The backbone of every business venture ultimately comes down to money, more specifically the inflow and outflow of cash to sustain it. For social enterprises on the other hand, it is essential that both financial and social aspects are to be given due attention.
Two quantitative studies on Philippine social enterprises by the British Council Philippines in 2015 and 2017 reveal the statistics of many aspects of social enterprises. Some striking points of the two studies show that the number of local social enterprises has increased from 30,000 in 2007 to at least 160,000 in 2016, benefiting around 4.7 million Filipinos. Additionally, younger age groups and more women were recorded venturing into social enterprises.
Nonetheless, the most striking challenge cited by social entrepreneurs from the two studies are financing and obtaining capital. Since start-up social enterprises are a non-traditional way of doing business, that used to be only for profit, the prevalent concern for entrepreneurs is whether a balance of funding and social mission could be found.
This delicate balance, however, can only be achieved by business owners who are financially literate. Financial literacy, as defined by Investopedia, is the education and understanding of various financial areas including topics related to managing personal finance, money, and investing. It deals with concepts on how to invest, budget, and plan whether for the individual or business scales. Being informed about how to manage one’s finances, social entrepreneurs will not only be able to sustain their businesses better but also overcome barriers to their goals.
To investigate financial literacy in the businesses of Filipino social entrepreneurs, Change Magazine spoke with two social enterprises, namely Cāpa and Gantsilyo both based in Manila, to know how these small companies handle their operations and finances.
Struggles in Starting a Social Enterprise
LEFT MOST PHOTO: Cāpa Team
(from the right counterclockwise) Yvette Tan (Chief of Operations),
Samn Mercado, CEO, Nicole Salazar (VP of Branding) with other co-founders.
Cāpa is a social enterprise created by Ateneo de Manila University students as a culminating thesis project in 2018. It is a start-up venture that markets and sells bags and pillows of canvas material made by mute or deaf individuals. Cāpa’s beneficiaries come from Tahanang Walang Hagdanan - an NGO that employs people with disabilities.
As one of the many new social enterprises, Cāpa had its fair share of struggles. When they were starting to launch the enterprise, CEO Samn Mercado commented frankly, “Starting the business, we had to consider basic skills, limited equipment. There are not many choices for products.” Fortunately, Cāpa had the backing of business students aided by experienced professors to bring it to fruition.
Photo from Gantsilyo
Gantsilyo is another social enterprise formed in 2017 by the AIESEC organization from the University of the Philippines Diliman that markets and sells bags and bikinis created by mothers in Pook Aguinaldo, an underdeveloped community in Quezon City. “Currently, we have four hardworking nanays (mothers), namely Nanay Angie, Nanay Sandra, Nanay Lyn, and Nanay Lorraine, who are deeply skilled in the art of crochet and handcraft every product with utmost quality,” Anna Liu, this year’s project head shared.
Both Cāpa and Gantsilyo are based in universities with a business background to give their students an upper hand in sustaining these ventures. Unfortunately, other aspiring Filipino entrepreneurs are not as lucky to get a good foundation.
When asked about the struggles of new social enterprises, Mercado shared that obtaining funds is a constraint as microfinancing services are limited. This implies that some entrepreneurs lack the knowledge about how to launch their business or keep it going. “A main concern is minimizing cost…there is a lot to account for like the materials we buy for the product,” Liu commented.
Strategies in Managing Finances
Nonetheless, there is hope for entrepreneurs to overcome funding and costing problems. They can educate themselves with financing and study other enterprises’ operating models.
“For the initial stages, I would suggest putting a lot of importance in the planning on the kind of social enterprise you want to make,” Liu advised. She also added that there are various ways to earn money through Income Generating Projects (IGPs) like selling raffle tickets and holding rummage sales. Sometimes, they would write solicitation letters to various companies who might share the same advocacy as them.
Moreover, Mercado suggested that aspiring entrepreneurs find a mentor to guide them in planning and executing their business.
Promoting transparency among co-officers is also a key way to promote accountability. “Most of our operations are fixed in the sense that we have a master tracker that tracks all our activities - meetings, inventory, supplier directory, cash inflow, and outflow,” Liu shared.
Financial Literacy and Filipino Social Enterprises
It all comes down to knowledge of how to manage finances in order to help any business flourish. Starting from an individual level, any person needs to know how to allocate or restrict their assets, to gain even more funds or keep some for future causes.
“[Financial Literacy is] very important just like in any other business that wants to keep itself financially self-sustaining and generate profit. However, what sets a social enterprise apart from a normal business is the reason why we aim to make revenue, which is to create an environmental and social impact towards a vast amount of people,” Liu said.
Mercado also remarked that social enterprises do not immediately succeed and that it is a big commitment. “What people are looking for now at most are quick earning businesses. Social enterprises take time. Don’t just take advantage of the social cause. It should be something that you pursue long term. Have passion,” she said.
As such, it is the responsibility of any aspiring social entrepreneur to learn about how to efficiently manage their business, while having the patience to take on this long term endeavor that will ultimately reap great personal and societal rewards.