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Lessons in Social Entrepreneurship from the People Making a Real Impact

There is clearly a balance to be struck between making a profit and making an impact (of the social variety). How do you straddle that line?

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Finding a balance between profit and social impact has long been an issue for entrepreneurs. It's also spawned a debate: On one side (profit), the argument leans toward the golden rule of business: Increase shareholder value. An investment that cannot be demonstrated as making a measurable impact on company value should not be made in the first place.


Related: 4 Ways Employers are Using Corporate Social Responsibility To Recruit Millennials

On the other side (social impact), the argument says that the community the business serves is also a shareholder and so deserves consideration as well. By complying with this view, companies oblige themselves to protect the shareholders of the "community." They do this by developing and implementing a strategy of corporate social responsibility (CSR).

En route, there is clearly a balance to be struck. But regardless of which side you lean toward, there are entrepreneurs leading the way in social impact, people like Joshua Schukman, founder of Social Change Nation, an organization focused on bringing together entrepreneurs from around the world who are making an impact while still making a profit.

Before founding Social Change Nation, Schukman spent a decade working with companies to develop cause-driven brands such as AmeriCorps, Habitat for Humanity and World Relief. Through his work with numerous social entrepreneurs,, Schukman developed a "blueprint" for other companies to balance profit with social impact. Here are several companies pursuing that aim, as outlined in their website quotes:

David Smith, Cotaxi

"Make your followers part of something larger than themselves."

A company pursuing an important social cause has an advantage. By empowering its supporters through the company's social mission, it can create a strong and loyal following of people who share similar values.

Cotopaxi produces and sells innovative outdoor products and experiences. Smith has said he created it in order to "fund sustainable poverty alleviation and move people to go good." The company strives to realize this goal by, among other actions, providing targeted grants to nonprofits, having employees volunteer at local farms and helping to install irrigation pumps in Myanmar.

Related: Corporate Social Responsibility Can Give Entrepreneurs an Edge

By regularly engaging with its customers and communicating its social cause, Cotaxi strengthens its bond with its fans.

Vincent Ko, Panda

"Creating movements that spark conversations."

To create a social movement, you need to get people talking about -- and willing to accept -- the need for change. Ko founded Panda, a fashion brand that prides itself on being "fashion with a purpose," because fashion and the fashion industry rely heavily on branding and conversations with consumers.

By leveraging a strong fashion brand, Panda can better communicate its emphasis on the importance of producing products from "sustainable materials that are kind to the environment and [promote giving] back to the community."

Bridget Hilton, LSTN

"Wear your heart on your sleeve."

Social entrepreneurs should not be shy about -- and indeed need to be -- promoting their cause as a means of building their personal brand and following.

Hilton founded LSTN with the goal of "changing lives through the power of music." Proceeds from the sale of all LSTN music products go to providing hearing aids to people with hearing problems in underdeveloped parts of the world. Hilton is not bashful about leveraging her cause to promote her brand, which through her advocacy and public persona has helped raise the visibility of her company and her cause.

Tyler Merrick, Project 7

"Make your product or service the star of the show and your cause the supporting actor."

A social cause is a great objective, but without a real company producing a quality product behind it, the cause will never be realized.

Merrick founded Project 7 with the mission of producing and selling a line of specialty gum and mint chewables "dedicated to bringing great flavor back into your day while at the same time giving back to seven areas of need." Merrick understands that the snack food industry is crowded and highly competitive, which is why his mission focuses first on great flavor and second on giving back. If his products don't resonate with his customers, he has no business -- and therefore no cause.

Zac Holzapfel, Mission Belt Company

"Don't be afraid to sell yourself. Remember, where there's no margin, there can be no mission."

Entrepreneurs on a social mission sometimes fail to recognize the most important part of business -- it needs to make a profit. A strong business model and profit strategy is just as important as the social mission.

Holzapfel's company, Mission Belt Company, which produces "no-holes" belts, is aiming to disrupt the fashion accessory industry with its unique and innovative design. The company's number one focus is making a profit -- reducing costs and increasing sales (a goal which included an appearance on ABC's Shark Tank).

Holzapfel understands that in order to fulfill the company's social mission -- providing microloans to entrepreneurs in the developing world -- it needs to make money first.

Hayley Besheer, Madi Apparel

"Nurture your impact partnerships. They will be the key to your success."

Like any business, success in social entrepreneurship depends greatly on the partnerships it creates while pursuing its mission.

Besheer's company, Madi ("Make a Difference Intimate") Apparel is a lingerie brand that aims to "make a difference in all areas of the underwear industry" by producing garments from sustainable bamboo. The company has fostered relationships with U.S. and international domestic violence shelters and donates one pair of underwear for every pair sold, to support victims of domestic violence.

Kyle Parsons, Indosole

"Build a community of customers."

Great companies attract customers who become advocates and promoters for the brand. At a company with tighter margins, leveraging this support becomes even more important for social entrepreneurs.

Parsons' company, Indosole, which produces and sells a line of sandals and shoes made entirely of repurposed old tires, has achieved a great deal of visibility thanks in large part to its community of customers, who support and advocate the company's quest to save one million tires from landfills.

Brittain Kovac, Hostel KC

"Use your raw materials."

For startup entrepreneurs, "bootstrapping" is a regular part of the daily lexicon. For social entrepreneurs, bootstrapping is a way of life.

Kovac did not originally start Hostel KC because she wanted to offer accommodations. Instead, she had a desire to start a business and make an impact in under-developed areas of the Caribbean where she had experience. At the start, after a great deal of consideration, she realized she had access to a 900-square-foot warehouse, which she quickly fixed up and made into a five-bed hostel.

Today, the modest hostel is on a mission: "For every 300 beds booked, Hostel KC will build a home for a family in need in the Caribbean."

Related: 3 Tips for Making Social Responsibility a Priority at Your Startup

These are just a few of the many entrepreneurs straddling the line of profitable company and social impact. What other companies do you know about?

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