Social entrepreneurship is a vast growing economic phenomenon that is being studied in academic research. Social entrepreneurship explores new boundaries for policy makers to transform the economic growth and development of a nation. It represents the future the of service sector by applying innovation and providing potential opportunities for new job creation. According to the study from a developing country like Pakistan, the research concludes key challenges faced by social enterprises that represent a broader picture of the phenomenon. According to the need of better understand the operations of social enterprises, this research also provides six key solutions that, if implemented, will help to achieve welfare and economic growth of the country. Based on the data collected from 24 semi-structured interviews of 12 different social enterprises operating in Pakistan, this research provides useful insights to laying the foundation for further development of a theory of social entrepreneurship. The key challenges identified and the solutions provided will help to develop a rich understanding of the multi-disciplinary phenomenon. By combining key concepts through comparing and contrasting the existing scenarios and then providing their effective solutions will help such social organizations to effectively achieve their missions by creating a social value in the society.