Doing Business by Doing Good: Social Entrepreneurship

You want your company to provide a living, and you want to make life better by advancing a good cause. Social entrepreneurship can successfully blend capitalist urges with an even higher calling.

There are lots of great reasons to become an entrepreneur. Perhaps you’ve hit on a particularly sublime reason: You want your enterprise to make a difference in the world. As long as you’re piloting your own ship, you figure, you should make it count for some higher purpose – as well as the bottom line.

Fortunately for all of us, social entrepreneurship is alive and well. The ranks of entrepreneurial do-gooders are growing every day.

“It’s much easier to market if people feel like they’re bettering the world in some small way by giving you business,” says Shel Horowitz, a marketing consultant in Hadley, Mass., and founder of an ethics-networking effort.

Here’s how you can go about creating a better life for everyone else as your company makes a better living for you:       

  • Figure out what you mean.
  • Have confidence that you can do it.
  • Follow your values to unoccupied niches.
  • Build it on values, and people will come.
  • Prosper first, and then start to give back.
  • Don’t worry about generating hostility.
  • Get a helping hand.

Figure out what you mean

“Values” run the gamut from right to left politically, from spiritual to secular, from practical to ethereal. And the ethical framework – or specific cause – that you adopt reflects your values.

If you’re going to incorporate your values and causes into your startup, first you’ve got to figure out how they will look in the guise of a company. And will these values drive your company, or simply flow from it?

Aliza Sherman Risdahl set up her media and marketing company, Moonbow Productions, to carry her concerns about environmental, women’s and Native American causes.

“We believe that people who share our interests in the world around us will be drawn to our goods and services,” says Risdahl.

The values orientation of Saelig, Alan Lowne’s company in Pittsford, N.Y., is overtly Christian. “Relying on Christian principles and ethics and committing our actions to God in prayer is most definitely the key to what we are today,” says Lowne, whose company imports foreign-sourced electronics components. He strives to lead with his faith in dealings with customers, suppliers and employees.

Have confidence that you can do it

Most entrepreneurs simply assume that it will be difficult to meld the profit-making purpose of their company with their call to social entrepreneurship. Usually, they’re selling themselves and their dreams short.

“If you’re starting a social cause and not thinking it could be a for-profit business, you’re making a big mistake,” says Alex Paul Pentland, a professor in the MIT Sloan School of Management and judge in its annual $100K Entrepreneurship Competition. “You’re selling yourself short. But you need to take into account the cash flow that you will need to make this company sustainable and make it scalable. Otherwise it will be a tin-cup enterprise.”

Follow your values to unoccupied niches

One good path to success as a social entrepreneur is to follow your values to market opportunities that you know, from personal experience, are unoccupied.

Bob MacLeod and Steve Byckiewicz were vegans who could easily find food to fit their philosophy – but not personal-care products. So they came up with their own stuff, starting with olive-oil soap; gave their company the intriguing name Kiss My Face; and watched consumers flock to the brand. Now, a quarter-century later, the Gardiner, N.Y., company creates more than 150 natural and organic bath, skin-care and home products and sells them in 19 countries.

Hoping for similar success, Kathy Gallagher deMeij recently established, a company that raises funds for hospitals from proceeds of sales of books, bedding and other unique baby goods on her site. “There are four million babies born each year, but we’re the first ones to tap into that to help hospitals,” says deMeij, a former publishing executive and consultant.

Build it on values, and people will come

Basically, you can do social entrepreneurship in two ways: Put your values first and make the business fit them, or get a successful company going and then layer on your do-goodism.

Brian Johnson has started, a social-networking site based in Topanga, Calif., whose sole purpose is social change. “I’m going to serve and give you something you’re willing to pay for, too,” says Johnson, who previously succeeded in business with, the world’s largest amateur-sports website. “But it starts from, ‘How am I going to serve?’, rather than ‘How am I going to make money?’”

Prosper first, and then start to give back

Some social entrepreneurs vouch for the other approach: Make sure your company is successful first, and then you will be capable of giving back to society in the ways – and to the extent – that you want.

Heidi Vance began selling beaded jewelry out of second-floor space in downtown Forest Park, Ill., six years ago with Jayne Ertel, as Team Blonde Jewelry. They flourished. Then they began to wonder whether their retailing enterprise could help women in the Third World. So Vance and Ertel began importing necklaces made by Maasal tribeswomen of drought-stricken Kenya and Tanzania, and soaps and bath salts from a non-profit company that employs American women who formerly were homeless or on welfare.

“We thought if it was important to us, it might be important to others, too,” says Vance. “The response has been great!”

Don’t worry about generating hostility

The more your company focuses on your values, the more potential your business has to turn off as many customers as it turns on. But that doesn’t mean you should do anything different.

“Even some active opposition will be outweighed by the strong buzz from people who do support your agenda,” Horowitz says. “The comfortable middle never makes waves, but you have to work much harder to get results. Don’t worry about alienating people who aren’t your audience – work harder to attract those to are.”

Get a helping hand

More financial incentives are cropping up that encourage social entrepreneurship. Investing in social entrepreneurs is one of the primary missions of the Skoll Foundation, created by eBay co-founder Jeff Skoll. And expanding its annual entrepreneurship competition, MIT has just added a series of prizes worth $50,000 just for “developmental entrepreneurs,” who target emerging, Third World and low-income markets.

Our Bottom Line

By following the path of social entrepreneurship, you can combine the excitement of starting a business with the satisfaction of making the world a better place. Plenty of startups have blazed the trail for you, but you and your company can find a unique path for doing good and well.

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