As you prepare your end of financial year figures, and gather up all your financial reporting data, now is a good time to match your financial health to your mission and purpose and ask yourself if your business is “doing good” while you manage your business.
We are all in this together
Consumer buying choices are evolving and customers are seeking out businesses that understand their role to be played in contributing to a better world. While you are making profit, can you also map out the social, cultural or environmental impact you can attribute to the way you trade?
If you have never thought about impact, or how you measure it, these 5 tips will get you started.
1. Don’t try and solve every problem
Climate change is a huge, global problem. Homelessness is a complex problem with many forces contributing to disadvantage. Domestic violence is equally as challenging. Racism has so many factors that compound discrimination for marginalised groups of people. By focusing your attention on the social, cultural or environmental problem that makes the most difference for your community, you mitigate the risk of trying to solve everything for everyone.
Just pick one issue to begin your impact journey. For instance, suppose you care deeply about climate change, and you know this is something that your customers are passionate and concerned about. Will you focus on Co2 reduction in your office and switching to renewable energy to power your fleet or will you audit your supply chain and switch to suppliers that plant trees for every tonne of carbon released during freight?
How will you know your customers perceive this as a fair and proactive approach to climate change reductions? Maybe an ambitious below zero carbon target for 2025 is more important than micro-actions? We all have to do our bit, so be clear on which bit you want to do and bring your customers with you on the journey.
2. Attributable actions
Measuring impact can be complex and require an involved process of design, validation and data gathering. If you are just starting out, carefully appraise your programs, services and products, and become familiar with the actions that you are solely responsible for.
Let’s say, if we look at the climate change example above, you choose to reduce emissions in your supply chain. You have a product that has raw materials shipped from other countries, but you are not sure how much emissions are generated from their freight. You can calculate emissions through a free, online calculator and determine how much your freight has contributed to the problem and take steps to offset the damage.
This is where things get tricky! You have to carefully design how you will offset the emissions, and consider how to accurately tell the story of your specific actions. When you have the evidence that your offset actions are legitimate, traceable and attributed to your design choices, let your customers know!
3. Social and Cultural Change is for the long haul
Tiny actions, be they donations to a homeless shelter or free mobile phones to survivors escaping domestic violence, are at the “pointy end” of the problem. The action is clear and you can attribute donations accurately; however, how are those actions deconstructing the social and cultural systems that lead to homelessness or violence? And how do you want to position your business to take on structural inequalities? Do you need to partner with a charity, or undertake a research project to figure out the size and scope of a problem?
Making charitable impact with your business is just one type of model you can use to make a difference. As you prepare your end of financial year records, think about how long-term impact can be leveraged with your profit, because problems like racism or poverty require impact that addresses the structural inequities and causes that lead to disadvantage. Think about a Research and Development (R&D) project to help you innovate, or get in touch with your local business advisory network or University to see if they can help. You might need a humanities or social sciences specialist to really get to the heart of the problem!
4. Making a difference requires investing in action that creates impact
With your EOFY data starting to take shape, you should have a clear picture of your profitability, solvency and – if you have been trading for 12 calendar months or more – a picture of your cash flow. Now is the time to analyse those reports and think about how you will plan for the next 12 months.
Can you link your financial picture to a story of doing better for the planet, or your community’s most vulnerable? Impact, and doing good work needs investment. Reinvesting your profits into programs or product development that specifically deal with social, cultural or environmental problems is just one way to make a difference.
Other types include employment models or deliberately offering products or services needed by your community which are not profitable, but will make a person’s life easier. Can you think about adopting or creating programs to hire vulnerable people, or providing training opportunities for people with a disability, or subsidising hampers for the elderly?
There are so many benefits for developing your business in this way. Social Traders, an Australian organisation dedicated to social enterprise procurement, has a number of resources and case studies for helping businesses think about profit and purpose.
There is a global movement for these types of businesses – ones that bring profit and purpose together – called Social Enterprise. I recommend a google search for social enterprise networks in your areas to investigate if this approach works for you too.
5. Business continuity; think creatively to recover and rebuild from disruption and crisis
Sadly, not every business will make it through the economic disaster or devastation of fires, floods and ferocious natural disasters. Those that do will need to prepare for more disruption and disasters. Business continuity ensures you have the plans in place so you can keep going under any circumstances.
By thinking creatively, you can develop scenarios to help you prepare and make plans so you can recover quicker. Are you thinking about how the world has changed for your customers? Can you communicate differently to share the challenges and reassure your customer base that you are in this for the long-haul?
Where to from here?
If you are familiar with Social Enterprise, the types of businesses that use trade to tackle entrenched disadvantage and structural inequity, these tips should be familiar to you. If this type of thinking is new to you, the shift in mindset can be a little overwhelming. But ignoring this opportunity – to evolve your business to take on big challenges – will eventually catch up with you. Your customers will vote with their feet and make purchasing decisions that benefit more than your bottom line!
For next financial year, start your impact planning now, and get your financial data in order to point the way to doing better business for you, your community and the planet.