What’s your start-up’s vision statement? It must have something about sustainable development for a positive change in society, doesn’t it?
Well, you are not alone. Almost every organization considers the social impact in its vision statement and wants to balance social impact and profit.
After all, everyone wants to show that their organization exists for a greater cause, not just profit.
In the United States, corporate social responsibility (CSR) is not mandatory, leaving organizations to voluntarily work towards creating a positive social impact.
If this is the case, why are we even talking about the social impact of a business? And why is it essential to balance social impact and profit?
Find out in the next section.
Why’s it Important for Startups to Balance Social Impact and Profit?
Modern customers aren’t just interested in quality products or services, they want to support companies that stand for the social issues they care about.
According to a recent study, around 85% of consumers have become “greener” in their purchasing over the last five years.
The study also found that one-third of the millennials prefer sustainable products over regular ones. The chart below shows the shift in consumer buying behavior.
Given the importance of social issues among consumers, brands have started to balance social impact and profit.
For example, recently, Samsung introduced its new line of smartphones, the Galaxy S22 series, that’s built using recycled discarded fishing nets.
Not just big brands, there are several startups that have also begun creating a positive social impact.
One such startup is Rens Original, a shoe brand based in Finland, that has recycled 750,000 cups of coffee to repurpose them into sneakers.
Now that we have established that positive social impact is a necessity for brands who want to thrive in the modern market, let’s understand how to create it.
How can startups, who are already struggling to break even, balance social impact and profit?
That’s what we’ll discuss in the next section.
How to Balance Social Impact and Profit
The need to balance social impact and profit seems like a strategic paradox for entrepreneurs. Although there are certain examples of companies successfully balancing both, there isn’t much clarity on the approach.
A massive chunk of the problem for entrepreneurs emerges from the investors’ side; because they prioritize profit.
Considering all the challenges, here is how you can balance social impact and profit for your startup.
1. Identify What Social Issues You Want to Tackle
Making a profit is the main goal for anyone forming a Corporation with the help of a business incorporation agency such as GovDocFiling. But in order to make a positive social impact, you need to think beyond the stereotypical business perspective.
Find out the social issues that your typical target audience would care about and spread awareness about them. For example, if your main target audience comprises women, you may want to tackle the issue of gender equality and women empowerment.
2. Make a Plan to Balance Social Impact and Profit
Once you have identified which social cause you are going to focus on, you need to think about feasible ways you can integrate it with your business strategy.
Maybe you can use sustainable business practices to create a positive environmental change. Or you could run social media campaigns to spread awareness about the cause.
You can also allocate a CSR fund to a popular social cause, so that your customers feel that they are contributing to society by purchasing products or services from you.
3. Create Your Mission and Vision Statement Around that Social Cause
Mission and vision statements of a business are the reason for its existence. While the mission is for the short term, and the vision represents a business’ long-term goals.
Your mission and vision statements are the cornerstones of your business and marketing communication.
Your website, newsletter, and advertisements should communicate your business values and ethics, which are derived from your company’s mission and vision.
So put a great thought while writing your mission and vision statements and include a relevant social cause in these.
4. Talk About Your CSR Efforts Publicly
While the main intent of creating a positive impact should be altruistic, it doesn’t hurt to let your customers know about what good work you’ve been doing. After all, building customer trust and loyalty is of the utmost importance for your company.
Tell them about the social cause you are working for and all that you’ve done to make a difference.
Consider this as one of your unique selling propositions so that your customers perceive your brand in the same manner.
The key to balancing social impact and profit lies in creating hype around what you are trying to achieve.
5. Learn and Improve
As there are no clear guidelines on how to balance social impact and profit, you need to learn from trial and error.
Although corporate social responsibility is not something new, the modern concept of creating a balance between social impact and profit is novel. Take inspiration from what others are doing and try different approaches till you find what works best for you.
The best way forward for startups to balance social impact and profit is to learn from what others have been doing and create an improved strategy.
Over to You
Trying to balance social impact and profit is not easy and a novel approach to doing business in modern times.
Customers throughout the world are welcoming businesses that are working towards creating positive social and environmental changes.
If you are a startup seeking a balance between social impact and profit, start by choosing the right causes and promoting your CSR activities actively. If you communicate in the right way, you certainly will get more loyal customers and their trust. All the best!