There is a growing interest and need in the world for companies that have a strong social purpose, but at the same time these companies are facing the cautiousness of the wider business community. Many social enterprises face difficult access to finance because they are not recognized by traditional financial institutions, such as banks because of their hybrid form, and sometimes because of their market activities – not even donors. Social enterprises in their business are constantly looking for a balance – between their social goal and sustainability in the market, and because of that, a large number of enterprises face the challenge of becoming sustainable. Despite all the problems, the number of people in the world and in our country who want to start a business with a purpose is growing.
One of the most common prejudices faced by these companies in the market is the question of whether these companies have the same quality products and professional services as traditional companies. Social enterprises are challenged to constantly prove that their products and business models are equally good, if not better than traditional ones because they respect the high principles of caring for employees and customers, opt for quality and local raw materials in the first place and do not compromise when it comes to the environment. Due to all that, their products are often not price competitive on the market, which opens an additional topic whether customers are sufficiently aware and in love with the social goal of the social enterprise to be willing to pay a little more and thus support solving of a social problem.
On these and other issues, we talked with Sonja Dakić i Milica Čalija, business mentors and entrepreneurs who have been actively involved for over 5 years as mentors in the programs of the Smart Collective to support the development of social enterprises in various stages of development. They selflessly share their entrepreneurial experience, skills and knowledge with others and are active through their programs and the programs of other organizations to support women entrepreneurs, young entrepreneurs and social enterprises.
CoSED: Hello! You are both recognized as very versatile people, successful entrepreneurs and good mentors who are happy to share their knowledge and experience with others. What was your journey towards social entrepreneurship and a mentoring vocation like?
Sonja: Graphic design is something I started with and what I was most active in. Today, in addition to NLP and online business, it is the base on which my work is founded. Over the years, I worked in various companies, and the biggest turnaround happened when, after the birth of my daughter, I decided to start a DAJ DAJ company together with a friend for the production of reusable bamboo diapers. This type of diaper is much healthier for babies and is also incomparably less polluting than plastic diapers. It was only after a few years that I realized, thanks to social entrepreneurship education, that our business is actually a business with a purpose. For several years I was actively involved in the development of this company, going through all phases, from setting up a business model, to branding and marketing, to development of sales channels, etc. This experience has determined in some way what I do today and that is a mentoring program. I try to use my knowledge and entrepreneurial experience to encourage and empower all those who want to start their own business and make it sustainable.
Milica: When I entered the factory for the first time in the second year of Italian studies to translate, I realized that I was much more interested in the factory and what was happening in it than in the language itself. It was the first big turning point in my professional career, after which I focused on marketing positions in large companies, first in Jaffa and then in Food Land, where I worked as a marketing director. However, 8 years ago, my husband and I embarked on our entrepreneurial story and that is how Angels was born – a family production of healthy and delicious oatmeal cakes. Although we did not have a clear vision from the very beginning that we operate as a social enterprise, we developed the company and our business guided by two key principles – a responsible attitude towards the environment and a responsible attitude towards people. Today, our company employs women over the age of 50, as well as people with certain difficulties. Our products belong to the segment of healthy food and we try to buy raw materials from local, small producers. Also, we try to make our entire sales space zero-waste, and we are slowly introducing this principle into our production. It is this entrepreneurial experience and the success of the family business that has led me to provide support to other entrepreneurs, including social entrepreneurs, through various mentoring and educational programs.
CoSED: From the position of business mentors who consult companies in the field of marketing and sales, what do you think are the key prerequisites for a social enterprise to be competitive in the market?
Sonja: Quality comes first. The service or product offered by a social enterprise must be good and of good quality. As well as elaborate communication, marketing, sales channels, internal organization… all those elements that make up a well-established, healthy business. This is a challenge for social enterprises in our country as well as in the region, because many of them come from non-governmental organizations that lack entrepreneurial skills and knowledge. In the context of competitiveness and survival in the market, the social impact is the added value of the company, an upgrade due to which someone will sooner opt for the products of social enterprises. However, if the social impact is not accompanied by a well-developed business, that social goal will not be enough for the survival and progress of that company in the market. Within DAJ DAJ diaper, our social and environmental mission gave us more media space to present our idea to the general public, but all this was accompanied by very serious and elaborate production, online sales, retail, marketing strategy, etc. as in any other “classic” business. The practice in the last ten years in our country shows that the most successful social enterprises are those that have been set up with a good business model from the very beginning.
