A seemingly irreconcilable combination: business and social action. For a long time, popular opinion has labeled money-making incompatible with charity work. How can a philanthropist make a social difference in underdeveloped, underprivileged areas while still maintaining a profitable business?
In an article entitled “Better Living through Business,” published in the February 2013 edition of Entrepreneur magazine, Michelle Goodman insists that it is, in fact, possible to be a social-impact entrepreneur. The evolving mindset that philanthropically-minded entrepreneurs are adapting is captured in this simple summary statement made by social entrepreneur Peter Scott: “There’s this whole new thing happening where people want to do social good, and they’re recognizing the limitations of just straight charity.”
Goodman lays out the necessary considerations for merging social enterprises with good business sense.
Firstly, entrepreneurs must recognize the importance of making a profit to maintain the program they are hoping to develop—no matter how moving the cause may be, eventually charitable donations will wane.
If one hopes to make a lasting impact, one must ensure the sustainability of the endeavor.
Secondly, in seeking investment for one’s business, the entrepreneur must be more intentional in his search. Investors must share more than their money: they must also share a passion for the cause you are pitching.
Finally, entrepreneurs must be strategic in the way they pitch their concepts to investors. Interestingly enough, Goodman warns against defining oneself as a social entrepreneur. This is in response to the popular misconception that it is impossible for a social-impact business to make money—by defining oneself as a social effort, one runs the risk of losing investor interest. Instead, one should first sell investors on the business model, then present the business’s unique purpose, using the collected data and success stories to validate this mission.
Overall, Goodman’s argument clearly supports and encourages the social-impact entrepreneurs in his quest to make a difference while still making a profit. The long-held belief in the impossibility of this mission is a myth being crushed daily by success stories of social entrepreneurs who have striven to penetrate the third world with impactful innovations and business start-ups.