Risks of Social Entrepreneurship 101

Successful entrepreneurs are constantly balancing the risks and rewards of their decisions. If you haven’t thought and understood the risks of your startup venture yet, then discover the 101 basics of social entrepreneurship risks here.

Navigating the Risks of Social Entrepreneurship

Lodge 441 / Old School - Festival of Ideas courtyard painting [Photo by Madilworth] (CC BY-SA 3.0)

Today’s organizational leaders and young social entrepreneurs are facing economic hardship and uncertainties which increase the risks of social entrepreneurship at a time when it’s needed most.

The ability to understand when to take a risk and when to manage risk is a critical component to success. When the opportunity to uproot injustice and inequality is in front of you, but the great risks involved are standing in the way, how can you best navigate your way to become the change you wish to see in the world?

It’s good to recognize that no matter how well you plan your campaign, there will always be unforeseen challenges along the way. There fore, the key to managing risk is less about what you plan and more about who your plan includes. Finding the right people who are patient and determined will create the flexibility to alter course when necessary and remain strong.

Risks of Social Entrepreneurship Compared to Traditional Enterprise

The risks of social entrepreneurship compared with traditional enterprise can be greater, and certainly different in some key respects. Social entrepreneurs must assess risk at any number of levels, from enterprise to managerial, market to financial.

They must also be able to evaluate potential reward and position their own resources to most effectively decrease the possibility that a risk becomes a reality. On top of this, social entrepreneurs must contend with the fact that they may carry a larger universe of risk than a traditional entrepreneur. For example, those businesses committed to hiring the majority of their employees from the ranks of the homeless certainly face issues that their traditional competitors don’t have to deal with.

In addition to traditional aspects of competition, the social entrepreneur must also contend with the fact that their performance indicators are different and more complex than a traditional enterprise.

Risks of Social Entrepreneurship Investment

From the perspective of a social enterprise investor, the risks of social entrepreneurship funding can be high. The higher risk, unconventional and cutting edge ideas that these investors support are viewed within a framework that looks at the potential of the whole enterprise, and takes into account the positive impacts that go beyond just monetary profit potential.

To stay relevant as a philanthropy that operates on a large scale, these investors must be devoted to the exploration of new ideas and concepts, and open to working with different people and supporting unconventional ideas. This kind of work helps social impact investing to stay fresh, and bring in new ideas and new grantees.

Ultimately this risk pays off in continued growth and keeps them ahead of the curve. When they find real winners, they benefit along with the sectors and communities these successful entrepreneurs impact.