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Social Enterprise and Giving Up: When is it Time?

You’ve founded a social enterprise and are shepherding its growth. But do you know when it’s time to throw in the towel?

There are two terms that go together more than people like yet are rarely talked about: social enterprise and failure.

In an interview with The Guardian, social enterprise founder Emily Mathieson speaks to some of the trouble us changemakers face: “My commitment to ethics makes everything more expensive and much more time-consuming. My margins are smaller… and a lot of routes to funding are closed to me”. This is a struggle faced by most social entrepreneurs: how do we balance purpose and profit? How can we remain commercially viable, without compromising on our social purpose? 

According to research from UK-based organisation, UnLtd, 71% of social entrepreneurs have trouble finding sustainable streams of revenue, and the same percentage struggles to make a living with their social venture. And this is just one of the obstacles faced by a social entrepreneur. More than half have trouble accessing the public sector and finding the right talent and skills to support their mission. 

Then there’s the risk of burnout to contend with… We know that social enterprise will play a key role in fixing many of humanity’s ills—but what to do when it comes to social enterprise and giving up? How can you tell that the time has come to throw in the towel? Let’s take a look. 

Social Enterprise and Giving Up: Signs that it’s Time to Throw in the Towel

You Can No Longer Finance Your Operations

Even in the for-profit world, profitability is notoriously difficult. When it comes to small businesses, about half of them fail within the first five years due to an inability to generate sustainable revenue.

When it comes to a social enterprise, profitability is even more difficult because we’ve got the social mission costs to also fulfil. 

For the most part, this means that operating on revenue alone is nearly impossible, and without the time, skills, and know-how to access other funding opportunities, we may be faced with an overdrawn business account, looming purchases, and unpaid staff. 

While there may be some last-minute funding strategies to help you in a pinch (like direct loans, where you offer the collateral), funding a social enterprise is difficult when times are good—and may be impossible when times are bad. 

Especially when it comes to a for-profit social enterprise, we’re faced with a unique situation in that we can’t access most grant money, but we simultaneously don’t have much to offer by way of low risk and high return for investors. 

If you have no way of paying for the essentials of your organisation’s operations, then it might be time to call it quits. 

Your Impact isn’t What it Should Be

It’s important to think of a social enterprise—especially one trying to tackle a big problem (sound familiar?)—as an iterative process. It will grow and evolve and adapt at every step of the process, and without doing a lot of research before developing your business model, you might find that your social impact gets lost in all the changes that come with keeping up with commercial viability. 

That’s why it’s important to regularly go back to the mission of your organisation, and determine that you are indeed meeting it. Perhaps in a push to have Q1 profits that are in the green, you may realize that you’re not helping out your target community or making some shortcuts that inadvertently impact your social impact. 

Maybe you didn’t do enough research prior to launching the organisation and you find that you’re operating in a market that isn’t attracted to your offerings? Maybe there’s competition that you didn’t realize you’d be contending with? Perhaps lack of support from the local or federal government level is undermining your impact?

Whatever the reason, if your enterprise isn’t providing the level of social good it’s designed to, it might be a good idea to step back, reassess, and get out of the game until you’re sure you can provide positive, measurable, and sustainable social impact.

The Burnout Becomes Too Much to Bear

As the saying goes, you’re only as strong as your weakest link—and when it comes to your social enterprise, that weakest link may be you. 

While official records of the rates of social enterprise burnout don’t exist, many academics believe that it is on the rise—and that mental health, well-being, and sound decision-making are all impacted. 

And while there may be a light at the tunnel for many conventional companies (i.e. the prospect of acquisition or IPO), the work never ends with a social enterprise and regardless of how lucrative it becomes there will always always be obstacles—as well as more people to help and communities to support. 

With consistent challenges and the ever-pressing desire to help, it’s easy for a social entrepreneur to trade in their partner, their families, and their personal lives for their organisation and its mission.

If this is the case, it’s a clear signal that you might want to bow out. This could mean pulling in the reins and limiting your involvement, it could mean stepping aside completely and letting someone else take over, or it could mean the end of your social enterprise.

Social Enterprise and Giving Up: The Importance of Community

There are a few truths when it comes to social enterprise and giving up, namely that it happens far more than we may admit, and it’s much easier to get back on our feet when we have the support of a connected community.

Chances are, another Social Change Central member has been through a similar situation. By coming together to share ideas, resources, and experiences (even those involving failure), we’re helping to create a stronger social enterprise ecosystem—one that will be better able to overcome some of these challenges in the future so that the world of social impact can truly thrive.

Social Change Central
Social Change Central

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