If you think your small business should only be focused on profits, think again. The world is changing: customers, employees, communities increasingly expect companies to serve a social good, not just make money. It’s time to start thinking not of just one bottom line, but of a “triple bottom line.”
Perhaps no better proof of that changing environment came a couple of weeks ago. On January 17, Laurence Fink—the CEO of BlackRock, one of the biggest investment funds in the world—wrote to corporate executives telling them that if they expect BlackRock to invest in their companies, to buy their stock, they need to make positive contributions to society beyond just making money or creating jobs.
Here’s an excerpt from Fink’s letter:
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society…Without a sense of purpose, no company, either public or private, can achieve its full potential.”
As Fink said in his letter, it’s time businesses need to ask themselves: “What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world?”
Now, small businesses don’t need a lecture from Wall Street to be committed to their communities: small businesses have long been the backbone of their towns and cities. It’s small businesses that support local charities, food drives for the hungry, little league teams, school fundraisers, and so much more. It’s small businesses that pay more than their fair share in local taxes and, when you buy from a local business, a far higher percent of your sales dollars stays local and helps support local fire and police departments, schools, and builds roads. It’s big corporations—not small companies—that demand tax concessions and subsidies from local cities, and then leave town when they can find cheaper labor elsewhere.
But, increasingly, customers and employees—especially millennials—expect companies to think about what is called “the triple bottom line:”
- People
- Planet
- Profit
In other words, making a profit is only one outcome to focus on. You also need to consider how your business contributes to people (the well-being of your employees, community, workers/vendors) and the planet (environment, climate change, waste, animals, etc).
This isn’t just some sort of “do-gooder” attitude. Being a socially responsible business brings your business—even a small business—many big benefits, including:
** Stronger team: A sense of purpose beyond the bottom line helps develop cohesiveness and commitment among employees and management.
** Positive corporate image: Having a strong socially responsible ethic helps foster positive feelings about your company in the community and by potential customers, employees, and others.
** Visibility: Community activities can be a particularly effective way for small, new companies to increase visibility in their community and industry.
** Recruitment tool: Helps your company attract employees. Job applicants often seek out companies whose values and social commitment they respect.
Now that you know some of the benefits, here’s how to implement social responsibility and get your team on board:
** Donate time. A good way to build team morale as well as contributing to your community is to have your employees volunteer—on paid company time—for a good cause. It can be a cause of their choosing or that you choose together as a company.
** Donate products or services. Your products and services are designed to help your customers, so they can help others as well. In my publishing business, we regularly donate free books to prisoners—who often have difficulty getting jobs after their release and will need to start their own businesses to stay out of jail in the future.
** Donate money. Customers respond positively to companies that donate a portion of their sales to a socially responsible cause. Make it clear that a certain percent of your pre- or post-profit sales will go to a specific organization. The non-profit environmental organization 1 Percent for the Planet—founded by Patagonia founder Yves Chouinard—enables companies to easily donate money for environmental causes.
Copyright, Rhonda Abrams, 2018
This article originally ran in USA Today on January 24, 2018