Singapore is renowned for being a bustling business hub, and one of the latest trends in the city-state is social enterprises. These innovative businesses are increasingly popular with local and foreign entrepreneurs who aim to make a positive impact while building sustainable enterprises.
The Singapore government is also showing its support for social enterprises by providing funding, tax incentives, and other valuable resources to help them grow and prosper.
If you’re considering starting a social enterprise in Singapore, there are several crucial things you will first need to know. In this comprehensive guide, we’ll walk you through the fundamentals of social enterprises, including the crucial steps you’ll need to take to get started. By the end of this guide, you’ll have a clear understanding of what it takes to establish a profitable social enterprise in Singapore.
What Are Social Enterprises?
A social enterprise is a business that operates like any other company, with the added objective of achieving social or environmental goals over and above generating a profit. The idea behind a social enterprise is to use the power of business to create positive changes in society by aligning commercial strategies with clear social goals that bring about improvements in human and environmental well-being. In other words, a social enterprise isn’t solely focused on making a profit for its owners or shareholders.
While similar in some ways to traditional businesses, social enterprises do differ from both traditional businesses and nonprofit businesses. Unlike nonprofit businesses, social enterprises will not use the money they make from selling goods or services to just further their causes. Some of the revenue generated by social enterprises is also used to cover the cost of running the business itself. Nonprofits, on the other hand, will direct all their revenue towards achieving the cause they were founded for.
While social enterprises and nonprofit organisations or charities both work towards social causes, how they reach their goals is different. Nonprofit organisations often rely on fundraising efforts, charitable donations, and sometimes government funding to obtain the money they need. Social enterprises, on the other hand, raise funds by selling products and services to the public. Another distinction is that in Singapore, charities are registered with the Commissioner of Charities under a separate license. In contrast, social enterprises are recognised as businesses regulated by the Accounting and Corporate Regulatory Authority (ACRA).
What Are The Steps Toward Starting A Social Enterprise In Singapore?
Starting a social enterprise follows a similar process to that for any other business venture. However, the key difference is that it involves using the business to support a social cause. This makes operating a social enterprise a uniquely fulfilling experience, as the positive impact it can have on society is often reward enough for those involved.
If you’re considering embarking on this journey in Singapore, here are a few crucial steps you’ll need to take.
Identify The Social Cause To Support
In conventional businesses, you have the opportunity to develop ideas for products and services that will generate revenue. Social enterprises follow a similar process but with a distinct difference: the ideas you develop should serve a social purpose. There are numerous causes to advocate for, ranging from social justice to environmental sustainability. What matters most is that you select a specific issue that you are passionate about and then go on to determine how best to address it.
To identify a worthy cause to support, there are several questions you can ask yourself. Firstly, what issue resonates with you the most? Have you or anyone close to you been directly affected by a particular social problem? Once you have identified the issue that speaks to you, narrow down your options and determine how you can contribute to addressing the problem.
Choose A Product/Service That Sells
Once you have determined the social cause that you wish to serve, it is important to narrow down your focus by choosing a specific product or service. It’s best to put aside personal feelings and consider a product that will be able to help you cover your business costs. While it’s important to be passionate about supporting good causes, your business will not survive if you are unable to pay your bills.
To select the right product, you should ask yourself a series of questions, such as: “What do I want to sell? Who is my target audience? How much competition is out there?” It’s crucial to be honest and thorough in your research, as the success and growth of your business will depend on you doing that.
Choose A Business Model
Once you’ve selected the product you want to offer, the next step is to determine the type of business model that will best suit your social enterprise. There are several options available, each with its own set of advantages and disadvantages, so it’s important to carefully consider each one before making a decision. Take the time to explore all of your options and find a business model that will work well for your needs.
Interestingly, in Singapore, the majority of social enterprises (69%) operate as for-profit Private Limited Companies, while 12% are Sole Proprietorships and 9% are Limited Liability Partnerships.
Incorporate Your Business
After you have chosen your business model, the next step is to incorporate your social enterprise. This process requires careful attention to ensure that you comply with the law. In order to obtain a license to operate a business in Singapore, you must first register it with ACRA. This agency is responsible for the incorporation of businesses, and they will require you to reserve a name for the business, list your directors, provide your registered address, and name a corporate secretary.
Meeting these requirements can be demanding, so it is recommended that you seek the services of a business incorporation agency. This will allow you to focus on other important aspects of your social enterprise while the agency helps take care of the paperwork.
In addition to registering with ACRA, you will also need to register your business with relevant government bodies. A business incorporation agency can guide you through this process as well.
Apply For Licenses Or Certifications
As a prospective business owner, it’s important to be aware that certain activities require specific permits and certifications in order to be legally compliant. It’s crucial to pay attention to these requirements to ensure that your business operates within the bounds of the law.
For example, if you’re looking to carry out fundraising activities within the social enterprise sector, you must first register with the Commissioner of Charities. Regardless of which sector your social enterprise operates within, it’s important to be aware of the necessary certifications.
To assist with this process, you may want to consider working with an incorporation services firm that can provide guidance and support in navigating these requirements.
Secure Funding
Social enterprises are designed to be self-sufficient, but like any other business, they may face funding challenges, particularly during the startup phase.
Fortunately, in Singapore, the government provides significant support to foster the growth of social enterprises, making funding more easily accessible. For example, a new agency called raiSE, established as a Centre for Social Enterprise in Singapore, provides a range of grants and schemes that are specifically available to social enterprises upon registration. This enables your company to gain access to the unique benefits that come with being a social enterprise.
Conclusion
To sum it up, launching a social enterprise in Singapore requires careful planning that takes into account a variety of legal and practical factors. Therefore, prospective business owners interested in starting a social enterprise in Singapore must ensure they have the necessary abilities and expertise to run such a venture, including management, marketing, and financial management, among others. Moreover, enlisting the aid of a business incorporation agency can assist one in navigating the many legal and administrative regulations involved in launching a social enterprise in Singapore.
