Social Responsibility Boosts the Bottom Line

Building social responsibility into your business plan is good for the bottom line. Consumers want business to do well, but they also want the community, the workers, and the environment to benefit from the companies they buy from. And I'm not talking about a fringe group of tree-huggers here. According to a 2009 survey conducted by Time, I'm talking about 38% of Americans 18 or older, or about 86 million people. That's 2.4 million potential customers in New York City alone.

“The financial crisis will accelerate the shift … as consumers look beyond products to see purchases as a statement about themselves,” says Scott Osman, Global Director for Corporate Responsibility for Landor, a global branding company whose clients range from Alfa Romeo to the YWCA. In 2010, Owens says, the social responsibility stance of companies will take on new importance and customers will want the public good to be included in business strategy. So what's a small business to do? How does an entrepreneur build social responsibility into the already complex and risky task of growing a business? How can you get involved in social entrepreneurship?

Does your organization produce a product or service that improves the quality of life?
Tim McCollum of Madécasse produces his chocolate in Madagascar in order to benefit the local economy. McCollum isn't running a non profit; he's running a business that he set up with the idea of benefiting others as well as himself. Different Roads to Learning has designed products to help children with autism develop their potential. Products range from flash cards to techniques parents can use to engage their children in conversation. The company was founded by the mother of an autistic child; it helps people and is a thriving business.

Does your business invest its profits in social or environment causes?
Socially responsible investing has grown from mutual funds that invest only in socially responsible companies (Domini Social Investments, for example) to Peacekeeper Cause-Metics, a cosmetics company that gives all of its after-tax distributable profits to non profit organizations. Your business can get points for such basic initiatives as using green energy or recycled paper; by supporting community groups on a regular basis whether a Little League team or the local food pantry.

Does your business operate in a socially responsible way?
Approaches to social responsibility include valuing and treating employees well and fairly; sourcing ethical suppliers; minimizing harm to the environment; and being good neighbors. It's worth noting that the concept of fair wages is so important now that the New York City Council recently killed a multi-million dollar Kingsbridge Armory development project in the Bronx because a living-wage clause was not included. Voters are also consumers. It is a safe bet that your customers will feel better about buying from you if your workers are treated well.

It takes an idea ... and a business plan
As I said in a past blog, socially responsible businesses are run by entrepreneurs who fill a gap as well as a social need. For example, the NY Report 2009 Small Business Award winner in the "Green Business" category was Tyga-Box Systems, Inc., a business created when its owners realized how much cardboard is wasted when people pack, move, unpack, and throw away the carton. They developed reusable plastic boxes with integrated dollies. Their products is used by Fortune 500 companies.

Companies, such as 3R Living in Brooklyn have put business training and environmental concern together to provide "future friendly" products for environmentally conscious consumers. 3R sells everything from jewelry to household products, all in keeping with the 3Rs of environmentalism: reduce, recycle and reuse.

The bottom line is that socially responsible business practices can increase your bottom line. They are not feel-good expenses; they are marketing tools that have been used successfully by many small business owners.

How have you incorporated social responsibility into your business? Have your customers commented on your efforts to be socially responsible? Has social responsibility helped your bottom line?