I’m not really an entrepreneur. Then what am I?

2014-10-10 12:26

Over the last few months I have attended a number of ‘PitchIn’ events across Cape Town and Johannesburg. Essentially PitchIn events are spaces organized by entrepreneur incubators or accelerators to give new entrepreneurs an opportunity to practice selling their businesses in front of a captive audience.

Some events have prospective investors and therefore adopt a Dragon’s Den style format, where entrepreneurs get a few minutes to sell their business model or idea to a prospective investor for a stake in the business or some other form of exchange. Many of these events are aimed at giving entrepreneurs an opportunity to practice their presentation and marketing skills, particularly for those budding business owners who have worked with incubators or accelerators over a course of weeks or months receiving business training, professional soft skills, coaching amongst others. Eager entrepreneurs are then given a chance to pitch their business plan to a mentor or potential investor who can support the launch of the business. These types of events have a bias towards enterprises and tend to prefer very product oriented business pitches instead of service-oriented businesses or social enterprises. It may be because investors tend to want to purchase a stake in the business rather than give angel or impact investment, as one would do in a social enterprise.

There are some platforms that will consider social enterprises and or social businesses that have a service or product orientation. However, these are few and far between. South African government has also explicitly set up a department for small business development attempting to popularize enterprise development as THE thing that will bring economic growth, reduce unemployment and fast track development. So, enterprise development is the fad right now.

Recently, I attended a pitch event that was organized by a certain university business school where young entrepreneurs pitched their ideas for a place in a prestigious enterprise development incubator. I sat next to a young entrepreneur who was not pitching but had come to support a friend who was.

We exchanged pleasantries and ended up chatting about our respective work. He asked me what I did for a living, maybe because he was expecting me to be an investor or the type of entrepreneur he knew and understood. I said: “I’m a social entrepreneur.” His response was: “ so you’re not a real entrepreneur then. Ok, why are you here?” I described my work and vision to run a nonprofit organization that was 99% self-funding.

On my way home, I kept thinking about this binary of “real” entrepreneur versus the social entrepreneur. The notion that being a social entrepreneur is not being a real entrepreneur is false yet very widespread. I’ve encountered often in the enterprise development space. In fact, there are many businesses, which exist to meet a social need and are often referred to as social businesses. Similarly, there are plenty of nonprofit organizations generate their own income or use a hybrid model where the enterprise part funds the free service delivery of social development programs.

In rather simplistic terms, the main distinction between enterprises and social enterprises is the motive for existing- social enterprises are motivated by philanthropic motive while enterprises are profit driven.

Enterprises are usually concerned with generating a profit and socio-economic benefits are secondary. The legal composition is also different with businesses regulated by the Companies Act of 2008 and company profit is shared among directors. Businesses or enterprises are also closely regulated by more stringent tax laws, ombudsmen or watchdog bodies.

On the other hand, social enterprises, often tend to be nonprofit organizations (NPO) or nongovernmental organizations, are regulated by the Nonprofit Organizations Act of 1997 and are driven by altruism and philanthropy. NPOs are managed by a voluntary Board and may not distribute any profit or asserts of the organization to its directors. NPOs are also eligible for tax exemption, and depending on sector have some oversight bodies that regulate their operations and nature of work.

As an individual running a business and nonprofit organization, the amount of effort and management skills for running a successful business and nonprofit are exactly the same. In fact, it may be even harder to be a social entrepreneur because you often have to adopt a human-centred approach to working with volunteers, program participants and communities where you deliver your services or programs. You manage relationships with donors who have their own ideas about some of the issues who may be addressing. Access to corporate social investment and funding is very competitive and no bank will consider a loan. So when someone says that I am not a real entrepreneur, I’m left thinking: then what am I?

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