by: Sara Herald
Social impact, long considered to be the exclusive territory of nonprofits, is becoming an integral part of for-profit businesses across the globe. From huge corporations like Unilever to local startups like Misfit Juicery, generating both profits and social good is gaining acceptance as good business practice.
This shift isn’t necessarily based in moral arguments such as “it’s the right thing to do”, but rather in solid business fundamentals: that’s what customers want. As more and more Millennials enter adulthood, they want to start up, work at, and buy from companies working to achieve social good. 84% of Millennials “consider a company’s involvement in social causes in deciding what to buy or where to shop” and they report “increased trust (91%) and loyalty (89%) in…companies that support solutions to specific social issues.”
If Millennials expect companies they engage with to have more than one bottom line, how can aspiring entrepreneurs of all kinds deliver on those expectations? The key lies in moving from a donations mindset to an operations mindset.
- Rethink your value chain. Today’s leading entrepreneurs aren’t thinking like old titans of industry about getting rich now and giving it away later. They’re baking social impact into their company’s value chains. From sourcing ethical and sustainable materials for products, like Mayorga Organics coffee, to employing marginalized populations like Indianapolis-based RecycleForce, make the way you do business reflect your commitment to society.
- Experiment with new business models. Just a few years ago, no one had heard of the one-for-one business model. Now it’s gone from shoes (TOMS) to eyeglasses (Warby Parker) to toothbrushes (Smile Squared). While this model has its limitations, it’s part of trend to think beyond traditional business models. Is there a way your company can collaborate across sectors that enhances your value proposition and competitive advantage?
- Turn gaps into marketplaces. There are a lot of problems facing the world today, as well as a lot of charities competing for dollars to address those problems. If you can find a way to turn a social problem into a market opportunity, you can generate profits and social impact. Smith alum Evan Lutz decided to turn the pressing issue of food waste into a thriving business with his startup Hungry Harvest. The company has prevented more than 600,000 pounds of produce from going to waste and also donates a meal for every box of produce sold. Recently featured on Shark Tank, Hungry Harvest is quickly expanding into new markets.
While it can take some extra thought and research to incorporate social impact into your business model, the results can be significant. Millennials are now the largest living generation in the U.S., and that is a customer segment most entrepreneurs don’t want to miss.
Sara Herald is the Associate Director for Social Entrepreneurship at the Dingman Center. She leads the school’s involvement in initiatives like the Do Good Challenge and the Maryland Social Entrepreneur Corps and serves as the University of Maryland’s Change Leader in the Ashoka U Changemaker Campus Network. A “Hoya-Terp”, Sara received her MBA from the Smith School and BA from Georgetown University. When not brainstorming ways to use business tools to solve social problems, Sara can be found spending time with her husband and their fur-babies.