Top 5 Myths in Social Entrepreneurship

The change-leader is a myth-buster. As technology fuelled business models change, nowhere is this more applicable than in the field of social entrepreneurship. The top 5 myths are:
1. If you want to do good, you have to create a not-for-profit company.
2. If you want to create a social enterprise with a mission, you cannot do this in a for-profit company.
3. For-profit companies are incompatible with a social mission.
4. Shareholders demand quick returns
5. Triple bottom lines (profit, people, planet) are incompatible
The fact is that the current legal and financial instruments are limited in how social impact is measured and hence the tools need to evolve. But tools can't evolve unless social entrepreneurs see them as tools to be changed. "Be the change" said Mahatma Gandhi. Nobody said myth-busting is easy - but its a lot easier if you firmly believe in the change.

Social Entrepreneurship Leadership Myth #1

Social entrepreneurs typically put up with personal economic hardship to launch their dream enterprise. Some work for a while, save money and live off of that or they have small grants, or personal assets, or working spouses or the new trend of limited prize money etc. This breeds a habit of thrift and economy. So far so good. This factor is really important when applying for grants from foundations or public funds. It is a critical personal and organisational leadership skill for running an NGO or other non-profit where one uses limited financial resources - since no new financial resources are being created there is no room for any financial risk-taking. So in my experience social entrepreneurs come to believe in a "how can I save money?" versus "how can I make money?" mindset.

This is where leading a social enterprise is strategically different from leading a non-profit. Corporate or social investors want to know when the organisation will be financially self-sustaining. strategically, a social enterprise looks more like a for-profit venture. Strategic leaders will answer the following questions:
1- how much time to first enterprise revenue dollar
2 - How much time to break even
3 - how much time to first profit dollar (social enterprises typically reinvest revenue)

A business plan that includes a well thought out financial risk (e.g. trying out or investing in a new technology) may be acceptable even if sustainability takes longer. The reason for having the "how can I make money" mindset is that :
1. It makes a more convincing argument that eventually the enterprise will be sustainable. In this mindset, fiscal responsibility is a given as good operations management and positions the entrepreneur as being strategic.
2. Additionally, investors are well versed with for-profit business plan evaluation and thus more likely to commit.

So my recommendation to social entrepreneurs: do put as much energy into your revenue streams as to fiscal operational responsibility when it comes to developing your leadership style.