A social enterprise is a business that exists specifically to make money and be a positive social impact at the same time, and can be for-profit or not-for-profit.
An inclusive business is a specific type of social enterprise – a for-profit business that uses its value chain to raise people out of poverty. While it has all the characteristics of a social enterprise, it also brings a focus to low-income communities and is often centered around agriculture.
What makes an inclusive business or social enterprise sustainable?
The driving force behind an impactful inclusive business or any social enterprise is the same: a strong business model. Without it, the entity treads water and becomes dependent on grant funding and philanthropy.
A sustainable business model has three vital features:
The business must be desirable to a customer, not a philanthropist or sponsor. That is, if the business creates a sub-par or low-grade product, or can’t fulfill its orders, the customer will have no choice but to go elsewhere, and the entity will close – devastating the local community.
The business must be feasible, with the right expertise shared amongst the supplier households, so as to not be dependent on anyone individual or sponsor. It has the right combination of people, equipment, expertise, and partnerships to deliver on its promises. The business must be financially viable, or else it either folds or requires constant subsidization.
These surpluses can be used to increase the capacity of the business (e.g. buying more equipment), be funneled into increased prices for supplier households, or be channeled towards community projects, such as improving local schools.