July 15, 2024

You’re the Boss: How Social Ventures Can Produce Profits

Laurie Loew donates 25 percent of her commissions.Courtesy Give Realty.Laurie Loew donates 25 percent of her commissions.

Last decade, it was all about going green to differentiate your company in the hearts and minds of consumers. Today, it’s social entrepreneurship that’s the nice new thing that can make your company stand out.

The 2010 Edelman goodpurpose global study (PDF), found that 87 percent of American consumers expected businesses to consider societal interests at least as much as their own interests. And 62 percent said that it was no longer enough for corporations to give money to good causes; they needed to integrate those causes into their businesses.

Edelman cites declining trust that the government can solve our social issues as one explanation for this call to businesses and individuals to step up. In its March/April brief, TrendWatching suggests that practicing Random Acts of Kindness is a winning strategy for businesses. While this may seem like the kind of thing only big corporations can afford, there are many small businesses taking advantage of this cultural shift to differentiate their businesses and make a difference in their communities. (We  just published a small-business guide to starting your own social venture.)

Laurie Loew started Give Realty two and a half years ago. She was coming out of a divorce and got into real estate by accident. It was during the recession, there was a slump in home sales — you may have heard! — and she was struggling with how to set herself apart from all of the other struggling real estate agents in Austin, Tex. “One half of my brain was feeling sorry for myself because my ex-husband and I were fighting over money, “ said Ms. Loew. “Then I realized how fortunate I was compared to a lot of women going through divorce. I came up with the idea of giving 25 percent of my commissions to the charity of my clients’ choice. I thought the worst thing that could happen is a bunch of other Realtors would copy my idea and a bunch more money would go to charity.”

As of today,  Ms. Loew has given more than $112,000 to 40 different nonprofits. Three out of four clients come to her specifically because of her business model. The surprise bonus, she said, is the quality of clients she attracts. “I’m surrounded by the best clients — the ones who want to make the world a better place,” she said. “They value my time, the mission of Give Realty, and they are very, very special people.” For some extra feel-good public relations, she arranges check presentations with the charities and her clients, and she posts the resulting photographs on her Web site.

Neil Goldman, chief executive of Hotels for Hope, which is also based in Austin, doesn’t think his travel agency would have experienced the growth it has if not for his social business model. In April 2010, inspired by the buy-a-pair, give-a-pair model of Tom’s Shoes, Mr. Goldman asked his hotel chain partners to donate $1 for every room night he booked, which Hotels for Hope promised to match. Mr. Goldman says the company was still able to save clients an average of 24 percent off hotel “rack” rates. And in its first year, it donated almost $25,000 to five national and international charities. “Charity is atonement, giving money back to redeem ourselves,” Mr. Goldman said with a smile. He noted that Hotels for Hope has doubled its staff and that it was much easier for him to recruit talented, motivated employees since adopting the social enterprise model.

Tyler Merrick started an ad agency in Dallas, but the father of three young girls longed to do something more meaningful. Mr. Merrick decided to invest all of his savings in something he called Project 7, an organization that tries to offer help in seven areas of need. Project 7 sells bottled water, gum, mints and coffee with the promise that “when you buy, they give.” Sales proceeds from the products are tied directly to nonprofit partners that teach, feed and house those in need.

Coupled with simple, appealing packaging, the model has gotten the products on the shelves of Whole Foods, Wal-Mart and Caribou Coffee. Not bad for a company competing side-by-side with Coke, Pepsi and other leading packaged-good giants — and truly impressive for a company of five people that’s been in business two and a half years.

“We were up against Kraft, Hershey’s and Mars for gum and mints,” Mr. Merrick said of meeting with Wal-Mart’s buyers. “Wal-Mart is the biggest seller of gum and mints in the world. Getting one product on their register is like hitting the lottery. Wal-Mart told us their average customer makes $30,000 a year and this $1.28 pack of our gum gives these customers an easy way to give back. They gave us three products at their register to launch at their West Coast stores, which Project 7 began shipping in February.” Initial sales reports, he said, had the company’s mints and gum 50 percent ahead of Wal-Mart’s goals — with no merchandise support.

From that initial Wal-Mart order, Project 7, which publishes an annual report of its impact on its Web site (PDF), was able to buy 100,000 meals for families struggling in Southern California and planted 80,000 avocado and mango trees in Haiti. At its two-and-a-half-year mark, Project 7 is projecting profitability, something that often takes well financed packaged-good businesses five years to achieve.

MP Mueller is the founder of Door Number 3, a boutique advertising agency in Austin, Tex. Follow Door Number 3 on Facebook.

Article source: http://feeds.nytimes.com/click.phdo?i=1500c780b50ba6fc9288a482d9d0d2b4

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