Why profit matters to social enterprises

Profit is often a tricky subject to discuss in the social enterprise sector.

It's often assumed that social enterprises are, or should be, "not-for-profit".

I think this is crazy!

Social enterprises are businesses and businesses need and should make a profit to survive and thrive (I explain why below).

The key difference with social enterprises compared to other types of business, which in my opinion makes it okay to making a profit (and getting comfortable with it) is:

a) the fact they have a clear social or environmental mission built in (so profits made are directed towards making more of this), and

b) their profit isn't for individual/personal gain so contributes to shifting the power dyamics that exist gloably around ownership of wealth, property and power essential to reducing global inequality and poverty (SDG1 & SDG 10). Listen to more about this with Erinch Sahan CEO at the World Fair Trade Organisation here, when I interviewed him last year.

So why, in my opinion, should social enterprises make a profit?

  • profit enables you to expand or deepen your social and environmental impact

  • profit enables you to have stability in your business

  • having even a little bit more than what you need to cover your running costs allows you to have a good cashflow from one month to the next (and from one financial year to the next)

  • profit allows you to invest in your business and employees' development

  • profit gives you options to build capacity

  • profit allows you to seek further investment - if an invetsor or bank sees that you're profitable they're more likely to want to invest with you

How does this make you feel about making a profit in your social enterprise?

But I know "profit" is often an icky word, something you don't feel comfortable with or don't want to allow.

One of the biggest barriers I see to making a profit is social entrepreneurs assume that making a profit means they're making a profit personally, as an salary. Although you certainly need to be paid for your time and expertise, this isn't about you as the founder, owner or CEO making a profit personally. This is about your business making a profit and then deciding what you do with it to achieve greater impact.

So what would you do with a profit?

Deliver more social / environmental impact? Take a breath for a couple of months because you don't have to dip in to the overdraft to pay the bills? Or invest it developing your business, so you can deliver more impact?

Whatever you do, start to plan your income strategy so you can make a profit in your social enterprise.

Kat Luckock is an Impact Strategist and Business Coach for Social Entrepreneurs

She is passionate about helping social entrepreneurs measure and communicate their social or environmental impact so they can confidently communicate: why they exist, the difference they make and why others should care.

She provides 1:1 mentoring & coaching, online courses, training, and done for you services (impact measurement and impact communications planning)

Want to find out more about how she could help you attract more customers and income? Get in touch here