Supporting the Business of the future: a focus on (non-)financial support for Social Entrepreneurship
During the three days of the 23rd MFC annual conference, professionals and experts in the field of social finance from all over Europe came together to intensively share ideas and learn from each other. The panel on “Supporting the Business of the Future” was moderated by Luisa Ferreira from the EIB and our head of policy and EU relations, Veerle Klijn, who made the message clear from the beginning. Micro-finance institutions (MFIs) can help the business of the future to grow and flourish. This, they explain, is especially true in tackling two crucial challenges identified by Veerle in her introductory speech: access to finance and to dedicated business support. MFIs can have a crucial role in providing these services. Guests of the panel were Stefan Bucic, CEO of BCR Social Finance, and Samuel Paulus, manager of Microlux.
What are the businesses of the future? Social enterprises!
According to Veerle Klijn, they can be defined as enterprises that have (i) a social and environmental mission set out in its governing documents; (ii) an independent and generated revenue through trading activities; (iii) a vision which considers profits as a means rather than an end goal; (iv) a management and ownership in the interest of the mission; (v) a transparency on the modes of operation and impact.
Moreover, Luisa Ferreira explained that:
Social entrepreneurship is the business of the future. It is the younger generation which wants to work in conscious businesses, it is the consumers which ask questions about the origin of their products. […] it is really a movement!
Nevertheless, as Paulus pointed out, sharing one of the success stories of his organisation, “social enterprises do not always have to be innovative”, explaining that even traditional businesses can have social impact through very simple choices – such as where to buy supplies or who to employ.
Together with Luisa Ferreira’s, Bucic indirectly emphasised the role of the consumer, especially in the long-term economic sustainability of social businesses – a crucial takeaway of his speech. SEs should not rely on the continuous flow of grants and other financial products from different institutions operating in the field, but rather on the actual ability to compete and be present in the market. According to him, a business’ focus on social impact can, in the long-term, improve its ability to attract talented individuals to work there, while also making it more appealing to consumers. In his words,
When you set your KPI [Key Performance Indicator] don’t look only at profits, loss, and financial KPIs but also at the impact KPIs because this will help you in relation to every agent you interact with. People will look more and more to use, buy, and partner with business which are sustainable rather than those which are not.
This, in turn, can help to make an enterprise more competitive on the market, fostering its economic sustainability.
The two guests focused on business support, sharing their own initiatives in this regard. BCR Social Finance, as Bucic explained, provides training in which social entrepreneurs can learn crucial coding and IT skills which can then help them in their business development. Moreover, they offer business and financial education to both private individuals and young enterprises, targeting the learning programs to the needs of their clients. As Paulus pointed out, similar services are offered by Microlux, which relies on expert volunteers to conduct business support beside micro-crediting.
Both guests, then went on to emphasise the importance of tracking the impact of social businesses, with Bucic claiming that data can help both compare SEs’ actions to the SDGs as well as to periodically monitor progress. Moreover, data analysis can also help the social business sector to meet society’s needs. In Bucic’s words:
We need more info from the market because the data are really not good right now. This will also be a challenge we [should] tackle in the next period.
Responding to the questions in the chat, Veerle raised a crucial point in line with the focus of the discussion. She explained how micro-financing shall also help to foster the system in which social entrepreneurship takes place.
Entrepreneurs never operate in a vacuum. – she said – The ecosystem, especially in terms of government support, regulations, solid financial market, business support organisations, mentoring programs, and co-working spaces, influences the activity and effectiveness of social businesses.
MFIs can help fostering this aspect as well. This was picked up by Luisa Ferreira in the final remarks. There, she underlying the fact that “MFIs are social entrepreneurs” in themselves because they are creating impact through their working as well.
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