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Social Enterprise: A Balancing Act of Profit and Purpose
April 25, 2012
The value of social entrepreneurship revolves around the ideals of the entrepreneur, who is engaged in a constant balancing act between “profit and purpose”. Determining if the venture can be true to its mission is just like that sweater you received as a present from your in-laws; it takes a few washes for the true colors to shine through.
The companies and organizations who promote their commitment to particular social initiatives and principles have the advantage over other organizations by appealing to, attracting, and retaining staff that hold these coinciding principles. There are cases, however, in which a company attracts new employees by promoting their virtuous mission, but when confronted with a conflict between cohering to the mission and maintaining a specific profit margin, it is the profit that wins. How is it that a company can advertise particular social values, attract new workers based on them, and expect its team to remain committed when its members realize the purported values are not actually what company decisions are based on? Undoubtedly, when an individual chooses to work for Enviro Car Clean Inc, attracted by the company’s environmental commitments, only to discover that the dye used to make their “green wash” is actually toxic, she or he will become disheartened. Never really having answered this question, I decided to become a social entrepreneur myself.
For some, becoming a social entrepreneur is rather simple: you take over the business down the street, paint it green, put a green sticker on it, and sell the same old product…but now it’s environmentally friendly!
For others, establishing social enterprises is not so easy. In the planning stages, finding like-minded people to be part of the venture can be extremely difficult. Every venture needs investors, managers, and staff and sorting out everyone’s true motives is not obvious. There are very rudimentary ways of separating people that take an interest in a social enterprise; the Profiteers and the Non-Profiteers. The Profiteers see the profit and like the idea that money can be made without completely destroying the world. The Non-Profiteers see how much good can be made but become very uncomfortable with the concept of working for a corporation. Unfortunately, this black and white system never really works. It’s not like at the first board meeting, you find yourself sitting to the left of a man who looks like Austin Powers’ Dr. Evil and to the right of what you swear is Mother Theresa. We are all many shades in between and it can take a long time to find out where everyone stands.
Once the venture is off the ground, the balancing act does not stop. Decisions about the recycled content in your business card and whether your cloud server uses renewable energy can be arduous. But then come the big questions. “How much profit DO we really need?” and “How much good ARE we really doing?” Ultimately, for the social entrepreneur, it comes down to: If the venture takes just one cent less in profit, is one cent more of good going to come of it? I haven’t yet answered this question, but I have found some guidelines to work with.
Believing in the mission of the social enterprise is imperative. Living and standing by one’s convictions is crucial in maintaining and growing client relationships while fulfilling a social purpose. Determining when a profit needs to be made and where a loss needs to be taken to fulfill the mission is a constant balancing act and learning to perform it is absolutely necessary for the entrepreneur. This balancing act is also what distinguishes an entrepreneur. The challenging and rewarding reality is that, as the entrepreneur, the decisions motivating change are his or her own.
The fact of the matter is that we are never properly balanced between “profit and purpose”. There is no Geiger Counter of “Good Vibes” that we can walk around the office with. All I can do is make sure that when my finger creeps to my mouth and I loudly give quotes of “one biiiillion dollars”, I know I’m too far to one side. And when I find that I’m giving away literally everything we have with no thought to how we will pay any bills, I may be too far to the other.
That said, we do give away a lot of things to a lot of great organizations…
But we also try to make a few dollars too.