EY (formally Ernst & Young) recently announced four winning start-ups that have secured their place in the firms accelerator program, targeted towards early stage start-ups in the accounting, tax, fintech, legal tech and regulatory sector. EY Foundry was established in November 2018 and gives the winners a six-month residency at EY’s Sydney office. During their Read More…
Can ‘For-Profit’ businesses still have a Social Impact? BenchOn’s founder provides answers
Tim Walmsley, Founder and CEO of BenchOn
Thu 29 March 2018 - 8:45 amStartup
‘You can’t make a profit while you are creating social impact, that would be wrong.’ This was a statement made to me by a Year 11 student taking part in an Entrepreneurial Challenge Week, where the students were challenged to develop a social impact business within 5 days.
Taken aback, I asked ‘Why?’. The five girls in the group conferred for a minute and then let me have it. ‘The drive for profit is inherently selfish and in order to have a focus on social impact, you have to be acting selflessly.’ So there.
Generalisations aside, there was some logic to their thinking and I was impressed at their answer – even if they were very black and white in their assessment. The problem is, that way of thinking is outdated and they were confusing ‘social impact’ with ‘social enterprise’. Thinking that way blinded them to potential innovation and it showed in their initial business models. All but a few of the pitches were based on the concept that they would buy ‘x’, then sell ‘x’ at a higher rate and give all profits to a charity that was supporting their cause. Charities do use this model to good effect to reduce their reliance on donations, but is it the best way for an entrepreneur, or established business for that matter, to affect the change in the world that they are after? I don’t think so. Social impact doesn’t have to be charity and it’s not necessarily about solving world hunger or poverty. It’s about solving real problems, no matter the size, for the benefit of society and by using a for-profit model, businesses are empowered to create an impact on a much grander scale in a sustainable way, without relying on Government handouts or personal donations (which I think in itself is a positive impact!).
There is a growing trend in our society where consumers are looking for businesses that are having a positive impact on society. Very rarely is it enough these days to simply have a great product or service – people want to know the direct and indirect benefits to society. Why? Because they know it’s possible and it is increasingly done well by others. This is creating an evolution of sorts which is shifting us from a purely transactional economy (profit focus) to a problem solving economy (impact focused) and there is no better example of this trend than in the startup ecosystem. Ask a startup founder why they started their business and you are likely to hear an emotional story of a problem they, or someone they know, experienced and then how this sparked an internal drive in them to solve the problem so it wouldn’t happen to anyone again.
Modern entrepreneurs use this story to anchor their ‘Why’; their purpose or why they do what they do. This drives them to make decisions in their day to day running of the business that not only supports the business needs but also moves them closer to achieving their ‘Why’. This prevents the ‘selfish profit chasing’ scenario because such a move would set them back in achieving their social impact goal which in businesses like these is unimaginable. By anchoring on the ‘Why’, businesses create win/win/win solutions where the client benefits, the business benefits and society benefits. I employ this rule within my own business, BenchOn. If it is not a win/win/win, then it is either not worth it or we aren’t thinking hard enough.
This is why startups are so innovative. When they run into an issue in the business and the only solution will compromise their purpose, they will find another way. Necessity drives innovation and throughout my time working with the BlueChilli Startup Accelerator, I have been involved in some gritty, dramatic conversations with startup founders where a situation has meant business failure or undermining their purpose, but they refuse to give up until that third option is found. It is inspiring and is why those businesses continue to have such a big impact. Sure it takes more work initially, but when you truly land on a win/win/win model, it is amazing how easy business becomes. Who wouldn’t want to support a brand that not only gives you what you want, but also contributes to bettering our society, the environment and overall way of life.
The next generation of startup founders are insisting on having meaning to what they do which will naturally create a wave of businesses built on having a positive impact. By insisting on a ‘win/win/win’ model, for-profit businesses, even established ones, can have a positive social impact. Ask yourself, what is your ‘Why’ and how can you build your business around that. Without it, your business will be viewed by those school students, who are your future customers by the way, as an antiquated, selfish, profit hungry organisation that will feel their consumer choice by the distinct lack of interest in what you do or offer.
About the author
Tim Walmsley is the Founder and CEO of BenchOn. BenchOn solves employee under-utilisation which is costing the Australian economy billions each year in lost productivity and costing thousands of Australian’s their jobs. BenchOn has developed a platform solution that matches idle staff from one business to short-term contracts from reputable companies and Government Agencies. Organisations can manage the peak demand/low demand business cycle more efficiently and effectively, by maximising employee productivity in low demand periods and providing access to the hidden talent inside Australia’s best organisations to assist during the peak periods.
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