Difference Between Social Business and Social Entrepreneurship

The world is faced with a multitude of pressing issues such as hunger, adverse climate conditions, poor education systems and crime, just to name a few. With all these issues, there is nothing as rewarding as an act that will positively impact society. This could be done through volunteer work, charities, and donations not to mention good leadership. Other activities and businesses can be run solely to benefit society.  In a bid to this, social businesses and social entrepreneurship have been formed. Although they are quite similar, they differ in various ways. 

What is a Social Business?

Initiated by Muhammad Yunus, this is a business aimed at solving a specific social problem and not for profits. Profits made are used to pay investors’ initial capital and also cater to the operational costs. Social businesses are common in the education, housing, nutrition, healthcare and financial sectors, with the success being based on the amount of impact on society as opposed to the number of profits made. Seeing that these businesses operate to positively impact society, the question of funding always arises. Social businesses are prohibited from receiving funds from people, seek financial support from the government or receive grants.  

Social businesses are categorized into:

1. Businesses that exist to solve societal problems
2. Society owned businesses that exist to make profits and distribute to the less fortunate. 

Like any other entity, social business is governed by the following principles

• The business aims at solving societal problem and not for profit-making
• The business is prohibited from receiving funds from people, seek financial support from the government or receive grants.  
• Investors can only receive the initial capital after which all profits are channelled to the business motive.
• The business can expand using money earned that is more than the initial investment amount in a bid to solve more problems.
• Persons employed in the business should get fair compensation for the services provided
• The businesses should not harm the environment in any way but should strive towards having an improved environment

What is a Social Entrepreneurship?

These are entrepreneurial activities aimed at achieving a positive social change either by employing processes, principles and operations towards solving cultural, environmental or social issues. The desired social change can be a reduction or the elimination of societal problems. Although this setup does not rely on monetary returns, the profits if generated are channelled to the business operations. Social entrepreneurship is common in healthcare, child rights, women empowerment, poverty alleviation, treatment of waste products, unemployment in societies and education, just to name a few. 

Social entrepreneurship encourages innovation while allowing people to engage in their passion. Because social entrepreneurship is not dependent on profits, its operations may be difficult. These businesses can hence seek funding from people, the government or grants. 

Similarities between Social Business and Social Entrepreneurship

• Both aim at solving societal issues

Differences between Social Business and Social Entrepreneurship

Definition

Social business refers to a business aimed at solving a specific social problem and not for profits. On the other hand, social entrepreneurship refers to entrepreneurial activities aimed at achieving a positive social change either by employing processes, principles and operations towards solving cultural, environmental or social issues. 

Measure of profitability

While social businesses measure profits based on monetary returns for the benefit of society, social entrepreneurship measures profits by solving a particular problem. 

Funding

While social businesses are prohibited from seeking or receiving funds from people, the government or receiving grants, social entrepreneurship can seek and receive funds from people, seek financial support from the government or receive grants. 

Social Business vs. Social Entrepreneurship: Comparison Table

Summary of Social Business vs. Social Entrepreneurship

Social business refers to a business aimed at solving a specific social problem and not for profits. Although these setups measure profits based on monetary returns, they are solely for the benefit of society. They are however prohibited from receiving funds from people, seek financial support from the government or receive grants. On the other hand, social entrepreneurship refers to entrepreneurial activities aimed at achieving a positive social change either by employing processes, principles and operations towards solving cultural, environmental or social issues. These measure profits by solving a particular problem and can seek and receive funds from people, seek financial support from the government or receive grants. Both, however, aim at solving societal issues. 

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