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What are some risks of social entrepreneurship

A social entrepreneur is an entrepreneur that starts a business to create social change and possibly solve certain social issues and problems. Examples of social entrepreneurs are wide and varied. It could be someone who builds mobile apps designed to report crimes or creates a business that aims to bring resources to underprivileged communities. At the end of the day, social entrepreneurs are known for following their hearts.

Being a social entrepreneur can be a truly fulfilling career. You get to follow your dreams, change people’s lives, all while obtaining financial freedom (hopefully). But there are definitely many risks and challenges associated with becoming a fully-fledged social entrepreneur, and you should be fully aware of them before embarking on this journey.

Obtaining finance

Most entrepreneurs require some sort of funding when they start their entrepreneurial projects. Whether they plan to obtain their funding from a private lender or a bank, the fact of the matter is that starting a business involves overcoming many costs. The problem with social entrepreneurship is that the business models don’t often turn over massive profits. This, coupled with the fact that social entrepreneurship is widely misunderstood, makes lenders wary of lending large amounts to social entrepreneurs.

Being constantly rejected by lenders can be extremely disheartening. That is why it is so important to have a solid business plan and a dependable way in which you plan to turn over profits.


If you are fighting for a certain cause, in many cases, there will be people fighting against it. The more controversial your cause, the more backlash you can expect to get. Even though social entrepreneurs are known for being selfless and aim to help people and communities in need, they often experience rather harsh backlash and criticism. In the day of social media, backlash can be never-ceasing and can take a toll on your mental health.

It is essential to be aware of any existing social justice groups and if you would be stepping on anyone’s toes with your intended projects.

Not focusing on profit

Many social entrepreneurs are so caught up in their cause that they do not focus on creating a profit. However, making a profit is very important when it comes to satisfying your investors, maintaining a successful business, as well as putting food on your table. If the cause is really your main priority, remember that the more profit you make, the more you will be able to put back into your business and the more financial freedom you’ll have.

More profit also means that you’ll be able to hire employees, and you know what they say; many hands make light work.


Burnout is a genuine risk for social justice entrepreneurs. Because they often put their heart and soul into their work, social entrepreneurs work themselves to the bone and work long hours. Like with all types of entrepreneurs, there are no set working hours, so entrepreneurs find their personal lives and their work lives amalgamating. It is very important to ensure that you maintain a healthy work/life balance to avoid burnout which can affect both your physical and mental health.

Lack of public knowledge

Although social entrepreneurship is growing and expanding, the majority of the general public do not have a clear idea of what social entrepreneurship is exactly. This can make it difficult for your cause to gain support, and support from the general public and local communities is often imperative to your success as a social entrepreneur. The lack of information both online and offline can lead to misconceptions.

Only through education and spreading information will the public be knowledgeable about social entrepreneurs and the work that they do.

Not many success cases

Unfortunately, when looking for role models and success cases in the field of social entrepreneurship, there are not many to choose from, so you have minimal business models to use as templates. This also affects your likeliness to get a loan as lenders like to see examples of similar, successful companies. This is why business models such as franchises find it so easy to obtain loans, as there are many examples of successful cases.

Not having a substantial support structure

Having a support structure and entities that you can turn to for help and advice is very important for the success of any business. Because social entrepreneurship is still relatively new, there are not many support structures or even regulations in place for businesses that fall into the social entrepreneurship sphere. Tax incentives in the UK are not yet regulated, and this can definitely cause some confusion for social entrepreneurs.


Marketing a social business definitely comes with its challenges. Unfortunately, many social entrepreneurs do not put enough emphasis on effective marketing and may not have the resources, time or funds to put into marketing, which could act as a massive risk and challenge.

How to eliminate risks as a social entrepreneur

When you look at the risks involved in becoming a social entrepreneur, it can be disheartening, but there are ways to minimise these risks, including:

  • 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. Therefore, ensure that you inform yourself and keep your feet firmly planted on the ground as you embark upon your journey towards social entrepreneurship. Social enterprises play a key role in the UK, and stable social entrepreneurship should be encouraged.

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