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Social entrepreneurship sounds risky, but is it any more of a leap than launching a for-profit startup?
Retaining your consumer base is no longer just about delivering a good product.
In 2013, a study conducted by Cone Communications and Echo Research discovered the high level of importance customers place on social responsibility.
An overwhelming 90 percent of respondents agreed that they would rather shop at a brand that incorporates some form of social responsibility into their product or service.
Almost half of the people surveyed reported that they expect to advance greater altruistic goals when they shop.
But the desire to do good isn’t just on the consumer side of things: within the last three years, entrepreneurs have made it their business to merge their social or environmental passions with their business goals.
Social entrepreneurship is hot for a reason
Enter social entrepreneurship, a particularly popular branch of the startup world for young talents not only looking to solve problems within the walls of an urban office, but those with a much greater cause.
For many of these startups, it all starts with noticing a gaping hole in the way things should be.
Take Sharon Rosenger, founder and CEO of CBO Baby, a line of larger onesies and body suits made to accommodate children with special needs who may need extra room in their clothing for breathing tubes and other apparatus.
“With time we noticed a great need for [this type of clothing] that was simply unavailable to those who needed it,” she says. “We were in a position to be able to fill this need, and without hesitation jumped at the opportunity.”
How do the challenges compare to other startups?
But starting a business for the sake of doing good isn’t necessarily any easier than running a strictly for-profit business.
Although Rosenger notes that her product was fortunately in high demand, she still recognizes the challenges involved in building any business from the bottom up.
“Inventory can be one of the biggest challenges with startup businesses. Doing proper research of what is needed and how it should be manufactured can greatly reduce the risk,” she advises.
She also adds the importance of “testing the market slowly. Order small, see which items pick up and learn from your mistakes.”
Risk management is certainly a viable concern for startups across industries. Even those socially responsible companies looking to engage in the purely non-profit sector must still be aware of the basic costs and risks involved in creating a fledgling company.
Fitting into the state of modern entrepreneurship
That’s not to say that non-profit startups are at a disadvantage: Due to the growing popularity and accessibility in creating an online presence, entrepreneurs are no longer worrying about brick and mortar storefronts, or even a shared office space.
The remote capabilities that technology affords young professionals is leveling the playing field for social entrepreneurs who can immediately cut operational costs.
Farther down the road, both non- and for-profit startups must keep in mind that no matter how perfect their solution is to a globally understood problem, most products and services don’t sell themselves.
For instance, Rosenger credits the atmosphere of her easy-to-navigate website, combined with her social media presence, that may help consumers take their mind off the medical nature of her product.
In other words, investing in branding is still key, even if demand is high.
When it comes down to it, social entrepreneurs can enjoy similar levels of of risk and success that for-profit startups face, and each type of company should keep similar mottos in mind.
“My advice for young social entrepreneurs is never to lose sight of the reason you started in the first place. The world needs more good, so why not be one of the ones who makes a difference?” Rosenger concludes.