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Starting a small business – Social Entrepreneur

December 4, 2012

“I want to make the world a better place.”  “I only buy Fair Trade products.”  “I want to contribute X amount of my profits to XYZ charity.”  I am a newbie to these kinds of businesses.  As a misanthropic curmudgeon, I try to maintain an open, however skeptical, mind to these business models.

If you’re interested in this business model, check out lifeoutofthebox.  This is a young couple in Nicaragua selling handmade goods and suing some of their profits to supports schools in the country.  They are very passionate about their mission and I wish them the best.  I’m hoping that they start selling belts soon.

Listen, businesses run on capital (which can be synonymous with cash).  No capital means out of business.  I like to believe that every business, in its own way, is trying to make the world a better place.  But you MUST make a profit to stay in business (or you’re just a private foundation giving all your money away). Profit is just an addition to capital measured over time – like a space time continuum.  Profits are not bad or evil.  They are only a measure of success for your business.

Businesses must be run in perpetuity and you must plan for that perpetuity.  Just because you had a profit in March doesn’t mean you’ll have a profit in April or ever again.  That’s why profits are important.  They guarantee the continuity of your enterprise.

At some point, I’ll do a post on not-for-profits and how they are generally a bad idea.  I believe it is far better to generate a profit through hard work and then freely give that profit, or a portion of it, to a charity.  I’ll call this the Carnegie method.  So, by all means create your social entrepreneurship but run it like a business and plan on making a profit.  Add a line for charity in your budget and hold yourself to it.  Or, amass as much wealth as possible and give it all away like Andrew Carnegie did.

 

 

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