Social Entrepreneurship

Primary driver of the social entrepreneur is to build a better society. Global media brings everything in front of us including all the major challenges that human beings are facing. We try to be part of the solution for issues such as underprivileged in the developed world, global warming, energy demands, wealth gaps, famine, pollution and so on. These issues drive us to become a social entrepreneur.

Green and clean tech should be considered as part of social entrepreneur movement. They are aiming for solving major issues such as pollution, global warming and resource conservation. These echoes with the primary driver of the social entrepreneur.

There are a few negatives about being a nonprofit.

  1. Lack of sustainability
  2. Lack of initiative
  3. Lack of growth opportunity

Stakeholders view the social venture differently from a traditional venture because markets do not work as well for social entrepreneurs. It is hard to value social entrepreneur since it is driven by the impact of the mission rather than by wealth creation.

There are also some major challenges for a social venture to grow,

  1. How to retain employees
  2. How to value their efforts
  3. How to stay on track with their initial mission plan

On the other hand, we can also see challenges and opportunities existed at the same time. Social ventures have opportunities that traditional ventures don’t have such as people who believe in the social mission of the venture tend to be willing to pay a higher price for products and services, employees who believe in the social mission will be more willing to work over time and put in extra effort.

 

 

 

Setting Up the Company

There are three most important factors to consider before choosing form of ownership for your company,

  1. Company Size – how big you want to grow your company
  2. Tax Consideration – avoid unnecessary cost
  3. Risk and Return – how much risk you want to take and how much return you expect to get also help you to determine your company form of ownership

Advantages of a Sole Proprietorship

  1. Profit Incentive
  2. Total Decision-Making Authority
  3. No Special Legal Restrictions
  4. Easy to Discontinue

Disadvantages of a Sole Proprietorship

  1. Unlimited Personal Liability
  2. Limited Skills and Capabilities of the Sole Owner
  3. Limited Access to Capital
  4. Lack of Continuity for the Business

A corporation is a separate legal entity apart from its owners and may engage in business, issue contracts, sue and be sued and pay taxes. The Owners of a corporation hold stock in the corporation. Each share of stock represents a percentage of ownership. The actual business of the corporation is conducted by the directors and officers of the corporation.

Steps to incorporate a business,

  1. select a local agent
  2. select the corporate name and check on the availability
  3. prepare the Certificate of Incorporation

Even though LLC and S-corp are similar in many ways, but they still have few differences between each other.

  1. LLC is easy to form and maintain without extensive records
  2. LLC tends to have a very small number of owners
  3. LLC can not take the company public
  4. Restrictions on transfer of ownership
  5. LLC may need to pay double tax like C-corp

 

Why Do Business Plans Fail?

Business plans fail for thousands of reasons when you test them in the real world. However, when you really look at them and try to summarize those reasons, there are probably only few main reasons that why they failed.

-You don’t understand your own products/services/team enough.

In this scenario, you will most likely end up with an unclear business plan or plan that doesn’t have focus. There is no way for your investors to understand your products/services if you don’t make it clear enough that the majority will be able to understand. You will also end up with a bad team or unclear role of your team players. This is also fatal for most of the start-up companies.

-You don’t understand your customer segmentation in the market.

In this case, you will overestimate or underestimate your target market size which will either come up with an over optimistic financial projection that no investor will believe or an unattractive financial projection that no investor will put in their money.

-You don’t understand your competitors.

In this scenario, you will have a inaccurate forecast of your future sales and cash flow which will directly harm the trust of your investors and your team.