Society

Why firms should look beyond earnings target

firms

Summary

  • Social entrepreneurship denotes the drive of a business towards achieving social and/or environmental impacts.
  • Understanding how to effectively measure and manage impact is critical to any business because it ensures that the entrepreneur is achieving their desired impact results.

In the year that is coming to an end in a few weeks, we have had endless talks about how we can build sustainable and resilient businesses. I am happy to learn how multiple businesses have made strides towards becoming sustainable and realising that, besides profits being their dominant ideology, the same will not be realised if there is no tomorrow.

We have thus worked together towards embedding Sustainable Development Goals into business as well as ensuring that firms remain afloat despite unprecedented circumstances such as what we have seen with Covid-19, or worse still with climate change calamities. I am now shifting my focus a bit to delve into the sphere of social entrepreneurship, which is the next business frontier in the coming year.

Social entrepreneurship denotes the drive of a business towards achieving social and/or environmental impacts. This is different from the traditional approach of business in that, those that have adopted social entrepreneurship integrate them with profits.

This kind of entrepreneurship signals the imperative to drive social change, and it is that potential payoff, with its lasting, transformational benefit to society, that sets the field and its practitioners apart. In the recent past, we have seen customer research revealing that clients are less likely to buy from businesses that will not be sustainable.

In my own forecast, they will likely want to buy from firms that have an element of social impact and they are these kinds of businesses that will stand out from the rest.

An example is Somo, an organisation that brings about social impact to marginalised communities by empowering entrepreneurs to build businesses that have an impact in these regions. Somo achieves this by connecting the entrepreneurs with the right mentors and equipping them with the right tools to enable them to launch and scale their businesses and bringing jobs and long-term stability to marginalised communities.

This social impact is in form of education, health and the environment. Somo supports entrepreneurs in marginalised communities depending on a needs-based funnel concept: Aspiring entrepreneurs have access to digital training tools a platform that enable them to develop skills vital for running their businesses.

Somo selects entrepreneurs, particularly those with an education, health, or environmental business focus, for training. The entrepreneurs learn business skills such as problem-solving, business planning, financial modelling, and capitalising on their business. Finally, select entrepreneurs whose businesses have the potential to scale receive longer-term support through Somo Invest and Somo Channels.

Such a model of supporting businesses to practice social entrepreneurship is the next frontier because the community, read customers, feel that they are part of the entity and they can relate with it from the impact that it has created. Such businesses end up spreading their roots so deep into the community to an extent that any new business trying to set shop in that community will have a difficult time getting new customers.

As an example, the businesses supported by Somo have hitherto provided clean water to 1,271 families and recycled 790,000 kilogrammes of materials across 10 counties in Kenya. They are Nairobi, Mombasa, Kisumu, Kiambu, Kajiado, Makueni, Kwale, Kilifi, Homabay and Kakamega, with physical spaces in Nairobi, Mombasa, Kisumu and Kiambu.

Such levels of social impact show the community that these businesses are not only there to reap profits from the hard-earned cash of the community but to also walk with the residents towards building a better society.

Understanding how to effectively measure and manage impact is critical to any business because it ensures that the entrepreneur is achieving their desired impact results to address the world’s most pressing social and environmental challenges.

Businesses ought to employ certain standards and paradigms that comprehensively demonstrate social impact and how these businesses have changed and/or influenced communities. In some instances, the social impact may be negative, which, therefore, informs the business on the direction it needs to take to make positive social entrepreneurship.

Social impact, coupled with sustainability and resilience, are some of the elements that will see many businesses thrive post-Covid-19.

The ravages brought about by the Covid pandemic have also provided many windows of opportunities that businesses can take advantage of while building social impact. Among the areas of social impact that businesses can look into include disaster relief, education, food and nutrition, youth development, environmental sustainability and gender mainstreaming.

The ideas can never be limited as long as the effect on people and communities that happens as a result of an action or inaction, an activity, project, programme or policy of the business can be felt and measured.