What is social business and enterprise?

The social business and enterprise sector is proving that companies can do business in a way that benefits society.

Like most mainstream businesses, social businesses and enterprises work to increase revenue and growth. However, they place at least equal importance on generating lasting social benefit.

This video produced for Coutts & Co by Form Films shows the social business and enterprise sector in action, featuring leading lights and pioneers from firms such as such as Bikeworks, Jamie's Farm. HCT Group and ClearlySo's own Rodney Schwartz.

Our definition

The scope of the sector is huge. These organisations come in all shapes and sizes. They can take any legal form and operate in almost any industry (excluding certian industries such as arms manufacturing). Some have a strong commercial focus and aim to deliver a return to their investors; others dedicate all revenue to business growth or increasing their social impact.

At ClearlySo we do not argue that one approach is better or worse than the other. However to add clarity and help you locate companies which match your interests we've divided them into two distinct categories: social business and social enterprise.

Social business

A social business integrates two objectives:

•    A financial goal: to achieve and increase profits and realise growth
•    A social goal: to deliver a postitive social, ethical or environmental impact

However, a social business must satisfy a third requirement which we call the test of equivalence - the social goal must be of at least equivalent importance to the commercial. In other words, any investment in the business must lead to an incremental increase in the social impact? If it satisfies this criteria, a company qualifies, in our view, as a social business.  

Social enterprise

Social enterprises mix social and commercial goals. However, they place a firm emphasis on the former. They also differ in the way in which they handle their profits. A social enterprise will not deliver dividends to shareholders. Surpluses should either be reinvested back into the company or used to further the organisation’s social goals. For example an organisation providing affordable childcare may use its surplus to open a new centre in another town. It is this primary commitment to prioritise social impact above revenue generation and profit which categorises a business as a social enterprise.