After the financial crisis of 2008 and 2009, my friend and I decided to start a landscaping business. Neither of us had gone to landscaping school nor did we have a particular affinity for lawn-mowers. (At least, not yet.) But hey, we thought, we live in Florida, grass grows like crazy most of the year, and, like haircuts, lawn mowing is pretty recession-proof. More importantly, we would be “business owners” instead of restaurant waiters. Continue reading “I Charged Too Little to Mow the Lawn”
One thing I enjoy doing in my spare time when I am not busy being nerdy with economics is watching YouTube clips of ABC’s hit show, Shark Tank. In this show, entrepreneurs are the contestants and the “sharks” are big ballin’ investors. Continue reading “Franco Modigliani: How to Survive Shark Tank”
Previously posted on GenFKD.
Gen Y has been deemed lazy, narcissistic, and entitled in previous “generational characteristics studies.” Millennials have a hard time holding a job for more than a couple years and are described as super materialistic. These studies also show that this generation is less concerned with the community and more focused on themselves.
But wait, aren’t millennials leading all generations in social entrepreneurship? Does that not completely refute all these negative characteristics?
In this three-part series, we will discuss the ins and outs of social impact entrepreneurs and businesses and how millennials fit into this wave of start-ups. The first part will introduce social entrepreneurship. The following tranches will discuss critiques of the traditional non-profit along with the economics and politics of these types of enterprises.
With all the social and economic turmoil, it is clear that there is ample work to be done in the “make the world a better place” area. How is Gen Y going about getting on this?
Social Entrepreneurship 101
Okay, so perhaps we should clear up what this social entrepreneurship thing is. A social enterprise is an organization or business aimed at solving a social issue with a for-profit business model. Yes, that’s right. Just like any other business venture, they are created to make cheddar, except that cheddar is used to make the world a better place. What a concept!
Tom’s Shoes, Project Repat, Sarvajal, Good Eggs, Indiegogo, and Sanergy are all examples of social enterprises. You’ve probably heard of at least a couple of these. By marrying profits with purpose, these enterprises, unlike non-profits, are self-sustaining by selling a good or service at market prices and using the profits to expand their social initiatives.
The business model
Tom’s Shoes is a pioneer in the “one-for-one” business model; for every pair of shoes purchased, another one is donated to a person in need, usually in a poor country. (We’ll critique this business model in another post.) Some of these social enterprises, like Sanergy or Project Repat, find a way to incorporate the solving of their social issue into the actual service they provide, but others separate the two.
For example, Red Eye Coffee, a local coffee shop in Tallahassee, uses the proceeds from the shop to go toward global humanitarian causes. They also purchase their coffee from small farmers who are paid a fair price and serve their coffee in earth-friendly cups.
This coffee shop along with most social enterprises, subject themselves to a more all-encompassing form of accounting. They have added two more “lines” to their bottom line, calling it the triple bottom line (TBL).
In traditional accounting, the bottom line is simply referring to the business’ profit or loss. What that single measure does not account for is the environmental and social costs of running the enterprise. The TBL addresses these extra costs, sometimes referred to as externalities in your intro to econ class, and allows businesses to make sure they aren’t screwing the world over with their services.
Gen Y drives social enterprise
Coming back to those earlier mentioned characteristics about millennials, yeah, they are pretty accurate. There could be an upside though. Being lazy, narcissistic, and all about paving our own little pathways in this world just might prime us for being the generation that makes strides in making the world a better place.
“We are also idealistic, but unlike previous generations, we have access to new technologies that can put this idealism into action.”
If we are not happy within our roles, we are quick to find a new way to satisfy ourselves by seeking out new opportunities. We are also idealistic, but unlike previous generations, we have access to new technologies that can put this idealism into action. So, if using these technologies to solve multiple problems at the same time makes us lazy, then so be it.
Another Gen Y trait is that we look for ways to invest into organizations that do have the triple bottom line, or social impact investing. Organizations like the Global Impact Investing Network, help guide investors toward organizations that meet the TBL benchmarks and offer a sweet return on their investment.
Like mentioned in a previous GenFKD feature, the question of “What do you want to be when you grow up?” has changed to “What problem do you want to fix?”
We’ve come to realize that just opening up charities and getting people to donate money continues to come up short in making an effective impact in our communities, let alone the world. We’ve also become aware that many of these non-profit organizations are riddled with inefficient bureaucracies with the money lining the pockets of the wrong people.
Social entrepreneurship, if done the right way, may be the answer and Gen Y is embracing it wholeheartedly.
We are in the driver’s seat of social entrepreneurship, but it is up to us in making sure that we are well equipped to drive. This means honing our relationship with technology and with each other, embracing our creativity, and not being afraid to take the necessary risks.
Pokémon Go has solved the problem of blood circulation in the legs of hermits who haven’t gotten off the couch since the late ’90s. Who’s to say we can’t solve world hunger and clean water access in the near future?
In the next installment of of this series, we will dive into critiquing some of these so-called social enterprises that may backtrack the very economies they are attempting to help.