Milica: It is crucial that social enterprises have a quality product and it is equally crucial that they communicate that. Regardless of whether it is a social enterprise or not, in our country small producers have a problem communicating their product, their business and their quality, so I think that this is the biggest space for working with all small producers, regardless of if they have a social mission or not. Social entrepreneurs should take into account that only a small circle of people in the market will buy their product because they know they are doing something good, while most consumers will also consider the price-quality ratio. But a well-communicated social mission is something that will lead consumers to opt for a quality social enterprise product/service sooner even when it is more expensive than another similar product.
CoSED: How important is it for social enterprises to clearly communicate their social mission and the results they achieve in that field? And is it an addition to their marketing strategy or should it be the most important part of it?
Milica: I think that with social enterprises, their social mission should be an integral part of the communication and marketing strategy. In addition to the classic business promotion, it is equally important to communicate what the company does on the social level and what results it achieves – for some consumer groups business information will be more important and for some customer segment this other part related to social impact. In our country, companies encounter two problems when it comes to their social mission – they do not know how to formulate it well and present it to others, or they are not even aware of it, it is taken for granted and it is not worth communicating with the public. And in marketing, nothing is taken for granted, everything must be very clearly communicated and repeated many, many times. It happens to us entrepreneurs that we get bored of ourselves when after who knows how many times we tell the same story about our business again, but in fact, only then does it happen that someone hears what we are talking about all the time for the first time.
Sonja: Social enterprises should communicate at the same time their social mission as well as what they do, what their product or service is. We always have one story and one business that we represent, but depending on who we are addressing and who is sitting on the other side of the table, we choose which part of the story we will emphasize. If you have someone who will make their decision based on what your social mission is, who you help, what groups you work with, etc. then of course you will put that in the foreground. On the other hand, if it is someone who is primarily interested in what you are offering, are you characterized by innovation, excellent quality, something that no one else on the market has, then it is the part of your business that you need to “highlight” the most – it will be your main asset and the social mission only an added value. Also, sometimes unfortunately it happens that people associate poorer quality and inefficiency of products or services with social entrepreneurship. That is why, in addition to the social mission, we always have to communicate what we do and how good it is, because then that social mission will be an additional trump card that will motivate consumers to support that social enterprise and its mission in the long run. I think it is important that every business has key values that it communicates, and that one of those values is social impact, because then those messages will attract certain groups of consumers who identify with that value. A well-communicated social mission is what will make someone decide on that particular product, in addition to the 10 similar ones that stand on the shelf next to it.
Milica: I agree and it should be emphasized that communicating the social impact of a company is actually a long-term process that needs to be developed through various channels, and then finally result in success in sales. Customers will not immediately decide on your product or service just because you are a socially responsible company, but it takes time and perseverance to introduce people to your social mission and goal, to stay somewhere in their subconscious and so they choose you next time and not some other product.
CoSED: One of the most common prejudices regarding social entrepreneurship is that the products and services of these companies are of lower quality than some others and that they are not competitive in the market. What is your experience as an entrepreneur and business mentor?
