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Disadvantages Of Social Entrepreneurship

What is the risk management in social enterprises? Well, becoming a social entrepreneur isn’t for the faint hearted. A social enterprise is often a business model that’s focussed on a social issue and making a positive change that solves problems for others.

Social enterprises range in goals from the building of mobile apps to report crimes to the building of community hubs for lonely individuals in rural communities. Often social entrepreneurs follow their hearts above their heads – something not all that common in the business world. And whilst social entrepreneurship is a just cause, building a social enterprise doesn’t come without its risks.

Of course, you’ll be following your heart and caring deeply about the community members you serve, but there are all manner of risks involved:

  • financial
  • competition
  • health
  • working against the odds


and much more besides.

If you’re interested in a career as a social entrepreneur, then you must be aware of the risks you’ll face.

Obtaining Finance

Funding is everything when it comes to starting a business, and start up capital is the key to success in the early days of any business. Most business models will tell you to look to financial institutions for support when starting out, to help bring in some outside funding and really kickstart your business.

The problem for social enterprises? You’re not in it for the money, and if the business owner isn’t in it for the money, then banks and other financial institutions will be much less willing to lend you money to begin with. Why? Because banks are businesses too, and if they don’t see you being able to repay the loan reliably or quickly, then they won’t want to lend you money at all.

Besides that, social enterprises are often misunderstood by the business world and the world at large. Very few people can understand why business owners would give their working lives to a cause that won’t make them rich. Of course, you know that starting your business simply because it’s the right thing to do to help people is the whole point of a social enterprise, but finding lenders and investors that understand that too will be a challenge.

One of the challenges faced by many social enterprises is struggling to find start up funding that can launch the business in the first place.

How Can I Increase My Likelihood Of Obtaining Finance?

The key to success for most entrepreneurs in obtaining finance is having a strong business plan and a legitimate way to show lenders their ability to repay any loans that they take out – and that’s true for those in social entrepreneurship, too.

In other words, you’ll need to make lenders as confident as you are that this business is worth starting, and you can’t just rely on the fact that your idea is the right thing to do. Show them there is money to be made whilst you’re doing good, and lenders will be much more confident in your idea, increasing the likelihood that they’ll help finance it.

social entrepreneur financing

Backlash & Competition

There are many challenges in social entrepreneurship because it’s the dynamic nature of this section of the business world, but one of the biggest challenges faced is your competition.

Social entrepreneurship doesn’t receive a lot of funding or support in the UK, especially when compared to entrepreneurs that are about making money for themselves and others. As such, you will be competing with other social ventures for a slice of the pie, and whilst every social entrepreneur will be tackling different social problems, you’ll all be facing common challenges, and often competing against one another to be heard.

Where you stand for one social issue, others will stand against it and for their own. You have to be prepared for backlash and competition.

How Can I Reduce Any Backlash I Face?

You will face difficulties as a social entrepreneur, but that doesn’t mean you have to put up with constant backlash. If you’re finding social media to be a toxic place for you and your business idea, it may be best to move away from it until things calm down.

But far more important than that is to just be respectful to your competition, and they’ll be respectful to you. Different social justice groups will campaign for different causes, just make sure you aren’t pushing other businesses just causes down to lift your own up.

And finally, know your target market. Often other social entrepreneurs will feel threatened by a new social enterprise, but if you can show that you have a very specific group of people you want to help in a very specific way, you may find others in the social entrepreneur space warm to you quicker as they stop seeing you as competition.

Not Focusing On Profit

Whilst making a profit won’t be at the heart of commercial enterprises focussing on reducing environmental harm or microfinance institutions supporting homeless individuals with loans for homes, every business in the UK must make money in order to continue.

If you want investors to give their money to you, then you have to show them that your business is profitable enough. No, social entrepreneurs won’t become millionaires overnight, but if you have a strong business model and a way to make money, then you can use your cause to create a successful business.

And remember, the more money you make, the more you can use it to improve your business further and support your cause even more.

Is Profit Important To All Social Enterprises?

Yes. It isn’t nice to think about when you’re going into business to have a positive impact on the world primarily, but money makes the world go round, and you have to prioritise profit as a business owner, even if social entrepreneurship is your driving factor.

You’ll need a business plan with strong financial targets to attract investors and lenders to keep your business going. Failure to make money could lead to funding being pulled, and your business ending, meaning you don’t get to make the changes you were hoping to see.


