For revenue driven organizations, their mission is focused on financial performance. For social impact organizations, their mission includes financial performance, but adds an important extra element – supporting an altruistic cause that has a broader impact on society.
If you are an entrepreneur that wishes to make a positive contribution to the world, here are 10 reasons to start a social impact startup:
1. Change the world for the better
While this sounds obvious, social entrepreneurs really can change the world for the better via their business. There are so many challenges to address in the world, from closing the digital gap so that any child can receive an education no matter their background, to facilitate financial services to underdeveloped countries, to name just two. What are you passionate about?
2. Address challenges brought by the current pandemic
One of the most obvious challenges that has affected all of us, is the effect the pandemic has had one every aspects of our lives. The arrival of COVID has had a great impact on people and society in general, and now more than ever, individuals need guidance, support and encouragement, a message that resonates with them. Whether it’s in the field of healthcare, online communication, or edtech, this is an opportunity to make an impact.
3. Work with investors that dare to make a difference
Startups addressing social problems are attracting more and more investors – who are of a certain kind. There is a change of perspective of what “good business” means when you bring social impact into the mix. Investors looking at sustainability are basically identifying well-managed companies that have a long-term view, including a strong social impact and market rate returns. Beyond a traditionally-minded VC, this might actually give you the chance to work with some of the more forward-thinking, innovative VCs and angel investors out there.
4.- Reduce investment risk
Being socially conscious in a startup means less risk in the sense of questions such as do the startup’s products potentially violate human rights or environmental standards in a number of countries? Do they cause resource scarcity? Do they contribute to climate change? Do the founders have a track record of evading taxes? Questions such as these are becoming evermore common for an investor to ask, and are likely to alter the investors decisions process, as they can negatively affect the total valuation of the startup.
5. Bring bigger profits and growth potential
Being ethical when conducting operations can bring bigger revenue and tend to be valued more highly. Consumers may be able to pay higher prices for goods when bought from environmentally conscious companies. Additionally, it may attract more customers if the company advocates for a specific issue they care about.
6. Access grants and financial resources
There are several programmes in the EU to support social enterprises. One example is the EU Programme for Employment and Social Innovation (EaSI), which supports the development of social enterprises by facilitating access to finance. The Commission also supports social enterprise via the European Social Innovation and Impact Fund.
7. Enjoy your work and retain employees
As the work in social impact startups contributes to society, you will most likely enjoy a satisfying working environment, causing higher employee retention and employee engagement. One of the reasons why employees remain in a company is because they identify themselves with the mission, cause or vision of the entit. This is one of the reasons why social impact startups, have higher employee engagement and retention. This is opposed to performance or revenue driven enterprises, where employees are mostly directed to produce and create profit.
8. Increase chances of corporate collaborations
Corporations are increasinly requesting that their suppliers integrate good practices and ethical standards, aligned with their corporate responsibility policies and principles. They are also increasingly looking to partner with innovative impact startups to expand the reach and impact of their work aswell. Keep a look out for programmes offered by large corporates whereby their advertise partnership opportunities in specific impact areas, such as education, environment, gender equality, etc.
9. Trigger innovation
Having a social impact startup means thinking about existing social or environmental challenges, potentially in a way that noone has thought about them before. Offering new solutions could mean manufacturing products in the most sustainable way, using advanced technologies, in turn fostering innovation.
10. Competitive advantage
Social responsibility enhances a startup’s reputation creating a competitive advantage when entering the market. Pursuing a good cause at the centre of your mission is a great way to start building trust, as it means giving back and being generous. It is a way to build emotional connections with people – clients see that there are real people who care about others.
In summary, becoming a social impact startup has a lot of advantages, for employees, for the company and for society. It has never been better time to start this journey, with enterprises are seeing the importance of incorporating good and ethical practices to create trust in clients for a better world.