Both social enterprises and entrepreneurship have been the force behind economic growth in many countries for a long time. In the recent decades, the number of non- profit organizations have been on the rise, which is a clear indication that many people are embracing the establishment of social enterprises and entrepreneurship. The core mission of such organizations is to make a difference in people’s lives by offering solutions and making their lives better. Unlike commercial and profit- based organizations, the social enterprises and entrepreneurs are not driven by profit. Instead, they focus on the mission of impacting lives through innovation and identifying new opportunities to make the world a better place. In the current economy where many nations are faced with hard economic times due to poverty and other natural calamities, these non-profit enterprises have played a vital role in creating avenues for solving such problems. The purpose of this essay is to evaluate the roles that social enterprises and social entrepreneurship play in promoting economic growth in the current century. Secondly, the issue discussed in this essay is the different business and financial models as well as business planning used in the two businesses (Li 2011, p. 4).
Lately, there is a lot of discussion about work and entrepreneurship. An entrepreneur is a person who identifies a market gap and then uses his/her innovation and creativity to come up with a new product or service to cover the gap. Economists define entrepreneurs as people who come up with products that did not exist in the market before to meet the demands of the customers (Smith and Chimucheka 2014, p. 79). In America for instance, entrepreneurship is seen as is an indication of self-image and identity. Although most of the entrepreneurs start a business with the aim of making a profit, they have played a vital role in economic growth. One of the ways entrepreneurship has contributed to economic growth is job creation. With so many young people pursuing education with the aim of getting a white color jobs, there has been an increase of job seekers whereas the job opportunities are minimal. However, thanks to entrepreneurship because it has been one of the ways through which youths can secure employment. Naturally, when a new business starts, it needs employees to work there. The people employed there can get a source of income, and this means that their standards of living will be improved automatically.
Secondly, they are a source of revenue for the government. Every year in the United States, the government uses billions of dollars to provide the public with social amenities such as infrastructure, healthcare, and education (Coursera 2018). The government collects that money from businesses through taxes and licenses. With public access to such products and services, the economy is then considered to be stable. Entrepreneurship promotes economic growth by offering a solution to environmental challenges. With environmental challenges that we face today such as global warming and gas emission, creativity will remain the only solution to such problems. Coming up with new ways to promote agriculture, electricity, and roads will increase productivity hence economic growth (Braunerhjelm 2008, p. 450).
As earlier mentioned, social entrepreneurship has been flourishing recently. Unlike entrepreneurship, the primary purpose of social entrepreneurship is to promote social value to the people they serve. They operate under the mission of using innovation and new methods to solve social and economic problems such as poverty, hunger, and climate problems. The difference between a social entrepreneur and a business entrepreneur is that the social entrepreneur uses his/her innovations to create a business organization with the interest of the people in mind instead of making profits or increasing the shareholder's wealth. Social entrepreneurship has so much to give to the people and the community in general. The following are some of the ways they promote economic development and the well-being of a nation. Sometimes, it becomes costly for the government to solve problems of water shortage, poverty, and drought (Newth and Woods 2014, p.194). In most cases, the government of a nation may not reach all the people affected by such challenges and that is where the social entrepreneurs come in. They identify such problems and make it their initiative to offer solutions to the people who are affected. Through this, they can sustain the social and economic value not only for the individuals involved but also for the nation’s stability.
Braunerhjelm (2008) explains that social entrepreneurs can bring out new ideas into practice which saves the governments a lot of money and resources. Though social entrepreneurship activities, many people can benefit from the services offered which could have been hard for the government to achieve. Most of such businesses are made accessible to many people even those who live in rural areas. A person who is healthy and energetic is productive and can work to improve his/her living standards and this translate to a healthy nation and economic growth. If people have access to resources such as water, roads, and electricity, they do not have to rely on the government to provide for this and social entrepreneurs are more interested in achieving this (Lundgaard Andersen, Gawell and Spear 2017, p. 98).
A social enterprise can be defined as an organization that uses commercial methods for financial or social gains. It can either be a non-profit or for-profit and can be structured as a business entity, a co-operative or a charity organization depending on the country where it operates. The purpose of non-profit enterprises is to impact lives of the people faced with different challenges through the services they offer (Eversole 2013, p. 567). On the other hand, the for-profit enterprises operate with the purpose of making profits by selling goods and services to customers. Below are some of the ways which profit-based enterprises operate which distinguishes then from non-profit enterprises. First, their primary aim of such profits is to maximize their profits which are then shared among the shareholders. They do not put the interest of the society first although some participate in Corporate Social Responsibility (CSR) activities. Some organizations may think that by contributing towards CSR makes them non-profit organizations but this is not true because they do so for marketing purposes. In other words, they do not have any direct impact on the lives of the people because that is not their mission. Secondly, social enterprises use the money raised from selling goods and services to expand their businesses instead of using the money for social purposes. The only way that people can benefit from such organizations is through taxes which the government uses to improve the lives of its people (Furma?ska-Maruszak and Sudolska 2016, p. 19).
Business and financial models used by social enterprises and entrepreneurship
Most of the social enterprises and entrepreneurship are not individually owned which means that for them to operate effectively, proper planning and reliable financial and business models is crucial. For social enterprises, they operate under well supported legal structures and laws (Selloni and Corubolo 2017, p.129). To add on this, they also maintain standards for public services to ensure that they meet their mission. Concerning financial measures, these enterprises raise funds through fundraising, government funding, and donations from well-wishers. On the other hand, social entrepreneurs mainly work by first identifying an opportunity or a problem in the society. The other crucial factors in social entrepreneurship are the people and the capital. To address any issue, an entrepreneur will need to understand the people who are involved and then come up with ways of raising money (Steyaert and Hjorth 2007, p. 67). The other factors to consider for the success of social entrepreneurship are external factors such as politics, government regulations, sociocultural factors, and taxes. Social enterprises mainly rely on various sources of funding which include individual contributions, contributions from friends and family, government payments, and members’ dues to mention but a few (SSE 2018).
An excellent method of raising capital for social enterprises and social entrepreneurship is through crowdfunding. Crowd funding provides a platform where entrepreneurs can raise a lot of money using the internet. With so many people using the internet recently, it is now easier to mobilize funds in support of a project that aims to benefit the public. Mostly, people who donate through crowd finding do so because they believe in the cause. Crowd funding comes in three forms which are donations by well-wishers, debt whereby those who invest receive back their money with a small interest and equity where people buy and sell shares. The funds which are contributed towards social projects do not attract any interest unlike that is lent to the for-profit organizations. Some of the popular crowd funding sites are www.seedrs.com. www.gambitious.com, and www.crowdcube.com.
Another method of supporting social entrepreneurship is ENACTUS. ENACTUS is a non-profit organization which inspires and encourages students to make the world a better place. The organization gives students with outstanding skills an opportunity to come up with entrepreneurship projects which will benefit those who are less privileged and the whole society (Enactus, 2018). Through guidance from teachers and business experts, students are expected to participate in a competition to showcase how their projects have impacted lives. The mission of ENACTUS is to change the lives of many people as possible so as to improve the world. With the hard economic times that the world is experiencing, ENACTUS aims to create young entrepreneurs who will be able to solve these problems in the next generation (DEL GIUDICE 2016, p 213).
To sum it all, understanding the role of these organizations will shed light on why people need to come together and find a solution to the challenges that are facing the world today. Although there are so many non-profit entrepreneurship and enterprises today, the issue of solving the economic problems is far from being achieved. It requires the support from individuals who are well of and countries which are wealthy to contribute towards such courses to changes the lives who are suffering to make the world a better place for everyone.
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