Why business should create social impact: Boost reputation, loyalty

Understanding and measuring social impact for small businesses

Social impact refers to the positive effects that specific actions, projects, or policies have on individuals or communities. While this concept can also involve negative outcomes, our focus here is on the positive aspects of social impact and how businesses can leverage it.

The challenge of measuring impact

Measuring social impact can be complex and requires a strategic approach. Start by defining a specific area where you want to make a difference.

This could involve supporting environmental initiatives, assisting a particular group, promoting mental health, or contributing to animal shelters. Establish clear goals for what you want to achieve, such as providing a certain number of meals or planting trees for each service rendered.

Setting these targets will help you measure and track your impact effectively.

Reasons for your small business to create social impact

Supporting important causes

One of the primary motivations for creating social impact is to support important causes and contribute to societal well-being. While you may not solve all global issues, focusing on specific areas where your business can make a difference can have significant benefits.

Enhancing business reputation

Creating social impact can significantly boost your business’s reputation and attract customers. According to a 2017 Cone Communications study, 87% of consumers are willing to purchase products based on a company’s commitment to a social issue they care about.

Additionally, 81% of consumers say they would share information about a company’s social responsibility efforts with others. This means that aligning your business with causes that resonate with customers can enhance your reputation and attract more business.

Attracting and retaining employees

Creating social impact also helps attract and retain employees who value contributing to society. By 2025, millennials are expected to make up about 40% of the workforce, and many seek employers who offer more than just a paycheck.

A Deloitte study found that 70% of millennials expect their employers to focus on societal or mission-driven issues. Additionally, 88% of millennials feel more fulfilled when they have opportunities to positively impact social or environmental issues through their work.

Engaging in community projects, like organizing cleanups or supporting local hospitals, can boost your team’s morale and loyalty.

Examples of small businesses creating social impact

Matt garcia cleaning systems: Based in Colorado, Matt Garcia Cleaning Systems donates one meal for every window cleaned, having provided over 2,000 meals to those in need. This initiative showcases their dedication to community support.

Bee maids: Bee Maids, a Texas-based family-run business, offers free cleaning services to women undergoing cancer treatment through the Cleaning For A Reason program. Since 2006, this nonprofit has provided cleaning services worth over $5 million to more than 17,000 women.

Onsite drapery cleaning: In New York, Harriet Erskine-Joseph’s Onsite Drapery Cleaning raises awareness for children with learning differences. The business has hosted its first conference on the topic and continues to educate parents and the community.

Mountain cleaning systems: A husband-and-wife team in Colorado, Mountain Cleaning Systems, donates 1% of their revenue to the Larimer Humane Society, reflecting their commitment to animal welfare.

Shine bright san diego: This exterior home services company supports the Angelman Syndrome Foundation, contributing to research for treatments and potential cures for this neuro-genetic disorder.

Urban street window works: Chicago’s Urban Street Window Works has introduced a work skills development program for at-risk youth, offering valuable skills while benefiting the local community.

Steps to building a business with social impact

Clarify your mission

Identify societal or environmental issues that align with your values and industry. Develop a compelling mission statement that reflects your commitment to making a positive impact.

Conduct a social impact assessment

Evaluate how your business affects society and the environment. Identify both positive and negative impacts to guide targeted improvements.

Integrate social responsibility into your business model

Make social responsibility a core aspect of your business strategy. Ensure your products or services address social challenges or contribute to sustainability.

Establish ethical supply chains

Optimize your supply chain to uphold ethical practices, from sourcing raw materials to distribution. Partner with those who share your commitment to fair labor practices and sustainability.

Engage stakeholders

Communicate with employees, customers, suppliers, and local communities to understand their perspectives on social impact. This engagement builds trust and provides valuable insights for your initiatives.

Empower employees

Foster a positive work culture by offering skill development opportunities, prioritizing diversity and inclusion, and encouraging volunteering. A motivated workforce drives social impact both within and beyond the organization.

Implement sustainable practices

Adopt sustainable practices such as reducing waste and conserving energy. These practices benefit both the environment and social well-being.

Relevant statistics and facts

Enhanced brand reputation: A 2019 Edelman survey found that 73% of consumers globally believe companies can both increase profits and improve social conditions in their communities.

Increased customer loyalty: Cone Communications’ 2017 CSR Study reported that 87% of consumers are willing to buy from companies advocating for issues they care about. Additionally, 76% avoid companies that support issues contrary to their beliefs.

Attraction and retention of talent: Deloitte’s 2020 study revealed that 70% of millennials expect their employers to address societal problems. Furthermore, 88% feel more fulfilled when they can make a positive impact through their work.

Competitive advantage: The 2020 Porter Novelli Purpose Study found that 66% of consumers would switch to a product from a purpose-driven company. Purpose-driven brands grow at twice the rate of others, according to Kantar’s 2019 study.

Financial performance: Nielsen’s 2018 study indicated that 48% of U.S. consumers are likely to change their consumption habits to reduce environmental impact. Brands committed to sustainability grew more than 4% globally, while others grew less than 1%.

Community support and engagement: Research from Boston College Center for Corporate Citizenship (2019) shows that 60% of small businesses engaged in their communities report better brand visibility. Additionally, 85% of consumers have a more positive image of companies supporting charities they care about.

Innovation and growth: The Global Reporting Initiative (GRI) found that businesses integrating sustainability into their operations are 64% more likely to innovate. Socially responsible companies see productivity increases of up to 13%, according to Harvard Business Review’s 2020 study.

Risk management: Allianz’s 2020 Risk Barometer highlights that 38% of businesses consider reputational risk a top concern. Companies with strong CSR practices can reduce risk exposure by up to 10%.

Access to funding and investments: The US SIF Foundation’s 2020 Trends Report shows that sustainable and impact investing assets account for $17.1 trillion, or one in three dollars of the total U.S. assets under management. Companies with high ESG scores often have a 3% higher return on equity.

Regulatory compliance and incentives: Governments are increasingly mandating social impact disclosures. For instance, the EU’s Non-Financial Reporting Directive requires large companies to disclose their management of social and environmental challenges.

Engaging in CSR can also lead to tax incentives, potentially saving businesses thousands of dollars annually.

By integrating social impact into their operations, small businesses can enhance their reputation, attract and retain talent, gain a competitive edge, and foster community support and innovation. These factors contribute to business growth and long-term sustainability.

Expert opinions on creating social impact

Johnathan Blake, CEO of GreenWave Solutions “Creating social impact is not just a moral obligation but a strategic business move. Small businesses that engage in social initiatives often experience increased customer loyalty. Customers today prefer brands that contribute positively to society. By integrating social impact into your business model, you not only enhance your brand’s reputation but also foster a deeper connection with your customers.”

Sarah Thompson, founder of Eco-Friendly Ventures “Small businesses have a unique advantage in driving social change. Unlike large corporations, they can quickly adapt and implement socially responsible practices. This agility allows them to respond to community needs more effectively, creating a ripple effect that can lead to significant positive changes. Plus, it sets a precedent that can inspire other businesses to follow suit.”

David Ramirez, marketing director at SocialGood Enterprises “From a marketing perspective, incorporating social impact into your business strategy can be a game-changer. It provides authentic storytelling opportunities that resonate with audiences. Sharing how your business is making a difference can boost your brand’s visibility and attract like-minded customers who value ethical practices.”