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The nature of business activity

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Article Index
The nature of business activity
Why businesses fail early?
Qualities of successful entrepreneur
Social enterprise
Triple bottom line
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What are Social enterprises?

Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Their aim to accomplish targets that are social and environmental as well as financial is often referred to as having a triple bottom line.

Social enterprises are profit-making businesses set up to tackle a social or environmental need. They often use blended value business models that combine a revenue-generating business with a social-value-generating structure or component. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose is central to what they do.

Rather than maximising shareholder value, their main aim is to generate profit to further their social and environmental goals. Therefore some commentators describe them as 'not-for-profit' as their profits are not (at least primarily) distributed to financial investors.

Three common characteristics of social enterprises as defined by Social Enterprise London are:

  1. Enterprise orientation: They are directly involved in producing goods or providing services to a market. They seek to be viable trading organisations, with an operating surplus.
  2. Social Aims: They have explicit social aims such as job creation, training or the provision of local services. They have ethical values including a commitment to local capacity building, and they are accountable to their members and the wider community for their social environmental and economic impact.
  3. Social ownership: They are autonomous organisations with governance and ownership structures based on participation by stakeholder groups (users or clients, local community groups etc.) or by trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the community.

 



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