Making an impact vs making money
Many impact-driven founders have come to me seeking advice on balancing “making an impact” with “making money”. Impact-driven founders are typically concerned about drifting too far from their mission while trying to grow their business. I personally struggled with that issue while starting/growing Hoom House. I feel I have found that balance, but it took some time for me to get there.
Recently, I had a conversation with an early stage startup with a great social mission. They were concerned about becoming too “money driven” while they try build their customer base and partnerships. This is an excerpt of my feedback on their situation. My goal was to shift their perspective to help them understand that “making money” is not always in conflict with “making an impact”.
I am glad you guys are talking about your goals/mission. It is very important to define that up front so everyone is on the same page. That fact that you are having these conversations is a good indication that your collective heart is in the right place. Here is the advice I give people when they are worried about becoming too money driven.
What is your measure of success?
Sit down with your team and quantify what you are really trying to accomplish. Find the magic number that, if you hit, you would feel content closing the doors and saying “we did good”. If you served 100 people, would you consider it a success? 1,000 people? 10,000 people?
Once everyone agrees on the same definition of success, you can figure out how to build your business. If you discover that your magic number is pretty small, then you do not need to worry about making money. You may not even need to run a business at all to accomplish your goals.
If your number is bigger, you need to be “money driven” so you can accumulate the resources needed (supplies, staff, cash) to make an impact. And don’t forget: if you are re not making money, it is not a business; it is just an expensive hobby.
Ways to achieve that goal
There are plenty of pathways to achieve your goal. You mentioned donating a percentage of earnings or doing a 1-for-1 program. Donating a percent of earnings (through cash or free product/services) requires that you grow the top end of the business first. I would rather donate 10% of $1 million than 50% of $100,000. Corporate giving can certainly be a part of your impact strategy, but I would not risk the growth/stability of your company in the early stages simply to say that you donate some amount.
Instead, I encourage you to look at the “Bill Gates option”. Bill Gates made billions off of Microsoft. His company, Microsoft, gives less than 1% of its earnings to charity. That still makes Microsoft a top 10 philanthropic company. More importantly, Bill and his wife Melinda have personally given more money to causes than anyone in the world. (source) They are now eradicating diseases from the world with their Microsoft money. For a “money driven” guy, I think Bill Gates is doing more good in this world than us!
Yes, Bill Gates is a bit of an extreme example, but I think you get the picture. Your odds of making a significant impact are greater if you build a greater company to fulfill your mission.