9 Problems Faced by Social Entrepreneurs and How to Solve Them Today

As a SOCIAL ENTREPRENEUR…

You might think the market doesn’t reward your caring nature, or that investors fail to understand the time social change takes. 

These kinds of big issues impact social entrepreneurs worldwide. 

I’m here to help you navigate the problems faced by social entrepreneurs.

This blog isn’t a lecture. 

It’s a toolkit to help you tackle these challenges head-on and learn how to overcome these challenges.

Let’s start immediately…

9 Problems Faced By Social Entrepreneurs

I’m going beyond telling you problems. 

These problems you might already know, but I’m offering actionable, evidence-based solutions and resource maps. 

You’ll learn strategy and execution. I’m equipping you with the operational tooling to turn these systemic challenges into competitive advantages.

1. Funding & Financial Challenges

Traditional investors want quick returns, but social impact takes time. 

This often causes “mission drift,” where you may leave behind low-income beneficiaries for more profitable markets just to survive. 

This misalignment of goals between investors and founders is dangerous.

Solution

Don’t rely on one “hero” investor. 

Build a Blended Finance mix. 

This is essential for a profitable business model.

• Use Grants to Take Risks: 

Secure funding for your R&D so your equity isn’t used up too soon.

• Impact Story: 

Treat “Impact” as an asset. Measure your social good to justify lower financial returns to impact investors.

Where to Get This Solution?

Resource	Why Use It	Action
Acumen Fund	Focuses on “patient capital” for the missing middle.	Read their investment criteria.
Ketto / Milaap	Crowdfunding to test demand before seeking equity.	Launch a campaign for a product.
Startup India Seed Fund	Government grants to prove your concept.	Apply through the portal.

Money is useless without a team that can spend it wisely. Let’s look at your hiring challenges next.

Once you solve the funding puzzle, the next step is execution.  Business coaching services can help social entrepreneurs build sustainable, profitable systems.

2. Talent, Skills & Leadership Gaps

Small businesses can’t match big company salaries, creating a “Passion-Skill Gap.” 

You attract junior staff but lose them quickly, preventing institutional knowledge retention.

Solution

If you can’t compete on salary, focus on purpose and flexibility instead.

• Fellowships: 

Don’t hire expensive managers yet. 

Partner with fellowship programs to bring in skilled individuals for a stipend.

• Skill-Based Volunteering: 

Stop asking for “help.” Ask for “expertise.” 

Get senior leaders to guide you at no cost.

Where to Get This Solution?

Resource	Why Use It	Action
India Fellow	18-month fellowship providing dedicated, skilled workforce	Hire a fellow
iVolunteer (Whiteboard)	Connects senior execs to NGOs for strategic consulting	Register your non-profit
Teach for India	Alumni network rich in mission-driven leadership talent	Post a job on their alumni board

Got a solid team? 

Great. But does the market actually trust you?

3. Limited Awareness & Trust Issues

Social enterprises confuse people. 

Are you a charity or a business? This “Trust Deficit” kills sales. 

There is a clear lack of public knowledge regarding how these models work.

Solution

Trust is your currency. 

If you can’t out-spend big companies, be more truthful through Radical Transparency.

• Professionalize Identity: 

Visuals matter. 

A sloppy logo signals sloppy operations.

• Impact Reporting: 

Don’t just file taxes. 

Publish data-rich reports that prove the “social premium” customers pay is delivering results.

Where to Get This Solution?

Resource	Why Use It	Action
Canva for Nonprofits	Free access to Canva Pro for eligible social groups.	Create a professional annual report.
SocialStory	Media platform dedicated to social entrepreneurs.	Submit your story for a feature.
HubSpot (Free)	CRM to track donor/customer interactions professionally.	Sign up to manage relationships.

Now that people trust you, how do you actually deliver the goods to remote areas?

4. Operational & Infrastructure Challenges

Delivery costs in rural India are way too high. 

Managing a distributed workforce with poor connectivity makes quality control a nightmare. 

Tracking a scattered team with poor internet makes controlling quality tough.

Solution

Collaborate. Don’t build from scratch. 

Instead of buying your own trucks, hitch a ride with those who already have them.

• Logistics Partnerships: 

Treat logistics as a utility you rent, not an asset you own.

• Work together: 

Share spaces to experiment and operate. 

This can save big money on pricey tools and gear.

Where to Get This Solution?

Resource	Why Use It	Action
Delhivery	Offers “Part Truck Load” for MSMEs (18,000+ pin codes).	Book a shipment.
Villgro	Incubator with physical support for agri/rural businesses.	Apply to join the program.
Zoho Creator	Build custom apps for field tracking without coding.	Build an operations dashboard.

Running a business is tough, but dealing with government paperwork can be even tougher.

