2. Defining Your Business Model /

2.1. Understanding the business of doing good

STANDARD:

We are familiar with the different business approaches commonly used by social enterprises.

To meet the standard in full, you will have considered the business methods that can be used to pursue your cause and deliver on your stated mission. You will have explored various alternatives and taken inspiration from other social enterprises.

The mission of a social enterprise sets out the reason it exists and the impact it wants to make, while its business model describes how it will deliver impact in a lasting way.

While the term ‘business model’ sounds like a corporate thing, it’s simply about finding the best way to create, deliver and capture value – something that is important to all social entrepreneurs.

This is where you can get really creative. Across the world, old ideas about charity, public service and business are becoming outdated. There are a growing number of ways that people are using business methods to achieve social impact.

In order to maximise the positive impact of your social impact the people you serve, you will need to find the right business model for you.

While no two social enterprises are ever exactly the same, there are some typical business models. The Four Lenses Framework from Virtue Ventures helpfully describes nine of them:

  • Entrepreneur support
  • Market intermediary
  • Employment
  • Fee-for-service
  • Low income client
  • Cooperative
  • Market linkage
  • Service subsidisation
  • Organizational support

The way that you approach and organise your business will depend on many factors including:

  • The personal ethics and motivation of the founder(s).
  • The relative priority attached to your social and business goals.
  • The business opportunities that are available.
  • The type of business ownership and accountability you require.

Where possible, take time to reflect on the business model of your organization and take inspiration from other social enterprises.


Course 2 in the Impact Practice series from the Social Enterprise Institute provides a great introduction to social enterprise business models.