This article is for entrepreneurs or people with side hustles who want to know more about building a socially responsible business from scratch.
We’ll be going over everything from discovering your “why” to how to maintain profitability while doing good. Building a socially responsible business isn’t as hard as you might think if you have the right road map.
With the world in the state that it’s in today, it’s no wonder that more and more entrepreneurs are tinkering with ways to make their businesses more socially responsible. From giving donations to supporting Mutual Aid, there are a variety of ways that you can have a socially responsible business today.
What if you’re a new entrepreneur or side-hustler and you want to know the best way to build a socially responsible business from the very start? Well, look no further!
In this article, I’ll be discussing the best way to set up your first socially responsible business while getting some help from a personal friend of mine – Cythina Flores, the founder of Utz Threads.
Utz Threads is a Latina-owned textile brand that weaves Maya Quiché culture into everyday use products. We serve as your connection to the ancestral weaving practices of this living culture and create space for women to tell their own empowering stories.
If you’re new to my page, Wander Onwards is an education platform that helps people chase financial and location independence all over the world.
I especially serve BIPOC, immigrant and femxle individuals who want to build wealth and pursue their wanderlust in socially responsible ways.
Together, Cinthya and I will be giving our best tips when it comes to establishing a profitable socially responsible business and how you can build your own too.
Basics of Building a Socially Responsible Company
In this article, we’ll be discussing:
- Finding your business WHY
- Registering as business properly
- Raising money for your business
- Creating your first product
- The Importance of Mentors in your Industry
By sharing our stories of struggle and triumph in the small business space, Cinthya’s and I hope to empower you in your journey to build a socially responsible business just as we have.
Find Your Inspiration and Why
Before you start digging into logos, a website, or even merchandise, you truly need to understand the WHY behind your entrepreneurial venture.
Did you grow up in this country or community and want to give back? Do you identify in some way with the group you’re directly trying to impact?
Are you particularly passionate about some sort of injustice or unfair circumstance in your neighborhood? Whatever your WHY is, be sure to think critically about if it’s appropriate and empowering in all the right ways.
There’s no need for saviors in this space because people don’t need saving. They need opportunities.
For example, Cinthya’s’s background is in social work and entrepreneurship, and she loves using business as a tool to create opportunities for growth.
Cinthya’s explains, “I went to work in Guatemala through a nonprofit organization in 2017 with the intention of supporting the women in reaching profitable markets in the US. I created Utz Threads in 2018 because I realized we had something so beautiful to offer the world and I wanted to serve as that bridge to help las mujeres reach a larger market.”
That initial experience coupled with her background in entrepreneurship then led to the creation of Utz Threads as an opportunity to offer well paying jobs to Maya Quiche women while showcasing their beautiful culture and talents.
The women bring their ancestral knowledge of weaving as well as their ganas (desire) to get ahead.
Knowing that every Utz product creates fair-paying jobs for entrepreneurial women while offering the public insight into this beautiful culture is her internalized why.
I‘ve lived abroad for many years and love helping others find work abroad and figure out their “Move Abroad Plan.” Check out my class below to get you started ASAP!
Register as a Sole Proprietor
Registering as a Sole Proprietor should be your next step when starting a socially responsible business because it creates the formal tax ecosystem for you to get paid and to start selling.
A sole proprietorship is one of the easiest and most affordable ways to start a business.
Unlike setting up a corporation or LLC, there’s much less paperwork when establishing a Sole Proprietorship, however, you will still have to acquire the appropriate permits and licenses.
Once you start to scale your business, you can move to the LLC route so you won’t personally be held liable for debts, lawsuits or taxes that your company accrues.
According to Cinthya, “You have to think long term for your business, imagine where you want to be in 5 years and work from that mindset.”
“Don’t work from where you are today because then you’ll make moves that match that and it’ll only keep you at the same level. Register your business as soon as possible because it’ll allow you to access opportunities for growth and will set you up when the perfect opportunity arrives…
The #1 thing I’m grateful for in setting up as a sole proprietorship is that it allowed me to open a bank account and separate my expenses. I recently worked with a financial coach (Yasnay Montalvo of Micro-Business Catalyst) who helped me organize my finances and it was a huge pain because I had to go back 3 years…
I can’t imagine how much harder that would have been if I had mixed my personal with my business finances. My sole proprietorship registration allowed for a business account which allowed for clarity in my accounting and will lead to so much growth in my business moving forward.”
