Start-up advice: How to balance making a difference with making a profit

Eight suggestions for social entrepreneurs


Many believe social entre­pre­neur­ship means neglecting the bottom line and profit margins. Michaels says that doesn’t have to be the case. (istockphoto)
July 22, 2014

In a world driven by the bottom-line, social start-ups must continually find new ways to maximize their effectiveness and increase their impact. While many of them are uniquely positioned to “do good” and affect change in the world, their success hinges on their ability to make effective use of available resources, partnerships and social structures.

As a social entrepreneur myself, I’ve learned many of these strategies the hard way.

Here are eight strategies that have served my start-up well and that I believe can help any socially conscious company succeed.

1. Forge mutually beneficial partnerships

As a social entrepreneur, it may seem as though all hope is lost when you enter a seemingly low budget market, such as education or, in my company’s case, volunteerism. However, this is simply not so.

Rather than jumping ship to a completely different market, look for strategic partnerships that can open new doors, allow you to leverage your creativity and overcome adversities. In particular, I have found that private-public partnerships can help turn vision into reality, especially if you emphasize the value-add for all parties involved.

My company, Soceana, quickly established a strong presence in the corporate sphere by catering to employee volunteer work — but we also wanted to work directly with youth. Rather than targeting schools, which is a much slower-moving, lower-budget arena, we collaborated with both city governments and financial corporations as sponsors to handle the budget.

In exchange, these cities receive key data metrics and analytics regarding their youth’s volunteer patterns, involvement in the community, and increased engagement levels. Meanwhile, the financial institutions receive data metrics and analytics for sustainability reports and gain positive press for their concern for youth in the community. This approach worked well as it enabled Soceana to quickly increase its impact and credibility while maintaining a viable business model.

2. Identify the best points of contact

Equally important as lasting partnerships is the selection of your points of contact. It is crucial to identify those individuals that will, for one, have control over the largest budgets, and two, inherently have the greatest interest in your mission. Sometimes, that may be two different departments inside the same organization.

For example, when we saw the potential overlap of corporate volunteerism with the human resources and corporate social responsibility departments in many companies, Soceana directly communicated with both in an effort to leverage different value-propositions. We spoke to human resources executives in regards to funding, as they were more likely to understand the potential benefits in terms of employee recruiting, productivity, and retention. At the same time, we targeted the social responsibility teams as the primary advocate of the platform to promote our core social good value-add.

3. Build credibility through partnerships

As critical as strong (and paying) partners may be, discovering credible, dynamic players who can assist with, say, your technology, distribution, or network gaps is critical. We realized early on that while our start-up may be nimble and innovative as a result of being a small team, we needed help gaining credibility — especially when trying to pursue partnerships with large, well-established corporations.

To address credibility concerns, we sought out and teamed up with WIPRO, a Global IT company located in 61 countries around the globe. As an international player, they serve as our integration partner and enable us to ensure high levels of security for integrating our platform into our corporate partners’ intranets. In exchange, WIPRO gains part of our fiscal return, establishes connections with leading large firms in the United States, and engages in social responsibility by working with Soceana.

4. Solicit help from advisors

While many social entrepreneurs may be bootstrapping or working on a low budget in the beginning, there is still a way to attract experienced, helpful additions to the team. Strong advisors can fill in the gaps or weaknesses.

Often found through networking at conferences, tapping into your own social circles, or even cold calling, advisors can provide an unending source of wisdom if you can keep an open-mind regarding time-commitment obligations. It has been our goal to always select advisors who bring complementary skills, a strong network or key expertise and knowledge to the company, and the benefits have been staggering.

Initially, our team had strong technology, design and client engagement arms, but we sought to improve our corporate network and business acumen. In order to do so, we emphasized our social-good drive, but also expressed our viable business model to our potential advisors. As a result, we were able to draw interest, advice, and formal mentorship from various experienced leaders.

5. Seek socially minded investors

In today’s changing societal priorities, finding ways to alleviate issues related to health, education and energy is imperative. And while most venture capital and angel investing groups are still focused on bottom-line benefits, many emerging groups are focused on the double bottom-line; in other words, they’re interested not just in the return on investment in terms of dollars, but in terms of social impact, too.

If you leverage your partnerships and your high-margin pricing, you can compete even in the bottom-line-focused investor circles. However, seeking out those socially conscious investors can add mentorship from leaders with a similar vision to you and your team — and often more flexible terms, too.

6. Don’t sell your product short

While the general public often connects social entrepreneurship with sacrificing the bottom line, this is simply not the case. When venturing to a wine store, you might select the more pricey option for a special occasion as you assume it’s associated with higher quality. Similarly, individuals tend to appreciate and value higher-priced platforms and products more (within reason of their price sensitivity point). Thus, don’t undervalue your product or platform just because you are a socially-good focused company.

For example, imagine if TOMS shoes were priced close to what its cost of development was, do you think the product would have nearly as much hype? Probably not. One of the highlights of TOMS is the idea that consumers pay a high premium on the basis that it will make a real difference in the life of an underprivileged individual (TOMS donates one pair for every pair purchased) and the shoes are thought to be of high quality.

Continue to provide desirable, differentiated products with a great value-add for your customers. However, always keep in mind that despite your social-good mission, you sell a novel, appealing product that deserves to be part of a viable business model.

7. Market your mission

Social entrepreneurs have a natural marketing advantage. In today’s changing social infrastructure, millennials are increasingly driven toward both products and employers that promote social impact.

You can make that changing dynamic work to your advantage. Consumers are more likely to buy a socially responsible product. With more tech-enabled transparency, individuals are increasingly aware of companies that are making a genuine effort to make a difference. You should aim to obtain good metrics and qualitative examples of all of the different social impact initiatives that your company enables in order to best position and differentiate it within the marketplace.

Also, be aware of legal structure benefits through becoming a Benefit Corporation or getting your B-Corp certification like Ben & Jerry’s and Warby Parker. Emphasize your company’s differentiating double-bottom-line impact to attract consumers, brand loyalty and positive public press.

8. Search for enthusiastic employees

Strategic hiring often differentiates those companies that will excel and disrupt the market swiftly from those that slowly will fade out. While finding industry experts seems like the obvious route, an early stage company can benefit greatly from a mixed base of talent.

For example, in roles such as client engagement, while your team manager should have experience in that department, finding young, engaged additions can help your company gain traction quickly. When it comes to repetitive task roles like cold-calling potential clients, it’s very important to find energized individuals whose infectious excitement about the cause will catch the clients hook, line and sinker.

Moreover, I have found that young, passionate client-engagement and sales-team members start hungry and stay hungry. Social entrepreneurs have the unique benefit of having a company grounded on a social good basis, so always infuse a culture that is vision-focused and passion-driven.

Tess Michaels is the founder of Soceana, a software-as-a-service platform that works with corporations and youth to encourage and promote volunteerism. Michaels is an active member of the University of Pennsylvania Class of 2015 and the Wharton Business School, focusing on life sciences, finance and legal studies.

Follow Tess Michaels and On Small Business on Twitter.

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