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5 Social enterprise challenges hindering their growth

Exploring the top challenges facing social enterprises and their growth
Category
Best Practices
Written by
Unmesh Sheth
Published on
January 18, 2022

Major 5 social enterprise challenges that are holding back social enterprise growth and impact, and they must be overcome by social entrepreneurs.

Social enterprises (SEs) measure success in two ways. The first is by generating economic gains. The second is by driving a positive impact in the community. How social businesses understand, track, and report their impact can make or break their growth. The right tools and frameworks for impact management and measurement (IMM) are critical to social enterprise growth. Managing their impact and integrating this information with operational and financial data is challenging. Here are 5 social enterprise challenges that hinder social enterprise growth.

  1.  Social enterprise ignoring the impact
  2. Social enterprise maintaining decentralized data
  3. Social enterprise, not engaging funders
  4. Social enterprise is not telling the whole story
  5. Social enterprise overspending on technology solutions

 

Management of Impact and unified data from operational/financial systems are critical to driving and demonstrating social enterprise growth.

  KEY TAKEAWAYS  
  • IMM is not about proving but about learning.
  • Impact management and measurement must go hand-in-hand with other business data to create a good enterprise dashboard for effective communication internally and externally.
  • The IMM tools help social enterprises make smart, data-based decisions and understand the value they create for their stakeholders.
  • Picking up the right technology is critical to the growth of the enterprise without wasting resources.

Social Enterprise Challenges

 1. Social enterprise ignoring the impact

Every business makes an impact. Businesses are enmeshed in our daily lives, from creating jobs to innovative products and services. Global crises like the COVID-19 pandemic and the climate crisis have shown that businesses directly affect people and the environment. 

Companies are increasingly adopting environmental, social, and good governance (ESG) standards. Corporate and social responsibility (CSR) models, social value frameworks, and other principles align business practices with impact on people’s lives.

Improved public image, brand differentiation, greater engagement, and more services to generate business value. Businesses can no longer afford to ignore a social purpose or demonstrate their impact on society. Today, all businesses have an impact element to measure.

2. Social enterprise maintaining decentralized data

Good data can drive social enterprise growth. Many mission-driven organizations have data all over the place. Data can sit in various systems like:

  • Donor or case management systems
  • CRM and marketing systems
  • Volunteer or loan management systems
  • Payment processing systems
  • Spreadsheets

The average enterprise is running 464 different applications to manage day-to-day business functions. With decentralized data, the organization can’t have a clear picture of its activities or relationships. Merging data into a single, impact-driven platform puts SE-specific technology to work for you, saving time and money.

3. Social enterprise not engaging funders

Social enterprise growth also depends on investment. Investors and funders want precise data that demonstrates your organization's impact. The current SE norm is to provide time-consuming annual or semi-annual reports. 

Social impact consulting leverages tech to create at-a-glance, on-demand reports specifically aimed at funders. An enterprise dashboard also provides a bird’s-eye-view of your social business goals and performance. This visual reporting system integrates social impact measurement and operational and financial dashboards for up-to-the-minute data. The right technology allows you to easily communicate with your funders rather than waiting on data cycles.

Non-Profit Fundraising
Fig: Non-profit Fundraising

 

4. Social enterprise not telling the whole story

Organizations that have incomplete data rely on output data or rely on qualitative data, and are not conveying the full impact of their work. These organizations also do not understand their full relationship with the stakeholders they serve.

A good enterprise dashboard is critical to effective communication both internally and externally. Comprehensive impact data allows you to communicate outcomes with management, executives, and board members. IMM is not about proving but about learning. It’s about seeing successes and challenges in real-time, adapting, and maximizing impact.

Externally, organizations with effective IMM can create strong public-facing communication. Using compelling and convincing data is a huge advantage in explaining your work's social, economic, and environmental impact.

5. Social enterprise overspending on technology solutions 

Social enterprises often struggle with several challenges when trying to interpret data from multiple sources. They deal with challenges such as:

  • Data manipulation (entry, clean up, translation)
  • Calculations like scoring
  • Data unification
  • Integration from different sources
What are the main challenges faced by a social enterprise?

Technology and expertise are costly as the level of data calculation, integration, and unification increases. Visualization platforms like Tableau and PowerBI can help, but they often require tech support. Social Enterprises must contract with data scientists or software engineers to merge pipelines and build custom dashboards. 

Tools like Tableau can be cost-prohibitive when it comes to per-user pricing. Multiple users must access the system if you have ten people in your organization plus a cadre of volunteers. Alternatively, the whole office tries to share one user log-in, creating bottlenecks and single points of error. The right kind of technology can grow your social enterprise without wasting resources.

Tips for Data Cleanup

 

The sustainable social enterprise Approach
Having united data is one of the most efficient ways to drive and demonstrate social enterprise growth. Impact management and measurement go hand-in-hand with other business data on centralized dashboards. These tools allow you to make smart, data-based decisions and understand the value you create for your stakeholders. Social enterprises can’t budget for high-ticket technology solutions every few years. For long-term cloud-based solutions that follow the unified approach for social enterprise growth, contact Sopact.  

Image: Unsplash

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