An edited version of this commentary was first published in NVPC’s SALT.
Perhaps the greatest lesson for aspiring social entrepreneurs is that the social enterprise is first a business enterprise. The ST (Mar. 30) featured individuals engaged in noble causes – training former offenders and single parents, hiring people with disabilities, or people with mental conditions – who have not been as successful as desired. The rate of failure is not surprising. After all, the problems of “rental costs, manpower expenses, and the lack of demand for products and services” are shared by all business companies in general.
In other words the social enterprise is no different from a regular business project.
A business model premised upon a good cause or meaningful operations does not guarantee additional revenue for its goods and services. If anything, the challenge of balancing balance sheets and a social purpose makes the demanding corporate going even tougher.
Without a national database the Ministry of Social and Family Development (MSF) might not be able to track the financial performance of all social enterprises, but surely if it disburses grants through its new Youth Social Entrepreneurship Programme for Start-Ups it would at least have some information on how well these young social entrepreneurs have performed. Some indications of how the funds have been spent, and on the returns on investment (if any).
Perplexing remarks aside the challenge of sustaining a social enterprise is no less tumultuous. The Social Enterprise Association was set up in 2009 after a third of social enterprises in a funding scheme failed. A spokesman for the ComCare Enterprise Fund revealed that only half of its funded firms have been “able to sustain beyond three years in operations”. Not encouraging, yet probably comparable to small and medium enterprises. Furthermore mentorship programmes have been in place to help these struggling enterprises keep afloat.
Getting a helping hand from the advice and expertise at these mentorship programmes is reasonable in the face of these challenges. The generosity of the government agencies with its grants is useful too. Though at some point one might wonder whether these manpower and resources – and pedantic reliance upon them – could be shielding the social entrepreneurs from the realities of the harsher, more competitive world. For instance one might contend that the purportedly rigorous grant-approval process at the government organisations approximates to the search for venture capital or private equity, but the differences are stark.
Making sure that the social entrepreneur has skin in the game – in terms of matching the governmental grants from personal sources – could be one solution. Some businesses survive, some do not. Some social enterprises survive, some do not. Social entrepreneurs must realise that without a sustainable strategic plan, sufficient business nous, and a commitment to tough it out, no amount of support and assistance is going to make a difference.