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Andrew Ruben

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The Socially Conscious Business: How to Balance Profit and Mission?

Posted: 05/02/11 12:03 PM ET

Blue State Coffee has just reached a milestone: we've now given away over $250,000 to local non-profit organizations selected by our customers. When we started the business five years ago, we never imagined that we would come this far. We've learned a number of lessons along the way, and I provide them here to help aspiring entrepreneurs learn from our experience.

Starting a business is hard; starting a socially conscious business is harder. Because a socially conscious company incorporates its values into its business practices, it is never just about profit. But profit necessarily comes first: if a socially conscious business isn't viable, it can't do any good for anyone. How, then, does the business balance its dual obligations to profit and to mission?

First, don't neglect the nuts and bolts. Although it can be tempting for socially conscious entrepreneurs to devote all of their time to the marketing element, it is equally important to devote time to the numbers -- projecting revenues, anticipating costs, and writing a rock-solid business plan. Make sure to consider the most important question: how will this business make money? The answer cannot be passing on the cost of the social commitment to consumers: as Green Works has learned, many customers will not pay a premium for environmental sustainable cleaning products. Socially conscious businesses, therefore, must be more efficient than most.

Second, define whom and how the business will help. No business can solve all problems for all people: the charitable component must be targeted. Existing businesses can provide a model for yours: Working Assets and Blue State Coffee donate a percentage of sales to non-profits voted on by customers; Tom's Shoes and Two Degrees donate one pair of shoes or one nutritional pack, respectively, for each customer purchase; Give Something Back and Stonyfield Farm donate a fixed percentage of after-tax profits. Limiting the business' social mission will allow you to anticipate the cost of your commitments throughout the year. To that end, I recommend that new businesses donate a percentage of sales, not profits, since start-ups often don't have profits in their first few years.

Third, profit and mission can be aligned. Cause-based marketing -- communicating your mission to a base of customers who care -- can differentiate your business from its competitors and drive sales above what they otherwise would be. Certain certifications -- the Certified B Corporation and 1% for the Planet, for example -- can lend legitimacy to your business as socially conscious. Even if you forgo formal certifications, make sure your customers know about your charitable commitments. This isn't bragging; it's demonstrating that business can be a force for good.

Along with helping other people, you'll discover that running a socially conscious business can be enormously rewarding, personally. The most gratifying moments over the last few years were not meeting sales projections, but handing donations to thankful leaders of non-profit organizations. Those moments alone have made all of the work, and all of the mistakes, meaningful.

 

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