Social enterprise has risen in popularity in the past decade. More social entrepreneurs – whether they are nonprofits or for-profits – are pursuing the model and a double bottom line. But, just like traditional for-profit businesses, they are not assured success. Only 20 percent of business ideas are viable. But, what can increase your chances of success?
There are many theories why some social enterprises flourish while others languish. Rolfe Larson, an expert in this space and author of Venture Forth!, shares his top five traits of successful enterprises, which I teach in my workshops and classes.
To find the answer, my team and I took a deep dive into research that examines what makes a social enterprise successful. We studied what works and what doesn’t to help practitioners, leaders and funders gain research-backed perspectives on the common ingredients for success.
This blog provides several highlights from that research. A full description of the characteristics that make successful social enterprises, references and a worksheet to apply them to your situation are available here.
- Buy-in from existing organization
If you are starting a social enterprise as part of an existing nonprofit, the board, executive director and other management must agree that operating a social enterprise would be beneficial to the organization. In addition, there needs to be a champion responsible for the coordination, support and expertise in the social enterprise. This person should possess both the skills necessary to run an enterprise and the passion to carry the idea through to reality.
- Active and Fluid Business Plan
Having a “road map” to follow is essential to the success of an enterprise. Starting with a business model canvas helps you develop your hypothesis surrounding the main areas of your business. Once you have tested that hypothesis, a business plan is useful – as long as it is ACTIVE and constantly updated as you begin piloting your project. Successful social enterprises are able to strike a healthy balance between planning and practice.
- Use of Data to Drive Decision-making
It is becoming increasingly important for social enterprises to demonstrate their impact. Having accurate data available is critical for decision-making that creates impact. Successful social enterprises have a “dashboard” to provide key stakeholders with the right data to inform good decision-making. Once that information is in hand, it’s important that it actually gets put to use; organizations must be willing to self-correct if the data points in a new direction.
- Specialized Niche/Competitive Advantage
Market demand is a major determinant to the success of any enterprise. If the product or service created is not meeting a need, the enterprise will not be financially profitable. The product or service must have a unique quality that separates it from competitors as well as a strong identity that allows it to stand out in the marketplace.
- Ability to Adapt to Change
The culture of a start-up is constantly shifting as the organization grows. Furthermore, even established social enterprises must continuously change to adapt to the broader market. Learning how to manage organizational change is a key to longevity.
Social enterprise is not for the faint of heart, but in my experience working with new and existing social entrepreneurs these traits have endured as the top five for developing or expanding a social enterprise.
If you run a social enterprises, we would love you to weigh in on these top five traits. We look forward to hearing other characteristics you would add to this list.