So you have an idea that's going to save the world or at the very least alter a small portion of it in a positive way. Congratulations, the trends seem to be in your favor.
Be it environmental, educational, or philanthropic, the rise in "social" entrepreneurship in the past decade has been astounding. In addition, most large-scale corporations have embedded the notion of doing good into their bottom line and most MBA programs now have core classes dedicated to the topic.
Yet, in order to make a potentially game-changing idea a long-standing reality, it is highly recommended that social entrepreneurs look at their business model and ask a very simple question: Could my company be a profitable one?
Bizarrely enough, the notion of creating a for-profit social enterprise is still considered unwise, unlikely and for some, just unethical. The mission should supersede all and thus, the bottom line is subject to it. Granted, there are hundreds of wonderful and awe-inspiring non-profits out there which change the world we live on a daily basis. There is certainly nothing but the utmost respect for these entities. But before going down that road, all potential social entrepreneurs should wrestle with and fully explore the possibility of creating a for-profit company.
I first encountered this dilemma while founding my first company, Recyclebank, in 2003. As my co-founder was deeply passionate about the environment, he correctly posited that Recyclebank's goal of rewarding and incentivizing green actions would do wonders in the newly burgeoning social enterprise scene.
- Is it absolutely imperative that we be a non-profit? Just because your industry may historically produce non-profits or is chock full of them, does not automatically mean you should paint your company with the same brush.
- Does my customer care whether we are non or for-profit? In the case of car-sharing, the answer was clearly no. Customers cared about reducing their car ownership in a convenience and cost effective way.
- Can it be profitable? Without question, this is every startup's crystal ball equation. Yet, if the social enterprise can be a significant and realistic revenue generator over a sustained period of time, then make it so. Keep in mind to underplay the potential for advertising revenue, though. If it's not core to the business, this will be a hard sell to potential investors.
Follow Patrick FitzGerald on Twitter: www.twitter.com/PatrickKFitz