When you’re passionate enough about a cause to become a social entrepreneur, then you’re also passionate enough to work yourself to burnout – and this is never a good thing. We completely understand passion and taking corporate social responsibility to the next level to upset the status quo and have people take notice of your business and the cause it’s fighting for; but this should never come at the expense of your well being.

A successful business is first and foremost sustainable, and your business won’t be sustainable if you work yourself too hard for extremely long hours. Social entrepreneurs don’t do a 9-5, clock out at the end of the day, and forget about the business until the next shift. Of course your business is a huge part of who you are, but that isn’t all you are.

Combating Burnout As A Social Entrepreneur

The best way to combat burnout is to learn to balance your life. Being passionate about your social entrepreneurship is great, but it doesn’t have to be all you focus on 24/7.

Take some time for you and do the things you enjoy. Dinner with friends, an evening at the gym, a hike in the morning – whatever it is that makes you feel relaxed, find the time for it in your week.

Failure to do so could lead to burnout, and burnout will mean you’re no longer working on your project at all. That goes against your aim, so take a little time out for you now, so you don’t have to take a lot of time out later.

Lack Of Public Knowledge

Most members of the public don’t know what social entrepreneurship is. Finding support for your cause from the public can therefore be tricky. Often it’s communities at a local level that make social enterprises a success, so you need to find a way to get them on board and support your cause.

How To Improve Public Knowledge Of Your Social Enterprise

When you’re just starting out as a social entrepreneur you don’t need to spend money on large marketing campaigns and advertising to get the message out there – all of that can come later.

For now, go to your local communities and simply talk with them. Let them know:

  • who you are
  • your business
  • why you’re doing what you’re doing
  • anyway they can help


Tell them this, and your business and its goals will start to spread, helping bring you the people you really need to support your cause.

Not Many Success Cases

It’s a sad fact of social entrepreneurship, but there are very few success stories in the world. That means when you become a social entrepreneur, you have to know the odds are stacked against you, and becoming a successful business that focuses on doing good is going to be hard. Hard, but not impossible.

Just because you don’t have many templates of successful social entrepreneurs to emulate, doesn’t mean you don’t have any. Do some research and look for examples of how other social entrepreneurs create a strong business that actually turns a profit whilst keeping their cause and fight for what’s right at the centre of all they do.

And remember, if you believe in your business wholeheartedly, that’s half the battle for any business owner. Keep pushing towards your goals, and you might be the success story others look to in the future.

Not Having A Substantial Support Structure

Every business in the world needs a business owner that can lean on others for support and advice – humans rely on social support in everything we do. The problem with social entrepreneurship is, there aren’t many support structures in place that you can lean on – there aren’t many groups of likeminded social entrepreneurs around for you to join and learn from.

As such, you might have to build that community and support yourself. Reach out to other new social enterprises and try to support one another instead of seeing each other as competition. This could make all of your enterprises even more successful.

social entrepreneurs working together


Very few social entrepreneurs focus on effective marketing strategies, and that could be due to anything from a lack of time to a lack of funds, but effective marketing is the key to any business becoming successful.

What Marketing Strategies Should I Employ As A Social Entrepreneur?

Digital MarketingThis could involve anything from email campaigns to building a successful business website that ranks well on search engines and makes you more visible.
Social Media MarketingHere you build a marketing campaign that reaches your audience where most of them are: on social media.
Traditional MarketingTraditional marketing can be anything from newspaper ads to radio or TV adverts – use these methods when you want to reach a large number of people at once.
Spreading AwarenessYou might not have the funds for marketing campaigns, but you can still start marketing your business by simply talking to as many people as possible about it.

How To Eliminate Risks As A Social Entrepreneur

Now that we’ve covered the risks of social entrepreneurship and some of the ways around it, let’s finish by focussing on eliminating risks using the following methods:

  • Speak to any successful social entrepreneurs that you know of. Their advice and guidance will be very valuable to you and may guide you on the best route to take with your venture.
  • Come up with a detailed business plan that covers everything you plan to do with your project.
  • Focus on effective marketing that engages with the public and informs them of your social business. The more public knowledge out there, the better!
  • Prioritise making profits.


The more aware you are of the risk involved in social entrepreneurship, the more likely you are to avoid these risks. Know the risks and plan for them, though, and you can make a successful social enterprise that really makes a difference to the world at large.


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