem by creating value for society, generating income and reinvesting it for a specific purpose.
The concept as itself, using business to support social services isn’t new. It existed already for decades. But finally it has a name — Social Entrepreneurship. To highlight the importance of the topic, there was an over 750% increase in publications between 1991–2009. Today Social Enterprises are growing rapidly all over the world.
Nevertheless, the fast rising trend isn’t the same for everyone worldwide — e.g. the Dutch Social Enterprise sector is compared to other countries such as the United States and Great Britain struggling with its growth and therefore lacking behind. What are the biggest struggles?
The Dutch Status Quo
- FINANCIAL POSITIONING (Missing of financial resources for growth)
- STUCK IN TRANSITION STAGE (Most of the Social Enterprises cannot make the step between being a startup and transforming into mature organizations)
- BLURRED LINE (no real distinctions between Social Enterprises and corporate social responsibility programs of big corporates, as well as a lack of awareness about purpose and impact of Social Enterprises)
- MISSING GOALS (No real measurements are implemented to measure growth and thus successful scaling)
- LEGAL SUPPORT (Lack of legal forms to support Social Enterprises in the Netherlands — f.e. missing corporate legal form thus, no tax benefits and despite European common law, there is still a missing convergence about the political strategies for Social Enterprises between the European and the Dutch government)
So there are several reasons, some of them are located in the internal environment and can be undertaken by the Social Enterprises itself, some are located in the external environment and can hardly be influenced.
Due to the limited amount of resources Dutch Social Enterprises have available — where do they have to focus to overcome these challenges by achieving a higher social impact and ultimately make them better?
After analysing the biggest Social Enterprise network in the Netherlands (Social Enterprise NL) the following 3 main drivers where the outcome.
AREAS TO FOCUS
- JOINT ACTION / ALLIANCE BUILDING (The main focus on Social Enterprises should be the focus on Partnerships & Joint Ventures. Finding partners or building alliances to overcome limited resources by leveraging synergies.)
- EARNING GENERATION (The biggest growth can be used by could be used by providing better access to capital, for example by implementing more social funds or bonds that can give better access to funding)
- STAFFING (Effectively acquiring the right people (skilled employees & volunteers) by educating the general public about the purpose and communicating the benefits of working for a double sided company!)
Thus, Social Enterprises in the Netherlands should devote the main part of their resources into Joint Action, Earning Generation and Staffing to successful increase social impact of their organizations and finally make them better.
Keeping in mind, that the strongest scaling effect to increase social impact varies and always depends on the social/economical context the individual Social Enterprise is operating in.
Until today the reach and capacity of Social Enterprises in the Netherlands is still limited. The full potential can only be released when a common ground is established that includes administrative, financial and legal instruments that allow Social Enterprises to create more opportunities.
It is crucial that the general public acknowledges the increasing positive impact and the enormous potential (disruptive) power a Social Enterprise can have on society as a whole. By supporting this movement society and the sectors have to be open to start and continue the dialogue about next required steps.
I belief that the potential of capturing synergies of economic and social value creation is huge. The Social Enterprise sector can play a pivotal role in balancing profit generation and social values as of now and especially in the future!
P.S. Social Enterprise is an important topic for me, so next time you get in touch with one — please spread some love and share the story ❤
P.P.S. If you wanna reach out to me, please feel free & I would appreciate any kind of feedback ;) — here
*(The topic of my master thesis was “Scaling Social Impact of Dutch Social Enterprise - An Empirical Analysis of the SCALERS Model”. It was the first empirical study on Social Enterprises in Europe that focused on how to scale social impact based on the SCALERS model. (More information)