Raise Money to Start Your Business
Every new business needs money to get started with. Even basic sellers licenses require some sort of fee to be paid so it’s my recommendation that you start a ‘business fund’ that is separate from your personal finances.
This fund can start in your personal budget framework, but before you start investing money into your business, you should really move that money into a separate bank account entirely (opened under your sole proprietorship).
Don’t forget, if you need to self-fund your business venture at the start, you can always pay yourself back later if you keep the appropriate records.
Here are a few ideas of what you can do to generate additional income for your business.
- Rent your house or room out
- Pickup extra side jobs
- Open a digital store on Etsy (This is what I did!)
- Offer coaching services in something that you’re an expert in
- Take a 0% interest crowdfunding loan (like on Kiva)
At the beginning of Wander Onwards, I was using my after-tax income from my 9 to 5 to fund all of my business costs. I never kept any records and this seriously impacted my personal finance situation because I was self-funding an unprofitable ‘wanna-be business.’
However, as I gained more experience, I developed several products and established myself as an authority in my niche so businesses and customers started to fund my business instead of Bank of Vanessa (my personal account).
To fund her business, Cinthya says, “I raised $9K through Kiva, a non profit that offers entrepreneurs a 0% crowdsourcing loan from friends, family and the Kiva community. I appreciated this approach because I knew I’d be paying people back and I’d have 3 years to do it in…
I also liked that I was able to let people know about my business venture through my crowdfunding campaign. I’m not great at telling people what I’m doing so this was a natural way of telling my story. I shared it with everyone I knew and it turned out to help with sales and support…
I’d highly recommend this approach to anyone looking to grow fast but with lower risk. If you believe in your product you know you’ll make that money back, no doubt. It’s just a matter of putting that money to work and turning it into profits.”
Create an MVP Product
Now that you have your why and a little bit of funding, next you need a product or service to sell! Building a socially responsible business doesn’t have to pigeon-hole you into any one industry.
If you want to do textiles, that’s fine! If you want to focus on impactful education, that sounds great too!
Whatever you choose, you need to make sure that you’re able to turn some sort of profit for all of your efforts… otherwise, this venture will just be a really expensive hobby.
Here’s a step-by-step process to build a product from scratch:
- Establish who your target audience is and what sort of pain points they experience
- Pick one pain point and design a product or service that resolves this problem
- Design a basic product – with as little money as possible – that solves the issue
- Sell at least a handful of that single product before developing anything new to ‘validate’ that the world needs this product from you!
- Invest the income that you received from the first product back into your business to develop additional products
It’s important that you take the time to validate that your ideal customers need this product to solve a particular pain point or desire before you continue to invest money into it.
There’s no shame in starting again from scratch if things don’t go 100% to plan. Every entrepreneur has gone through a similar experience!
Find Mentors in that Industry
It always helps to learn from someone who’s been through the good, the bad, and the downright ugly.
As an entrepreneur, there are so many potential pitfalls that having a Mentor in your industry can potentially change the course of your business entirely!
Cinthya says, “I’m a very curious person by nature so I would ask people I admired about their start. How did they get the confidence, how did they find the resources, and who did they talk to along the way?
Creating a socially-responsible business is so much more than just being business savvy; it takes you into deep levels of understanding of yourself and the world around you that you probably weren’t even looking for.
Having a mentor along the way in whatever aspect is infinitely useful to talk through these learnings and guide you in the next steps. Also, know that those mentors might change.
Today it’s someone who helps you understand business basics and tomorrow it can be someone who helps you delve deeper into your relationship with money. I think the main point in finding a mentor is to always be curious and open to learning and adapting, it’s what will make you the best version of yourself.”
Not finding mentors earlier on in my career is probably my biggest regret as an entrepreneur to be frank. I spent so much time running around in circles chasing my own tail.
But you live and you learn, and you pass this fantastic information on to the next generation or your mentees. It always comes full circle at some point.
You’re Not Alone in this Venture
Whether you’re just at the start of your socially responsible business journey or somewhere in the middle, you are definitely not alone!
Both Cinthya and I are trying to be the change we want to see in the world with our socially responsible businesses and we hope you see what your business can be after reading this article.
Don’t be shy! We’d love for you to reach out on Instagram.
Vanessa – @WanderOnwards
Cinthya – @UtzThreads