A Focus on Profitibility Serves Long-term Social Goals
and 40% under $1 million in revenue also do business with corporations. An overwhelming 97% of female business owners cite networking relationships with key decision-makers in these companies as their primary contact point and most important resource in creating these vital clients. These two facts taken together seem to indicate that Texas’ female business owners are not meeting the right people in corporate America, or if they are meeting them, for one reason or another, they aren’t establishing sustainable relationships that translate to business. If they were doing so, Texas women owned businesses would see growth rates corresponding much more closely with their high numbers of overall women owned firms.
This brings us to an interesting question; should female social entrepreneurs trying to develop sustainable revenue models to drive their social mission focus on the societal benefit or social consciousness of their organization’s when relating to potential corporate clients? Historically, this has been the route taken by traditional non profits seeking funding through competitive grants, philanthropy or corporate sponsorship.
According to the latest research, the answer is a resounding no.
In the 2004 data compiled by CWBR, only 8% of corporate decision-makers said they focused exclusively on doing business with female owned businesses because they considered it the socially responsible thing to do, as compared with four times that many (33%) that said they sought out women owned business partners due to quality and price performance of services and products, and five times as many (41%) that said that changing business demographics were the key to their decisions. In other words, in the double bottom line business model that social entrepreneurs use, the social ROI part of the equation lags far behind traditional business considerations when it comes to the ability to create key networking relationships in corporate America. This is the same corporate culture that pays extensive lip service and invests billions of dollars in CSR, a strategic approach that benefits both public relations at the consumer level as well as the ability to attract and retain younger workers concerned with social issues. The lesson is clear; when it comes to creating a diversity based supply chain, corporate purchasers and key decision-makers look at what benefits the financial bottom line first.
In Texas, Dallas ranks 7th in the nation in the number of women owned firms and Fort Worth-Arlington ranks 31st. Together these businesses comprise 134,551 firms, or nearly a third of all DFW businesses. When factoring in businesses owned by women in 50/50 partnerships, these firms account for nearly half the DFW business market in the nation’s 4th largest metropolitan area.
Given the fact that research surveys indicate that women have a high propensity for wanting to impact their communities through their work, this is an incredibly powerful potential market for developing future social entrepreneurs.
To bring value to the table in terms of what SBIG can offer female business owners (actually all business owners) as a networking tool to leverage contacts in the corporate community, it’s clear that we need to focus in this market on those aspects of our organizational mission that attract corporate interest in terms of how it can benefit their financial position rather than merely our social benefit side. To facilitate this, our approach with corporate connections stresses leveraging our social mission as the means to an end for business networking partners. That end is their opportunity to tap into an outsourcing vehicle through their relationship with us that is actively focused on designing new business models created for a globally diverse and technologically connected economy.
Can corporations do this without our help? Obviously they can since they possess the resources to do so, but doing this at anywhere near the cost to value rate of efficiency that a dedicated organization with local market experience can produce is not realistically competitive with what SBIG offers our stakeholders. This would involve either doing advanced training with CSR professionals already in the company to create a dedicated department, or bringing in outside consultants; both expensive propositions. Neither solution comes close to the cost advantages offered by partnering with an organization that offers the DFW area’s only market brand in social entrepreneurship where it touches the small business community; the place where most women owned firms are found. Factor in the advantages of that organization maintaining business networking at the core of its mission and you have a powerful formula for mutual benefit.
This discussion of course presumes that in the DFW market, recognition even exists with corporate planners that social entrepreneurship exists as a collaborative tool for building networks and diverse supply chains. That’s a large assumption since the business concept is almost unknown here at present.
So if female entrepreneurs should avoid the focus on social mission as a driver for corporate decision-makers to consider their products or services, why should they consider partnering with an organization that works in the social enterprise space as a networking bridge? There are three reasons.
First, SBIG is actively building a networking footprint in the financial services industry in Dallas through our project driven environment, which obviously represents high strategic value to women owned businesses; and second, because unlike most of the social enterprise community that resides on the east or west coast, we balance our objectives more evenly in the direction of business sustainability as opposed to stressing social mission heavily at the expense of financial viability. Much discussion about this issue from practitioners in the field seems to stress social vision with financial metrics as an afterthought.
I believe that to be a mistake because social entrepreneurship needs to gain credibility in the traditional business sector as a financial model before it can become a legitimate successor to the traditional non profit business model. From that perspective, SBIG follows closely in the tracks of the various social benefit business plan competitions like the Global Social Venture Competition. If you Google the sector’s views on this subject or check out the bloggers through the Social Edge or the Stanford Social Innovation Review to get a feel for what I’m referring to, you’ll recognize a preference for mission over money that has political ramifications not necessarily fit for the Dallas market. Dallas is a highly aggressive business community where profitability is king. That’s not to say that philanthropy doesn’t flourish here, because it does. But it should be apparent that working in this sector and tinkering with Milton Friedman’s business model means we need to represent when it comes to demonstrating that social entrepreneurship is more than a new buzz word for an old concept; outside funding supporting social vision and controlling the action on the ground with their purse strings.
The combination of a very large contingent of female owned businesses in the DFW area, combined with the obvious need to leverage these business owner’s networks into corporate relationships along with the established attraction women have to helping others, molding community and making a contribution beyond the financial bottom line offers SBIG an unprecedented opportunity to create tremendous value with female clients and stakeholders alike.