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Business models beyond profit

How are the business models of social enterprises different from those of conventional businesses?

What makes the social enterprise business model different?

Your business model is an integrated view of your entire organisation, bringing together your social model, strategy and operational plans. These components form the ‘engine’ of your organisation, with your vision and mission providing the context of what you do.

A business model describes how an organisation creates, delivers, and captures value. However, there are several reasons why business models of social enterprise are distinct from those of for-profit enterprises:

  • Social entrepreneurs pursue different objectives: While commercial entrepreneurs focus primarily on value appropriation, social entrepreneurs focus on value creation from a broader perspective. For social entrepreneurs, profits are a facilitator but not the sole purpose of the organisation.

  • Social entrepreneurs pursue different entrepreneurial opportunities: Social entrepreneurs often discover and create opportunities related to the social, the so-called ‘third sector’, characterized by the idiosyncratic personal relationships.

  • Social entrepreneurs take different approaches to enact opportunities: Social entrepreneurs typically spend less time focusing on capturing competitive advantage and increasing market share for their organization, and more time focusing on providing sustainable solutions to the benefit of larger groups of stakeholders. This also means social entrepreneurs worry less about protecting their ideas, as they want their idea to be spread to other geographical regions or target groups.

Are there any other differences between the business models of social enterprise and those of for-profit enterprises that you can think of? Please share them in the comments.

In the coming steps, you’ll have the opportunity to start developing a business model for your own social venture. Before moving ahead, check out the business model resources in the Downloads section below.

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Social Enterprise: Turning Ideas into Action

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