THIS IS AN OPINION
We'd also like to hear yours.
Tweet us @ArkBusiness or email us
Social entrepreneurs want to make a difference, not just a buck.
Businesses have had social impact for a long time, creating jobs and tax revenue for their communities. Yet social entrepreneurs are not content with the rising tide lifting all boats; instead, they go into business with a specific cause in mind.
For instance, Austin and Ashton Samuelson, with whom I have worked at the Arkansas Small Business & Technology Development Center, launched Pitza 42 in Conway in 2011 to “do good.” For every meal sold at the restaurant, they donate the cost of a meal to the charity Feed My Starving Children. In essence, customers are paying “for two” — 42 — theirs and a hungry child’s.
As the millennial generation comes of age, expect to see more social entrepreneurs. Projected to overtake the baby boomers this year as the largest living generation, millennials born between 1980 and 2000 are entrepreneurial-minded and interested in the greater good. Millennials may be better known for their technological savvy, but another defining characteristic of the generation is the desire to achieve more in business than just a fat paycheck.
In his book “Generation We: How Millennial Youth Are Taking Over America and Changing Our World Forever,” author Eric Greenberg writes, “Generation We is deeply concerned about the common good. They also believe in social change — and they are ready, even eager, to play their role in making positive changes happen.”
Social entrepreneurs are passionate people. The energy they bring to the table is contagious. However, in their zeal to focus on the social impact of their businesses, they must not lose sight of their top priority: to operate well enough to succeed and grow, plus create enough wealth to fight the social problems they want to address.
As Robin Chase, co-founder of Zipcar and founder and current CEO of Buzzcar, has said, “Having the social goal as your number one focus is inadequate. It makes you focus on the wrong thing because you still have to deliver what people want.”
In a world where many new small businesses fail in their first year, social entrepreneurs must understand the fundamentals of running a successful and profitable business. For new social entrepreneurs, business feasibility should be discussed before the social goal. Business planning, whether with a traditional business plan or a lean canvas business model, is a tried and true process for determining feasibility. This “profit reality” underscores the need for the business to make money or else risk its cause financially.
Even with proper business planning, social entrepreneurs may have difficulty acquiring funds to start their business. While a traditional loan for all or a portion of the needed capital is an option for some, many social entrepreneurs are turning to crowdfunding to raise startup funds.
Online crowdfunding platforms such as Indiegogo or Kickstarter provide an outlet for social entrepreneurs to raise money. A successful crowdfunding campaign can result in donations from outside supporters as well as heightened awareness for the new business and the social cause that inspired it.
Starting with Maryland in 2010, 28 states have passed legislation to create a new class of corporations, the benefits corporation. Arkansas law, in effect since 2013, allows businesses to declare themselves as benefits corporations in their articles of incorporation if they seek to provide a “specific public benefit.”
A recent Mashable article by Matt Petronzio stated that “90 percent of Americans are more likely to trust and stay loyal to companies that actively try to make a difference.” Customers even justify paying more for a product or service when there is an additional benefit attached to the purchase.
The overwhelming success of internationally recognized brands such as Toms Shoes, Life Is Good and GoldieBlox demonstrates that social entrepreneurs can prosper. Closer to home, Pitza 42, Tacos 4 Life and WestRock Coffee show that Arkansas entrepreneurs are following suit, initiating social change with innovative and sustainable businesses.
Whitney Horton is a business consultant with the Arkansas Small Business & Technology Development Center at the University of Arkansas at Little Rock’s College of Business. Email her at WAHorton@UALR.edu.
Sign up for Daily E-news
