5 stereotypes about social enterprises

The desire to start a meaningful business with a positive impact is among the most commonly cited motivations of today’s entrepreneurs. More and more people are turning to new entrepreneurial concepts and business forms: social entrepreneurship, circular economy, sharing economy…

Yet the Social and Solidarity Economy (SSE), which consists of projects and activities founded on social, societal and environmental values, is still saddled with many clichés. In this article, we’ll be taking a closer look at those that top the list.

1. Social enterprises generally have low financial profitability

Like any other business, a social enterprise must have a positive financial result and be sustainable. This means profit exists in the SSE sector. The only difference with a “conventional” business in this regard, is in how profit is distributed: rather than transferring to shareholders, profits are reinvested. Take the Groupe SOS1, an SSE giant in France. Their revenues have risen an average 25% per year, with 60% of their sales in competitive areas including publishing, food & beverage, health and housing, outrunning all competition. Increasing the exposure and public awareness of companies that strike a balance between financial viability and social missions can help overturn the preconception many of us have of social enterprises being wholly dependent on state subsidies.

2. SSE only consists of a few specific activities

People tend to wrongly believe that SSE is restricted to service activities and companies offering help to those in need. Whether or not an enterprise falls within the Social and Solidarity Economy is not determined by its activity, but rather the values it manifests such as sharing, democracy, social utility… meaning any company can be a part of the SSE as long as it abides by its principles! Since 2016, entrepreneurs in Luxembourg have been able to apply for societal impact company (SIS)2 accreditation, which provides official recognition to businesses with social or societal aims. In order to obtain accreditation, the company’s social aim must meet certain criteria, such as supporting people in vulnerable situations, protecting the environment…

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3. SSE is only social

It’s true that SSE is very prominent in social and medico-social areas, but new fields of activity have been brought to light in recent years including environment, natural resources preservation, ethical fashion, health and even communication. Opportunities in digital technologies and the boom of specialized legal statuses such as co-ops are undeniably creating new vocations and diversifying the sector. “Social” in SSE actually refers to the collective dimension of projects, and not to the “social” sector.

4. An SSE project is led by a single person

SSE projects are often the collaboration of several people working toward a shared goal, like for an association or a cooperative. The business form allows for several project holders to associate, based on the agreement that: each person has the right to one vote, thus fostering participative and democratic governance within the company. SSE projects are often correlated with local communities as well: a pooling of efforts, teamwork, partnership!

5. SSE is marginal

The SSE is a vibrant and burgeoning sector in Luxembourg and throughout the world. Over the past decade, social entrepreneurship has established itself as a new paradigm for action, facing up against the complexity of major social and societal challenges: return-to-work aid, the environment, health, integration… In France, the SSE represents 10% of the GDP made by 200,000 companies3. According to a STATEC report4, the number of social enterprises in Luxembourg rose 44% between 2000-2012, which demonstrates the true impact of the SSE economy in the country.

We hope this article has helped you overturn some of these preconceptions. So to conclude: yes, social enterprises can strike a balance between performance, sustainability and innovation, and even work in social utility.

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