Impact Doesn't Need to Be Not-For-Profit: How to Set Up a Social Business For Success

Jul 23, 2014

In 2011, I left the $40 million company I started ten years earlier with much of the success and accolades I had once hoped for -- but lacking the gratification I had expected. When I departed, I knew my next move needed to be in pursuit of a fulfilling mission, but I refused to accept that I had to choose between doing something meaningful or making money.

I'm far from the first person to experience this conflict. In addition to striving for high profits, satisfied customers and industry leadership, entrepreneurs increasingly want their companies to realize a larger social mission as well. The popularity of terms such as "social enterprise," "B-Corp," and "triple bottom line" indicates a new generation of companies aiming to capitalize upon real market gaps while creating meaningful change in the lives of others.

As I've learned since founding THRIVE Farmers -- a farmer-direct company specializing in superior quality coffee -- running this new kind of business requires evaluating "success" in new ways. In order to achieve both your societal and financial goals, your business model must carefully balance your for-profit and for-purpose priorities through a few key strategies.

Brainstorm Bottom-up

If you're trying to address a social problem, it's crucial to build a long-term relationship with the community you're attempting to help. Your business needs an aligned solution, not a prescriptive one.

For THRIVE Farmers, that meant building hope for farmers through a committed partnership focused on high-quality coffee farming and sustainable business growth. Coffee farmers make pennies on the pounds of the coffee they sell, yet the price of your morning cup keeps rising - leading to double-digit drop-out rates for farmers over the past decade. They are also subject to wild volatility of commodity markets to determine pricing year over year. If the system continues this way it won't just be the farmers who suffer: consumers will struggle to find quality coffee at an affordable price.

We addressed this disconnect by directly involving farmers in the supply chain and eliminating middlemen, aligning the interests of farmers and consumers for the first time. We also tied pricing to the retail market value, eliminating the toxic effect of the commodity market. With an optimized supply chain, stable pricing and improved allocation of revenue, farmers can earn up to 10x more annually, enough to support their families and invest in producing the specialty-grade coffee consumers love.

A bottom-up solution naturally empowers communities to take part in the change your company aims to enact. What's more, informing your mission with the knowledge of key stakeholders helps you better understand where current industry flaws exist -- in our case, the major disconnect between farmers' resources and customers' needs.

Remain Competitive

A company with a social purpose needs a product that can compete at the same level as any other for-profit company. While responsible business practices are increasingly expected of companies, great products are always a necessity.

A recent global study from CONE Communications and Echo found that 91% percent of consumers are likely to switch brands to one that is associated with a good cause, given similar price and quality. At THRIVE Farmers, all of the coffee we source is specialty-grade (estimated to be the top 10% of coffee), meaning consumers get a great tasting cup while also creating economic sustainability for farmers.

A commitment to a social mission will attract consumers, but quality products will establish your company as a true market competitor. By providing customers with a superior product and the promise of an impactful purchase, you can attract that 91% and grow your customer base. As we like to say, "The story is great, but the coffee is amazing."

Stay Focused to Scale

The potential impact your company can achieve is directly tied to your potential for expansion -- expansion that requires a careful balance between immediate objectives and a larger vision for the future.

When we started THRIVE Farmers, we envisioned disrupting a $100 billion dollar industry. Coffee, the second largest commodity in the world, is not a simple industry to tackle. That's why we started small, working with a few hundred farmers to focus on perfecting the model, getting feedback from the farmers and consumers, and measuring our impact. Today, we work with more than 5,000 farmers and expect to move more than 3 million pounds of coffee -- a number projected to double by next year. We are now seeing large enterprises embrace what we are doing.

Patience can be difficult when you're eager to see the difference your company is making, but one of the biggest pitfalls for entrepreneurs is broadening the company mission too quickly. Before you focus on impacting an entire industry, focus on impacting individuals and doing it well. The growth will come if you are adding meaningful value to the system.

Our standard definitions of success are changing for the better. As we approach a time where it's a given that businesses should not only avoid doing harm, but also find ways to do good, we're redefining what it means to be a strong company. Alignment, quality, and scalability can help entrepreneurs overcome the challenge of building companies that disrupt established industries and create positive impact that lasts for the world of tomorrow.

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