Social Enterprises: Navigating Challenges and Building a Better Future

Kai Mendoza in Business & Economy August 2025 • 4 min read.

"A Deep Dive into the Social Entrepreneur's Journey and How Hybrid Complexity, Finance, and Value Alignment Shape Success"

Social enterprises are emerging as pivotal players in our modern economy, bridging the gap between traditional businesses and charities. Driven by a desire to address societal needs and fueled by innovative, ethically-minded leaders, these organizations are tackling some of the world's most pressing issues. Unlike conventional businesses, social enterprises prioritize social and environmental impact, reinvesting profits to further their missions and operate independently of the state.

However, this dual focus presents a unique set of challenges. Social entrepreneurs must navigate the complexities of hybridity, balancing financial sustainability with their commitment to creating positive change. A recent study delved into the experiences and perspectives of social entrepreneurs in South Wales, offering valuable insights into the hurdles they face and the strategies they employ to overcome them.

This article will help unpack the findings of this research, exploring the key factors that influence the success and sustainability of social enterprises. By understanding these challenges, we can empower social entrepreneurs, inform policymakers, and build a more supportive ecosystem for these vital organizations.

The Terrain of Challenges: Finance, Hybridity, and the Quest for Value

Tree of Social Enterprise: Community Roots, Financial Branches

The study identified several critical challenges that consistently affect social enterprises. One of the foremost challenges is finance. Securing adequate funding is a persistent struggle, exacerbated by post-austerity measures and the unique nature of these organizations. Social enterprises often find it difficult to attract traditional investors due to their dual missions and perceived risk.

Another significant hurdle is 'hybrid complexity'. Social enterprises exist at the intersection of private, public, and non-profit sectors, creating inherent tensions. Balancing competing institutional logics and incompatible goals requires a delicate balancing act. This complexity can lead to mission drift, where the pursuit of financial stability overshadows social objectives.

Here are some key insights:

Financial Scarcity: Limited access to traditional funding sources forces social enterprises to be resourceful and creative.
Mission Drift: Balancing financial sustainability with social goals requires constant vigilance.
Complexity Overload: Navigating multiple sectors and stakeholder expectations can be overwhelming.

Measuring social value is another complex undertaking. Accurately quantifying and communicating the social impact of these enterprises is essential for attracting support and demonstrating accountability. However, traditional metrics often fall short, making it difficult to capture the full scope of their contributions. Furthermore, there is risk of focusing more on the “Measuring” rather than the impact. More focus is needed on demonstrating the value rather than proving it.

Emerging Factors: Leadership, Marketing, and Situatedness

Beyond these established challenges, the study shed light on emerging factors that significantly influence the success of social enterprises. Leadership, professionalization of marketing, perception of validity, and situatedness were identified as crucial elements. Strengthening leadership skills, investing in strategic marketing, and cultivating a strong sense of community are essential for navigating the complex landscape of social entrepreneurship. By embracing these strategies, social enterprises can increase their visibility, build trust, and attract the resources they need to thrive. Further investigation of the tensions and problems are needed but hopefully the information presented here can get one started

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1177/0269094218803313, Alternate LINK

Title: Social Entrepreneurs In Challenging Places: A Delphi Study Of Experiences And Perspectives

Subject: General Economics, Econometrics and Finance

Journal: Local Economy: The Journal of the Local Economy Policy Unit

Publisher: SAGE Publications

Authors: Gareth Rt White, Anthony Samuel, David Pickernell, Dan Taylor, Rachel Mason-Jones

Published: 2018-10-10

Everything You Need To Know

Why do social enterprises struggle to obtain sufficient funding?

Social enterprises face challenges in securing adequate funding due to their dual mission and perceived risk. Traditional investors are often hesitant because social enterprises prioritize social and environmental impact alongside financial returns. This scarcity forces social enterprises to be resourceful and creative in their fundraising efforts, seeking alternative funding models and revenue streams.

What does 'hybrid complexity' mean for a social enterprise, and what are its potential consequences?

'Hybrid complexity' refers to the inherent tensions arising from social enterprises operating at the intersection of private, public, and non-profit sectors. It involves balancing competing institutional logics and potentially incompatible goals, which can be overwhelming. This complexity requires careful navigation to avoid 'mission drift', where financial stability overshadows social objectives.

Why is it so difficult to measure the true social value created by social enterprises?

Measuring social value is challenging because traditional metrics often fail to capture the full scope of a social enterprise's contributions. Accurately quantifying and communicating the social impact is essential for attracting support and demonstrating accountability. The study suggests more focus is needed on demonstrating the value rather than solely proving it through metrics.

Besides finance and hybridity, what other factors significantly impact the success of social enterprises?

Emerging factors influencing the success of social enterprises include leadership, professionalization of marketing, perception of validity, and situatedness. Strengthening leadership skills enables social enterprises to navigate complex challenges. Strategic marketing increases visibility and builds trust. Cultivating a strong sense of community fosters support and collaboration, which are essential for thriving. These elements collectively contribute to a social enterprise's sustainability and impact.

How does focusing on the South Wales context contribute to a broader understanding of social enterprises, and what are the implications of these challenges?

The study, focused on social entrepreneurs in South Wales, offers insights into the challenges and strategies within the social enterprise sector. These insights are invaluable for empowering social entrepreneurs by informing policymakers and building a more supportive ecosystem. Understanding these challenges contributes to developing effective strategies that enhance the sustainability and impact of social enterprises globally.