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Guidelines for Social Entrepreneurs

Rick Cohen
November 9, 2010

November 5, 2010; Source: Fox Small Business Center | “It’s not easy to do a social enterprise,” says the managing director of the University of Michigan’s Social Venture Fund. Like it’s easy to establish and run a nonprofit? Anyway, the Fox Small Business Center offers some guidelines to budding social entrepreneurs, whether they are coming from the business side or working for nonprofits.

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  • Stay focused: “Perhaps the biggest pitfall social entrepreneurs experience as they try to grow their enterprise is broadening their focus and product lines too quickly.”
  • Remain competitive: “Don’t confuse helping society with ignoring the need to be business-savvy.” The author, who writes for the Wall Street Journal, suggests that it is important to think about capital structure such as the creative use of debt and early-stage equity and reminds readers, “Foundations donate an estimated $200 million annually to social enterprises.”
  • Hire great talent: One entrepreneur notes that “Top talent will be drawn to something exciting like a mission, but you also have to pay attention to incentives to draw in great people,” though another noted that because of the social mission, he was able to recruit “really great candidates at a lower wage.”

The author concludes, “the best way to build up a social enterprise is to run it like you would any business,” and he provides this intriguing quote from one of his featured social entrepreneurs: “In the beginning, you have to be three parts businessman and one part social [entrepreneur] . . . As you get the business successful, then you can begin to make it three parts social and one part profit.” But how to know when to say when? And how many social entrepreneurs end up being more businessman than social activist?—Rick Cohen

About the author
Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.

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