Assessing the potential for social enterprise


When we talk to new participants on the Inspiring Enterprise programme about their socially enterprising idea, 99% of the time they talk about a need (a problem they’d like to fix) that they have identified, either in their local community, or, in some cases, more generally. For example, ‘people need access to healthier food’, or ‘there needs to be a more holistic approach to mental health’.

However, when it comes to social enterprise, identifying a need isn’t going to be enough to justify the time and effort required to develop a social enterprise. There needs to be proven demand for the service/product being offered.

In his book How to be a Social Entrepreneur, Make Money and Change the World, Robert Ashton explains why this is the case.

First of all, let’s be clear about the definitions of ‘need’ and ‘demand’ in this context:

Need – an ‘urgent want’, something that should be done that people will welcome and that fits with your vision

Demand – something that people want and that they will pay for

Ashton explains the differences in the balance between the importance of need and demand for conventional for-profit enterprises, charities and social enterprises.

Conventional for-profit enterprises – demand is more important than need. E.g. people only need to drink water to survive but marketers create the demand for drinks like Coke or tea.

Charities raise money to meet needs where there is no demand. For example, when people are starving, famine relief is a crucial need, but there would be no demand among those people for a Tesco supermarket.

Social enterprises set out to meet needs, but to get paid they need to satisfy demands. Ashton uses the example of a community café to illustrate a good balance between the two when it comes to social enterprise:

The need = A community café provides a place for local people to meet and work opportunities

The demand = People are willing to spend money in a local café and an employment charity wanted to provide work placements.

So, given the above, assessing the potential for a social enterprise can be tricky and potentially less straightforward in comparison to a purely for-profit enterprise.

To help, Ashton suggests asking the following questions:

How big is the issue you’ve identified?
How long do you think the issue will last?
*Who cares most about solving things and how can you help each other?
*Who gains from fixing the problem as well as those directly affected?

Doing this desktop research is great but be sure to balance this with grassroots reality by going out and talking to the people affected by the issue you’re focusing on.

Our blog Building the right it explains more about effective user research.