Sonja: Sometimes it happens that social enterprises that employ people from hard-to-employ categories, such as e.g. people with disabilities with have lower productivity which then affects the price of their products or services because they need more time to make, more investment in adapting the workspace, etc. In order for that higher price not to turn away customers, it is necessary to explain very clearly to consumers why that product and service costs so much – who makes that product, how much time is needed for its production, how that company takes care of its employees, etc. What is certain is that just a nice social story is not enough for survival and competitiveness in the market if it is not accompanied by a quality business model. In order for that to become a standard in the entire sector of social entrepreneurship, we all need to work together to make a well-placed business part the primary thing we will focus on and then build a story of positive social impact around it. In practice, this means investing in raising the quality of a product or service by hiring a technologist or expert to improve our product, its packaging or help us improve the service delivery process. It also means that we first test what we offer to investigate how the market reacts to our product and service. I would also add that it is very important for social entrepreneurs to understand that some things that are perceived as a cost are actually an investment in their business and the spread of social influence. And by that I mean marketing, communication and sales that usually do not require as much money as they require time and attention – to pack a message / gift for the customer with your product, to communicate the stories of your employees on social networks, to really tell your story about the values you stand for, etc.Milica: From my experience, what Sonja is talking about does not refer only to social enterprises, but also to small enterprises in our country. Many of them have a really high quality and authentic product or service, on average better than some other market players. However, what most often appear as problems are either that consumers are not familiar with what they are doing or that the packaging design and visual identity do not match the true quality of the product. As a result, consumers expect lower quality and are not willing to pay the real price of this product. Simply put, products are not well “packaged” – they do not have a well-developed visual identity and communication strategy so that consumers cannot recognize the real content and values behind that brand.
CoSED: Milica, in one of your lectures, you said that marketing is an emotion and that from that point of view, social enterprises have an advantage over some other forms of business. What did you mean by that?
Milica: It’s all emotion. In shopping as in many other aspects of life, emotions are what drive us, more than we think. If we say that marketing is an emotion, then social enterprises have an advantage because, unlike e.g. large traditional companies, they do not have to invent their emotion and social mission, but it is an integral part of their existence. Also, the kind of emotion that a small entrepreneur feels while working, is something that customers also want to buy together with the product. Very often the reason is that your business is their unfulfilled dream, their wish that they have not yet dared to do and would like to. That is why emotion is something that small businesses need to communicate very clearly in order for consumers to connect with them, but the boundary between emotion and provoking pity should be taken into account. My advice for all those entrepreneurs who have not been involved in marketing and communication so far, is to talk honestly and openly about what they do, how they work and the motives for doing so. This simple and effective way can be an entrepreneur who will record himself in his production and post it on social networks, or he will share with others the thoughts and ideas he has for continuing his business and the like. Emotion is what is remembered and what makes customers come back and choose your product again among other similar brands.
CoSED: Sonja, do you think that social entrepreneurs have a greater and different responsibility towards their customers than some other business actors have? If so, what is the specificity of this relationship with customers?
Sonja: In recent years, a big change has taken place on the world market, which is reflected in the fact that the focus of business is shifting from the needs of entrepreneurs to the needs of the customer – the entrepreneur and the business adapt to the customer. In addition to this, the additional task of social enterprises is to educate their customers, especially if they offer an innovative product or service that is not on the market or if they employ hard-to-employ groups. In the case of DAJ DAJ diaper, my advantage was that I introduced a product on the domestic market that did not exist before, so I had no competition. On the other hand, due to the unfamiliarity of this type of diaper, I had to constantly educate customers about the importance of children’s health, environmental protection and the fact that this product is available in our country, to single out from that audience a group that was ready to buy my product. But whether we offer a new product, have a different business model or have a very important social mission that we want to promote, marketing and communications are tools with which we, among other things, create our customers, educate them and raise their awareness on a topic. Today, I have the impression that people are more aware of what they can achieve if they are united. And therefore, we all need to spread awareness about which businesses need to be supported in order for them to make some change in society tomorrow. The first step towards this is to realize that our shopping choices have far more far-reaching consequences than we think. When we buy from a domestic producer as opposed to a foreign one, we support a business that uses our local raw materials bought from our producers, a business that pays taxes and contributions for its employees and a business whose employees are actually our fellow citizens. This type of education about the importance of buying domestic products should be the responsibility of the whole society and not just small businesses.
Finally, there is no doubt that consumers who opt for products or services of social enterprises, first because of quality, then because of the social mission, help the development of social entrepreneurship, but also solve many challenges in the community. If you want to get to know all the social enterprises that exist in Serbia, what kind of social mission they run and what products or services they provide, visit the #CoSED database of social enterprises.
The Coalition for the Solidarity Economy Development has launched the first blog on social entrepreneurship in Serbia within the project “Fostering the development of social and solidarity economy” in cooperation with the Heinrich Boell Stiftung – Belgrade Representative Office.
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