Business Planning

What’s the Difference Between a Social Enterprise and a For-profit Business?

In both the U.S. and UK, you can set up your social enterprise as either a non-profit/charity or a for-profit business, such as a sole proprietorship or LLC. In the UK, however, you can also choose to set it ups a Community Interest Company (CIC).

Social vs. For-Profit Enterprises

Key differences to consider when choosing between a purpose-led or a profit-led venture:

  • Motivations & Journey  

  • Purpose over Profit - The Triple Bottom Line

  • Board & Governance structure

  • Income generation methods  

  • Staffing Structure

  • Intellectual Property

What motivates a social entrepreneur?

The biggest difference between a for-profit business and a social enterprise is motivation. The social entrepreneur is motivated by purpose over profit. A social enterprise can still be profitable, but the purpose or positive impact is the primary motivation. So, while a traditional, for-profit business has one bottom line (to increase profit), a social enterprise has a Triple Bottom Line.

“The triple bottom line is a business concept that posits firms should commit to measuring their social and environmental impact—in addition to their financial performance—rather than solely focusing on generating profit, or the standard “bottom line.” It can be broken down into “three Ps”: profit, people, and the planet.”   Harvard Business School