The newest trend in small business is in fact the oldest business model around: for-profit ventures that serve the community in a direct and positive way. Since ancient times, successful small businesses have fundamental integrity structures built into their DNA. You can’t double deal customers like the Big Boys on Wall Street and call it “hedging.” Why? Because you will lose every customer you have. So by nature, most small businesses operate with the long-term in mind or they won’t have a long-term. Building a satisfied customer base with a reliable and loyal workforce is the best way to grow a Small-b.
Combine this reality with the dissatisfaction and mistrust that ordinary folks have with global corporations and too-big-to-fail financial institutions and that explains the genuine rebirth of Small Business with a Social Purpose. These days, the hottest new businesses are social enterprises in some way. Either by addressing a social problem directly with a for-profit solution, or by incorporating a mission-based view for how to serve people and planet in a responsible way, 21st century small businesses are changing the model of Good business. Doing good business is no longer just about profits. In fact, doing “good” might even cut into your profits, because profits must be balanced against social mission and community engagement.
So the questions to ask for the modern Small-b is: What’s my mission? In what socially responsible way do I intend to accomplish it?
There are different ways to address this issue. Daniel Lubetsky, founder of KIND Bars, is dedicated to the cause of Middle-East peace. The son of a Holocaust survivor, Lubetsky’s passion is to forge peaceful ties between Palestinians and Israelis through joint business ventures. When putting his mission first, the entrepreneur explained, his businesses failed or had moderate success. When he changed his focus and developed a product that customers loved and put his mission of global peace behind it afterward, he gained spectacular success. His entrepreneurial advice is to develop a great product with great values that support the social mission.
The other way to go about this is through more traditional social enterprise models that combine social purpose with sustainable revenues. The Hot Bread Kitchen in Queens, New York does just that: sells out-of-this-world bread products to support its stellar workforce of low-income immigrant women. Is it possible to build a sustainable social enterprise in New York City? HBK seems to be pulling it off and establishing a great model for other social enterprises. According to Stanford Social Innovation Review, Hot Bread Kitchen is an example of a successful social enterprise using an updated “hybrid” model. “Rather than take a non-profit model and add a commercial revenue stream—or take a for-profit model and add a charity or service program—Hot Bread Kitchen’s integrated hybrid model produces both social value and commercial revenue through a single, unified strategy.”
For today’s SBs, social purpose and sustainability are part of the for-profit recipe. It is simply a matter of how you blend the ingredients.
“In the aftermath of the 2007-08 economic crisis, the global economic system is still regarded as broken. Calls for reform have been particularly strong among youth. Vast unemployment, ballooning debt, and entrenched inequality have left a generation of young people frustrated with modern capitalism and motivated to change it. Among the voices for reform, hybrid entrepreneurs are opening the way for a reformulation of the current economic order, combining the principles, practices, and logics of modern capitalism with more inclusive humanitarian ideals.
The essence of this movement is a fundamental convergence and reconfiguration of the social and commercial sectors, from completely separate fields to a common space. (See “The Hybridization Movement.”) Hybrid organizations that are currently being created serve as a testing ground, and we expect that the most successful models will be replicated (see yellow arrow in the graphic). Yet hybrid entrepreneurs are not the only actors through which the hybridization of the economy is happening. Existing for-profit and nonprofit organizations are also part of this trend.”