What makes social entrepreneurs different from, say, Richard Branson or Anita Roddick? Some demographic differences have been noted in the 2003 Global Entrepreneurship Monitor report, which found that women and people from ethnic minorities are more likely to become social rather than commerical entrepreneurs. Social entrepreneurs also tend to be well-educated and financially better-off. However, when it comes to the practical aspects, there aren’t so many differences.

Mary Creagh, lecturer in entrepreneurship at Cranfield Business School, says that social entrepreneurs could be business men or women who spot a gap in the market. She points to Penny Newman who grew Cafedirect, the Fair Trade Coffee product, from a small outfit to a supermarket brand with an 8 per cent share of the coffee market. Using a diversifying model common to private-sector businesses, the brand has expanded to include tea and cocoa - and earlier this year the firm’s finances were boosted further with the launch of a successful (and ethical) shares issue.

“Cafedirect is not a charity but it sells socially useful products and has tapped into the growing consumer awareness around Fair Trade issues.” says Creagh. “Newman has focused on her customers and used marketing to get her business ideas across to a wide audience.”

David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas, says: "Social entrepreneurs do the same things as entrepreneurs with the same skills and the same temperament.They love to build things - not to invent a new running shoe, but to change the world.”

Colin Crooks, chief executive of Green-Works, which supplies low-cost furniture from large companies to charities and community groups, agrees. Previously an entrepreneur and environmental consultant to private-sector companies, Crooks was appointed London Ambassador for the Environment in July by the city’s mayor, Ken Livingston, and Downing Street has honoured him as one of the country’s leading social entrepreneurs. He says that the difference between social and commercial enterprise is what drives the people who run and work for the business. “I get up in the morning because of the environmental and social challenges I want to address,” he says. “The business and the furniture are the means to an end.”

Despite this, social enterprise is still about sustainable business, and in order to be successful an effective business model needs to be established that creates enough turnover to cover bills, pay staff and do all the things the company wants to do.

Social enterprise also fits neatly with the current business passion for stakeholderism, the idea that anyone affected by a business (employers, consumers) has a stake in it. For Crooks, this is the fact that his furniture redistribution business provides opportunities for the long-term unemployed.

“The furniture’s an engine,” he says. “We act as a middle-man. Our proposition is that we’ll take that furniture into warehouses located in areas of great social deprivation. Each warehouse creates jobs for an average of 16 or 17 people, who otherwise wouldn’t have been employed.”

The challenge then, he says, is to train as many of these people as possible so they can develop skills to use in future employment: “When they come up to you and ask you for a pay-rise, or they tell you that they want to go on another training programme because they’re bored with what they’re doing, you know you’ve cracked it.”

In the meantime, social entrepreneurs need to up the ante to demonstrate that they can successfully partner both private companies and government. According to Crooks, in order to forge these contracts, social enterprises need to consider increasing in size and being prepared to compete.

“The main thing for social enterprises is to build capacity, he says. “A contract could be for anything from providing staff counselling to security services to car washing. But if you’re going to provide those services, you have to think big. You can’t just have one security guard; you’ve got to have 30. If you’re going to take furniture, as we do, you have to have enormous warehouses.

“Social enterprises are often categorised as being part of the charity world, but they don’t have a right to occupy space just because of that. They only have that right if they can provide a better service than the next organisation.”

Providing a better service is exactly what Progreso are hoping to do. A social enterprise set up by Oxfam and Glasgow coffee roaster Matthew Algie, Progreso opened Britains first-ever Fair Trade coffee shop, which launched in London’s Covent Garden in November 2004.

Progreso came out of a conversation between Oxfam's trading director and the cooperatives it buys its coffee from. Enterprise, says Wyndham James, Progreso’s managing director, is about taking opportunities as they come. "It is by definition opportunistic," he says, adding that the firm is currently looking at opportunities in internet retailing and out-of-town shopping centres.

The coffee shop employs the marketing-speak of the private sector, with a sophisticated branding language that includes terminology such as “honest”, “soulful” and “consistent”. The difference is that its branding comes not out of an ad agency but out of the firm’s social values, and as a result, wears its credentials lightly. Consumers discover it’s a social enterprise almost by accident. There’s no major point-of-sale push, save a few Fair Trade posters and second-hand books – from Oxfam’s other major enterprise – under the seats, available in return for a donation.

“The brand is about a good experience and good coffee,” says James. “And it’s important to point out that the brand is real, rather than a gimmick. Our strapline – ‘Sin café, no hay mañana’ (Without coffee, there is no tomorrow) is the motto of one of the cooperatives that make up Progreso. We started out with La Central, the name of one of the cooperatives, but it read like ‘LA Central’, which didn’t seem like such a good idea.

“We obviously have values about how we behave within the organisation, for example there’s a clear tension between buying products with greater margins and those that are responsibly sourced. At some point, consumers might discover these values, but many may not notice,” he adds.

The firm plans to open a further 20 stores nationwide over the next three years, possibly through franchising. From a business perspective, the risk is that ethical consumerism will be little more than a fad. If it is, says James, it’s a growing one. “Ethical consumerism was tiny 15 years ago when I started, but it isn’t now. People are shifting in the way they respond to the idea. The tricky bit is to keep the social values with expansion.”

For Allison Ogden-Newton, chief executive of Social Enterprise London which provides a range of services to the social enterprise sector, growth can mean risk. She gives an example from the corporate sector where employees working at a large department store might find it difficult to understand the concept of partnership. “Once you get beyond a certain size, it’s very hard to maintain the sense of ownership,” she says. Apply this to a social enterprise and maintaining integrity is another challenge to add to the list.