Business is all about taking risks and making profits. So how can a startup, or any small business for that matter, be ‘social?’ A new term called “social enterprise” has been doing the rounds, and many people are understandably curious about the existence and sustenance of such businesses. Social enterprises are organisations created to bring about positive changes in society through the use of sustainable business methodologies. Their values include out-of-the-box thinking, authenticity, balance and sustainability. While the ultimate goal of both startups and social enterprises is to bring a substantial change in the world, the latter is more focused on long-term solutions that can create a huge impact in terms of social welfare.
That being said, social entrepreneurship has joined the mainstream, with a growing number of supporters and incubators. It has been estimated that by the end 2016, social business establishments are expected to increase by 20 percent. From Tata Social Enterprise Challenge to IIM-B, there are many organisations who mentor and incubate these startups. The future of socially-driven startups is bright, and with powerful business models and immense support from market leaders, some of the great social changes seem just round the corner.
But, how can profit-driven businesses focus on both profit and social good?
TOMS Shoes, an internationally recognised shoe brand, is a classic example of a company that uses its business model to bring about positive change in the world by helping “people in need”. It adopted a unique “buy-one-give-one” model. So far, while making profits, the company has donated more than 10 million pairs of shoes. In August, 2014, the company was valued at $625 million, and Bain Capital LLC acquired a 50 per cent stake in TOMS. The company continues to grow at a fast rate and still contributes to social welfare in more than one way.
Similarly, other enterprises like BoGo Light, One World Futbol Project, Baby Teresa and Blanket America also work on a “one-for-one” model which focuses on making a big difference with small initiatives.
In the context of Indian startups and their social contributions, Retail giant Flipkart has made a lot of efforts in the past few years to contribute to the welfare of its employees and society as a whole. The company offers an allowance of Rs 50,000 to employees who look to adopt children. Another company, Zostel, a recent winner of Wharton India Economic Forum’s startup competition, recently launched an incubation program for entrepreneurs. Zostel is also on the path of taking a proactive approach to corporate social responsibility. While most Indian startups have started dominating the financial market, they will also be expected to take initiatives to contribute to social issues. Indeed, startups which are backed by huge funding are now required to contribute about 2 per cent of their three-year average annual net profit towards social welfare by the Corporate Social Responsibility (CSR) law of India.
Overall, businesses have all the freedom and flexibility in choosing the kind of cause they would like to support from a vast range of social issues. Every time a transaction takes place, implementing the right strategies would ensure that the company is making a difference even if it is on a small scale.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)