5. Policy, Legal & Compliance Problems

Strict regulations, especially FCRA caps on admin costs, force you to perform complex accounting tricks. 

Compliance burdens are high for small teams. 

This is one of the major problems faced by social entrepreneurs.

Solution

Choose a Hybrid Structure and outsource the headache.

• Hybrid Model: 

Run a non-profit (Trust/Section 8) to get grants and a Pvt Ltd for sales. 

This optimizes tax benefits and investment channels.

• Legal Tech: 

Don’t hire a full-time lawyer. 

Use online tech platforms to handle filings cheaply.

Where to Get This Solution?

Resource	Why Use It	Action
VakilSearch	Online legal services for ROC/GST/FCRA compliance.	Check your compliance status.
NGO Darpan	Mandatory government portal for grants.	Register to get your unique ID.
Catalyst 2030	Network offering policy advocacy resources.	Join the community.

Are you in the clear? Great. Now how can you prove you’re making a difference?

6. Measuring Social Impact

Investors ask, “What is your impact?” You say, “We changed lives.” 

They say, “Prove it with data.” 

The absence of standard metrics makes it tough to show value. 

Collecting high-quality data from the field is expensive and error-prone.

Solution

Stop guessing and use standardized frameworks for measuring impact.

• Theory of Change: 

Make a logic map linking Activity to Impact.

• Digital Data: 

Drop paper. Use mobile tools that work offline to gather verifiable data.

Where to Get This Solution?

Resource	Why Use It	Action
KoboToolbox	Free, open-source mobile data collection (works offline).	Create your first impact survey.
Sattva Consulting	Advisory for deep impact assessment.	Explore their insights on creating impact.

Data is great, but don’t overwork yourself collecting it.

7. Emotional & Founder Burnout

You are carrying the weight of the world. 

Literally, it’s tough. 

This leads to “Compassion Fatigue.” Resting makes you feel guilty because others are struggling. 

Solution

Connect with Your People. 

Make mental health discussions a normal thing. 

You do not have to suffer from a lack of support.

• Peer Support: 

You need to chat with other founders who understand the payroll panic.

• Professional Help: 

Treat therapy as a business asset, not an optional one.

Where to Get This Solution?

Resource	Why Use It	Action
YourDOST	Online counseling with expertise in startup stress.	Book a session.
Headstart Network	Startup communities that offer peer mentorship.	Attend a local meetup.

To reduce your workload, you should start using technology to take over some tasks.

If you feel stuck in a cycle of exhaustion, business mentoring can provide the clarity and support you need to recharge and lead in a healthier way.

8. Technology & Digital Transformation Challenges

Low tech literacy and perceived high costs prevent adoption, leading to inefficiencies.

You might believe tech costs too much or “isn’t for us.” 

Relying on Excel sheets and paper records makes it tough to analyse data or grow your reach.

Solution

No-Code & Tech Donations. 

You don’t need a developer. 

A login suffices.

• Free Tech from Big Companies: 

Large tech firms give software to non-profits. 

Obtain it at no cost.

• AI Tools: 

Use Generative AI to write grants and manage content.

Where to Get This Solution?

Resource	Why Use It	Action
TechSoup	Offers free Microsoft and Google software to verified non-profits.	Register immediately.
Notion	All-in-one workspace for docs and wikis. Free for non-profits.	Build an internal wiki.
ChatGPT / Gemini	AI for drafting emails and proposals.	Ask it to write your next grant.

9. Challenges of Growth

Business owners who can’t let go stop their companies from growing. 

You cannot scale if the business runs on your gut feeling rather than documented systems. 

The reason is a lack of market discipline.

Solution

Create systems and spread out control.

• SOPs: 

Write everything down. 

Change unwritten skills into easy-to-follow manuals to build a system.

• Decentralized Models: 

Scale through agents or micro-entrepreneurs (like Haqdarshak) rather than opening heavy branches. 

This requires solid market research.

Where to Get This Solution?

Resource	Why Use It	Action
Notion Templates	Pre-built templates for Standard Operating Procedures.	Download an SOP template.
NSRCEL (IIMB)	Incubator focused on scaling social ventures.	Apply for the Social Ventures program.
Aspire Circle	Leadership fellowships for scaling impact.	Join the fellowship.

Conclusion

We have covered a lot of ground regarding the problems faced by social entrepreneurs. 

Starting a social business can be tougher than launching other kinds of businesses. 

You are trying to earn money while also making a positive difference.

But remember, the ecosystem is maturing. 

The tools are ready for you to use.

Pick just one tool listed in this blog and implement it this week. 

People are eager for your solution. 

Make sure your business is strong enough to deliver it well.

Looking for more MSME growth strategies? Click here to read more blogs like these and make your business more systematic.

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