In this series, I dive into the challenges that social entrepreneurs face in solving the issues they can no longer leave unsolved. In this article, I look at what social enterprises are (not), what this ambiguity creates for difficulties.

Social enterprises do not start with a business plan. They start with a problem that someone decided they could no longer watch go unsolved.

The man who wheeled a BBQ up to Kings Cross with two mates to cook proper food for people living rough, and kept asking how to scale it until it became a business employing the women from the shelters he was feeding. The two groups in Wollongong who came together in 2011 — one working on unemployment, the other on a food system that was not sustaining anyone — and built a farm that answers both at once.

These are real organisations operating in Australia right now — Two Good Co and Green Connect. They exist because their founders both had the conviction that something needed to change and the determination to change it themselves.

That is where social enterprises come from. Not from a gap identified in a policy document. From people who saw something and acted.

What social enterprises actually are

What they build when they act is, by any conventional definition, unusual.

Social enterprises are businesses — they generate revenue through trade, manage cash flow, compete for customers, and hire staff. But unlike conventional businesses, the majority of that revenue is reinvested into a defined social, cultural, or environmental mission. The benefit they create is explicitly public or community-oriented rather than primarily private.

This makes them neither a charity nor a small business in any straightforward sense. Charities depend primarily on grants and donations; their relationship to the market is incidental. Small businesses are optimised for commercial return. Social enterprises are commercially operating organisations whose purpose — and whose profit — is explicitly in service of a defined social mission.

That is a category the existing frameworks were never quite built for.

Where their legitimacy comes from

The legitimacy of a social enterprise comes from the problem itself, and from being close enough to it to understand what solving it actually requires.

Two Good Co currently runs a catering and employment operation, and venues in Sydney, all to employ women who have experienced homelessness and domestic violence. Women are referred by shelter managers who know them and know when the timing is right for them to take the next step. Two Good Co spends time on finding a worthy solution for the women. By doing that, they ensure the organisation delivers the social impact needed to help the women become more confident and understand that they are loved, valued, and respected.

Green Connect built a farm that employs young people and former refugees, two groups the labour market regularly shuts out. Green Connect spends its time building a workplace around what people rebuilding their lives actually need, not around compliance. By doing that, it turns a first job back into something people can actually hold onto.

In both cases, the organisations are working on issues that have democratic legitimacy, as the government is committed to solving them. However, the organisations are reaching a level of the problem that policy instruments cannot.

On the other hand, there are also social enterprises that have taken it upon themselves to address issues that have not been recognised by government, and with that there is no policy, no funding stream, and no framework attached to them. Those organisations are not operating outside the policy conversation. They are ahead of it. Policy usually arrives after someone has demonstrated that a problem is real and that something can be done about it, and social enterprises are often the ones doing that demonstrating.

Why the system makes it harder than it needs to be

The difficulty is that this ambiguity is not how the system tends to see it.

Policy frameworks treat social enterprises either as small businesses — applying commercial logic — or as charities — applying grant-dependency logic. Neither fits truly. A social enterprise measured purely on financial return misses the point of the impact it is trying to make. One treated as a grant recipient also misses the point, as it needs to compete with regular businesses for customers.

The result is that organisations doing work of clear public value, often at a level no policy instrument reaches, end up navigating support systems, funding conditions, and measurement frameworks that were not designed for them. They carry that mismatch alongside everything else — the commercial pressures, the mission accountability, the relationships with funders and communities, and the ongoing question of whether growth serves or dilutes their mission.

That is a significant burden for organisations that exist, at their core, to solve a problem that they just had to fix in their community.

What this series will explore

Over the coming articles, I will focus on the challenges that social entrepreneurs face in solving the issues they just could not see unsolved anymore.

Some of these issues have been covered before. Others, particularly in the Australian context, are barely mapped at all. Regardless of prior coverage, every article will start from the same place: the problem itself. What is actually true here, and what assumptions is everyone quietly making that deserve to be questioned? That is where the important perspective tends to live.

If you are running a social enterprise, I would like to know: what is the hardest thing you are dealing with right now?

Social Enterprise Series

If any of the difficulties described here sound familiar — feel free to contact me.

Start a conversation or call +61 475 923 987