Five key challenges faced by social entrepreneurs in India

Social Entrepreneurs play a big role in changing the way people live their lives. Whether it is the people they work with or the causes they espouse, social enterprises are game changers and very welcome in today’s complex world.

Five key challenges faced by social entrepreneurs in India

Tuesday June 04, 2019,

7 min Read

Over the past few years, in my role as a business consultant, I have met several brilliant people who have set up firms for the greater good. Whether they are spin offs from well-funded foundations or a personal dream, all of them have a great vision, dedicated core team, and amazing product/s or services. However, in spite of all this positive energy, some are unable to scale up. As a result, the society doesn’t get the full benefit of these powerful ideas.

A quick review of the situation reveals five key challenges frequently faced by social entrepreneurs who are looking to scale up. By addressing them, organisations with a positive brand promise can scale up for the greater good of the society.

Social Entrepreneurship-01

1.Raising funds in times of austerity

Across the world, investors and donors are looking for rapid and larger impact growth. Not something that all social entrepreneurs can promise to deliver. The overarching reason behind this trend may be a sluggish global economy, but its ramification on the social sector is huge.

Often, social enterprises work in areas where the gestation period for new product development or behaviour change is high. In this situation, investor/donor focus on short term - higher yield situations makes fund raising difficult. As a result, several social entrepreneurs end up vying for a slice of the same pie, and end up going to family and friends for money or crowdsourcing.

Successful social entrepreneurs are able to raise funds by clearly demonstrating how they are different from other players and staying focused in a specific area. They are also able to stay connected with the ecosystem using digital communication interspersed with one-on-one interactions in key events. Moreover, their communication mirrors the needs of donors / investors in an explicit manner with easy-to-relate metrics of performance. In other words, there is a science to fund raising, and needs to be a key focus area for the founders.

2.Building and following a ground up business plan

All enterprises need a strong ground-up business plan to help achieve milestones. The rigour of building and following a plan that is based on market realities and customer insight is critical. It ensures adequate focus on both raising funds and meeting operational targets. Founders also find themselves more in tune with the market and their end customer requirements as they chase well-defined business targets and part of the scaling up process. Plus, an action-oriented team with a strong business plan instills confidence in the investor community, as eventually the social enterprise will need to become profitable.

However, many social entrepreneurs are visionaries who do not have much experience in running a business. This aspect of planning and evaluating performance vis-à-vis metrics in a systematic manner may be a new experience for them.

Now hiring a senior resource, who will stay focused on meeting business numbers, is an ideal option, but it may not be feasible for cash-strapped companies. For them, I recommend the founders commit to a business plan and review it weekly. This will ensure barriers and triggers to growth are captured and acted upon in a timely manner. If funds permit, a business consultant can facilitate the transition and help bring about the necessary change.

3.Investing in the right people

Hiring the right people to compliment the skill set of founders is an essential part of scaling up for every enterprise. The social sector is no different as the skills required to sell, brand, and manage financials are specialised.

Many cash-strapped founders over-extend themselves, multi-tasking product development, fund raising, and running the business. While this may work in the short run, it eventually leads to sub-optimal performance. As without the right team – an organisation will not grow.

A social entrepreneur in the environment sector once informed me that they were unable to afford the right people. Plus, expensive resources don’t perform in the short run (as they don’t know the category) and leave because they don’t meet targets. This leads to churn and re-hiring. So, founders prefer to do both operations and fund raising by themselves. Eventually, this company, which has great products, ended up stagnating and becoming limited to specific geographies.

In my experience, all companies who want to scale up face these challenges. The successful ones find a solution that works for them. Without the right people and a proper, fact-based business plan, growth is difficult in the long run.

4.Process Management & Planning for Growth

Firms that offer good products and services quickly grow and reach an inflexion point. In this situation, process management comes into play and companies who have not planned for growth often end up missing the bus.

We have all heard of a great social enterprise doing good work, but limited to specific geographies. The primary reason they are not able to scale up is lack of funds or the founders’ limited bandwidth.

Take for example a social enterprise that offers housekeeping services by differently-abled people. As their brand offering is fulfilled by front-line staff with specific needs, they need to invest in training, monitoring processes, and equipment (if any). Without planning for the above and ensuring a pipeline of staff across locations, they will not be able to grow.

Personally, I have learnt a lot from MNCs who invest in great processes to ensure profitable growth with fewer people. They also heavily invest in technology to ensure process efficiency. So, while a startup / social entrepreneur may not be able to replicate Unilever’s manufacturing processes – staying process oriented at the start of the entrepreneurship journey is extremely helpful.

5.Balancing the vision with business

A lot of social entrepreneurs start off as activists. And over a period of time, create a social enterprise that is in line with their passion. These founders need to draw a line between volunteering for a cause and running a profitable business. And it’s difficult.

A social entrepreneur once told me she never gets paid her ‘market rate’ for consulting engagements because as an activist, she often gives the knowledge away for free. This is a typical conundrum. Sharing knowledge is necessary for change and creates credibility, but it should not be at the expense of growth.

On the other hand, once a social enterprise scales up and overcomes various hurdles, there is a lot of pressure on the founders to stay profitable. This may lead them to dilute their vision and focus on RoI and compete with other ‘for profit’ businesses.

A healthtech entrepreneur confided in me that it was so much easier to sell her company’s innovative service to corporate hospitals rather than government ones. But she chose the difficult path as her offering was designed to make the lives of the poor easier. Not just for easily accessible rich people. So, it is important for social entrepreneurs to have a mission statement, which they review on a regular basis and stay true to the same.

In conclusion

Social enterprises play a key role for the development of our country. They help alleviate poverty, bring about hope, and provide people access to a brighter future. 

However, like all organisations, social enterprises face challenges while scaling up. Most of them are related to funding, people, process, and technology. In order to grow, the founders need to acknowledge the issues and work towards addressing the same.

Moreover, such enterprises don’t need to hire long-term resources to solve specific problems. They can easily tap into a large base of experts who are willing to share their skills and knowledge for a good cause. But at the end of the day, it all depends on the founders and their vision. If the vision is strong enough and the founders are resourceful, the enterprise will succeed and thrive.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

Montage of TechSparks Mumbai Sponsors