Corporate social responsibility has become very popular in recent years. Over 93% of employees have said that they would prefer working for a socially responsible company. Over 80% of customers would pay a premium for companies that sold environmentally friendly and socially responsible products.
Unfortunately, these statistics often cause socially responsible entrepreneurs to become unrealistically optimistic about their future outlook. The harsh truth is that, running a socially responsible company is very difficult. These companies often have a high failure rate.
This isn’t because it is impossible to run a successful socially responsible company. There are a lot of ways companies are more successful with their socially responsible missions, such as buying from fair labor companies that sell union clothing.
However, many business owners with social missions don’t understand the factors that will influence their success and the steps they need to take to be profitable.
Here are some things you need to do to run a profitable business with a socially responsible vision.
Don’t build your business on the foundation of wishful thinking.
Many companies believe that socially responsible visions will pay for themselves. They expect customers to flock to their doors if they have a company built on good intentions.
They often learn the hard way that adhering to a respectable social mission alone will not be enough to make a company successful. Unfortunately, Pepsi had to learn this lesson the hard way. Indra Nooyi, the CEO of Pepsi, tried to push for a shift towards healthier products during the beginning of her career. She was confident that this would be both beneficial to the public well-being and help boost profitability at the same time. However, the new focus on healthier soft drinks didn’t pay off financially. Pepsi stock price barely budged while the stock price of Coca-Cola doubled.
It is certainly possible to create a successful company with a social mission. First, however, you will need to come to terms with the reality that it won’t pay for itself.
Buy from the right suppliers
As stated above, it is important to also purchase from suppliers that share your social missions. You want to make sure that they are eco-friendly, don’t engage in animal abuse and fair to their employees.
Market the merits of your socially responsible objectives
You might have an exceptional product that is produced and distributed in a socially responsible manner. However, if you cannot show these benefits to your customers, then your business will struggle.
Your socially responsible company needs a sound marketing strategy behind it. You need to highlight the CRG benefits of your product and the tangible advantages to your customers.
Avoid greenwashing
Integrity is a very important element of any business strategy. But, unfortunately, dishonesty has made many people skeptical of companies that claim to be socially responsible.
This is a particular concern when it comes to supposedly eco-friendly businesses. Greenwashing is the practice of misrepresenting a company as being eco-friendly when it isn’t.
Customers recognize that this happens and have become less trusting of these brands. One survey found that 71% of Americans don’t believe claims from companies about environmental friendliness.
It would help if you dispelled skepticism by avoiding making any unfounded claims about your company’s commitment to protecting the environment or engaging in other socially responsible activities. You will be a lot more successful running a company that makes moderate contributions to the environment than one that exaggerates.
Get affirmations from independent organizations
How do you dispel skepticism from customers that don’t trust your claims about helping the environment? One of the best approaches that you can take is to have an independent organization review your business model and provide testaments to your efforts. You might be able to use a certification to prove to your customers that you are the real deal.
Be cautious about making major donations
Many socially responsible businesses make donations to worthy nonprofits. This can be an excellent way to attract customers that are happy to know their money is going to a good cause.
However, you have to be cautious about donating too much money to these charities. You might be unable to build up enough cash reserve for future economic problems if you give away too much of your profits. You also might not attract enough customers if you don’t advertise your donations properly or give to charities that they want to support.
Philanthropy can be a good business decision. However, it has to be done properly.
