“your profitability = your ability to profit others.” – Social Change Nation
Welcome to another fantastic Friday. As you're now well aware, Friday is the day we dish out a fresh installment of social entrepreneurship 101. These are the lessons I learned from interviews with 101 social entrepreneurs. If you've missed any, click here for the audio versions. Today, let's talk about profit...
The only way to turn a profit in cause-based business is to profit others far more than you profit yourself. That doesn’t mean you’ll take a vow of poverty, in fact you can do quite well in this business, but it does mean that you have to be other centered.You’ve already shown where your heart is with your story, now it’s time to show it with your money. Cause minded consumers will demand accountability and transparency when it comes to your profits. They will understand that you need to profit to continue to grow your impact, but they’ll want to know exactly what you’re doing with those profits. Let’s dig into some examples of how cause based companies are handling this:
- Tom’s Shoes – Tom’s created the one-for-one model: buy a pair of shoes = give a pair to a child in need. Now, many companies have duplicated this model as it’s a proven way to demonstrate transparency. Another benefit of this model is that people understand it and can easily share the impact they made with their friends. If people can’t easily understand or share your story, you’re going to have trouble growing your movement.
- Life Equals – Life Equals is a one-for-one company too, but they take it a step further by actively showing the number of people their products have helped via a ticker on their website’s homepage. To date, Life Equals has used product sales to give nutritional supplements to over 100,000 children. Anyone looking to join the nutrition revolution can see this ticker, understand it, and share it with others.
- Mission Belt – Mission Belt donates $1 to Kiva for each belt sold. Kiva is a non-profit that gives microloans to budding entrepreneurs. Once these loans are repaid, that money can be re-lent, meaning that every dollar Mission Belt donates is recycled time and time again. I love this model because it fosters entrepreneurship and creates a transparent impact that customers understand.
- Sword and Plough – On top of its ‘quadruple bottom line’ S&P donates 10% of its profits to veteran initiatives. This system may be excellent for you if you don’t have a product/service that leads naturally to a one for one fit. Just be sure to tell the story as well as S&P does (photo credit):
Sword and Plough uses this diagram to transparently communicate every step of its process and profit with its customers.
Take a cue from these great companies when it comes to your profit. Use an ‘impact ticker’ like Life Equals to share your cause, create an ‘impact story’ like Tom’s that is easy for people to pass along, and show your customers a map of your whole process, like Sword and Plough. Profit is the lifeblood of any entrepreneurial venture, and in our case, we need to take it a step further and show our followers exactly how we’re using our profits to better humanity. The steps above will help you get there.
Social Entrepreneurship is a tough business. Yes, you’ll have fun, meet incredible people, turn your dreams into reality, and create social change. But you’ll also have more 15 hour days than you can count, scads of sleepless nights, missed social events, and ebbs and flows of cash like you wouldn’t believe. Because of this, you need to devote a small portion of profit to keeping yourself sane. Cook up a nice dinner once in awhile, go to a movie, take a vacation (one that fits your budget, that is :), or buy some fun item. Bottom line: you need to take care of yourself too. We change agents are ripe candidates for burn-out because we’re dunked in social problems every day. Take a little bit of the profit you’ve worked so hard for and re-invest it in yourself.
P.S. One of my favorite thought leaders on profit is Mike Michalowicz. Mike’s writings are funny, informative, and a breath of fresh air for entrepreneurs of all stripes. Check out his books Profit First and The Pumpkin Plan for a roadmap to profits in your cause minded business.
P.S.S. Have you ever hit 'reply' and told me what you're up to in the world of social entrepreneurship? If no, hit me back now. I'd love to hear from you.
-Josh
@joshschukman