With so much talk these days about corporate social responsibility, many companies are feeling compelled to jump on the values bandwagon. Because of their agility, small businesses in particular are at the forefront of what is becoming a responsibility revolution. But, what does it really mean to be a mission-driven business? Simply selling green products does not classify a company as values-led, according to Jeffrey Hollender, co-founder of the consumer products company Seventh Generation. So, whether you are thinking about starting a social enterprise, or want to incorporate a social mission into an existing company, here are some tips for succeeding as a social entrepreneur.

Building a Values-Driven Business: Think About What You Can Provide

Being passionate about protecting the environment or providing clean water to kids in Africa is all well and good, but in order to be a social enterprise you also need to have a product or service that provides value to others. Jeffrey Hollender of Seventh Generation recommends going through the following exercise to determine what kind of value proposition your business will have. Hollender says that every entrepreneur should start by trying to answer the following question: What does the world most need that we as a company are uniquely able to provide?

The key point for any social entrepreneur to understand is, "your core values and passion have to align with some demand in the marketplace," says Hollender. In other words, a values-driven business isn't going to succeed if it relies on the owner's passion alone. Deborah Nelson, director of San Francisco-based Social Venture Network, a non-profit organization that supports social entrepreneurs, says there's more than one meaning to "value" when it comes to running a social enterprise – there's your market value and also your defining values (or beliefs). She reminds budding social entrepreneurs that it's important when building your company to "lead with your value, and follow with your values."

Building a Values-Driven Business: Hone Your Mission Statement

Having a visible and known mission statement is crucial to building a values-driven business. It's not uncommon for businesses in general to form without a mission statement, but if you haven't spent a significant amount of time thinking about the goals of your social enterprise, make sure you work on that core building block before going any further. "It's always a good idea to go online and read the mission statements of the 10 companies that you most admire," says Hollender. You'll find that it helps to see the operating principles and values-oriented statements put out by established companies, and then use those as model for your own, he says.

You'll want your mission statement to embody both what you're passionate about and how your business will help you fulfill it. "Your mission statement should be strong enough that it continually drives you to keep focused on your values, and gives insight into your value proposition as a business," says Hollender. Once you've spent some time refining your mission statement, don't just ignore it. Use it as your compass for making decisions, and put it out there whenever you're presenting your company to others.

Building a Values-Driven Business: Focus Your Efforts

Focus can be a big challenge for social entrepreneurs, says Ganesh Rengaswamy, a vice president at Unitus, an international non-profit that promotes the growth of microfinance. Most do-gooders have started a social enterprise because they are very passionate about a particular social issue or problem. However, Rengaswamy, who has trained entrepreneurs worldwide on the topic of leadership and social enterprise, says it's common to get distracted by the broader social problems while building a company, and feel compelled to want to "fix it all." In his experience, Rengaswamy has found the entrepreneurs who become most successful are those who stay focused on their founding mission and don't try to do too much at once.

One way Hollender recommends staying focused is to start small. For example, if your mission is to stop hunger, it's better to refine that by being specific about what you can do on a local or more concentrated scale to achieve that mission. You will always be able to expand on that vision later, once you've established yourself as a business. Another danger of trying to do it all is that it often creates confusion for employees, and then they don't know what aspect of your vision they are expected to deliver on, says Hollender. "If your employees or people connected to your company can't tell you how the given mission of your company would affect a decision they have to make, then you are probably not staying focused enough," he says.

Building a Values-Driven Business: Practice Transparency

Along with the task of staying focused comes the importance of being transparent in the way that you run your business. The easiest way to build trust with consumers and employees is to be clear about what you are and aren't doing, says Hollender. A good way to create that transparency is by putting together a corporate responsibility report. The report doesn't have to be long but it should discuss how exactly you are being socially responsible in your process and methods, says Hollender. It's important to point out the areas where you are striving to do this as well, but may not have the capacity to do so at the time. It's helpful to post the report on your Website for your customers to see, as well as share it with your staff. The more open you are about your process, the easier it will be for your employees to deliver on your mission, says Rengaswamy, and the more invested they will feel in the success of the company.

Building a Values-Driven Business: Treat Your Workers Well

While outwardly your business is driven by your social mission, what happens inside your company is an expression of that mission as well. That means also focusing your passionate energy inward to create a fair and beneficial work environment for your employees. In his new book, The Responsibility Revolution, Hollender describes this principle as striving to be authentically good, by building the mission into every part of your business. "Your employees are one of the key stakeholders at a social enterprise, so make sure that your values are reflected internally as well," says Hollender. It's easy to get carried away with developing your product and everything that you have to do to keep consumers happy. But, if the health of the company is suffering internally, the rest doesn't really matter.

Building a Values-Driven Business: Build Your Team

According to Rengaswamy, one of the most important aspects of running a social enterprise is the people you hire to work at your company. While smart hiring is crucial to the success of any small business, there are certain things to look for when hiring for a social enterprise, says Rengaswany. It can often be more challenging for social entrepreneurs to attract high-quality people, because you aren't just looking for someone who can do their job well. You also want to bring the people on board who really understand the mission of your company and believe in it. Those who are eager to build upon your vision are the kind of employees that won't just help your company grow, but the ones who will grow with you. Your challenge as their boss is to make sure they remain motivated and excited about the mission.

Blake Mycoskie, the founder of TOMS Shoes, estimates that he spends about 30 percent of his time on hiring, which has been a crucial role for him especially during the past couple years as the company has experienced rapid growth. The dedication to finding the right people has paid off for Mycoskie. Many of the original interns he hired when he started TOMS four years ago, are still with him to this day, and are now moving into key strategic roles. They have also helped shaped the culture and keep it intact as new people come onboard, Mycoskie says.

Building a Values-Driven Business: Educate Yourself

The more involved you are with a community of like-minded social enterprises, the more knowledge you will gain about decisions crucial to your own company. Deborah Nelson of the Social Venture Network recommends finding a group of trusted advisors who can take part in your company in a mentoring capacity. Finding advisors that you admire often comes from joining community networks, especially ones that are geared towards social responsibility in business. You don't necessarily have to find an organization based in your city or state, says Hollender, because many of them, like Vermont Business for Social Responsibility, Social Venture Network, and Social Enterprise Alliance have a wealth of resources on their Websites. It's a good idea to sign up for newsletters from these organizations and keep watch for upcoming networking events. Additionally, Hollender helped start Sustainability Institute, a training portal for social entrepreneurs, which offers a variety of paid online courses geared towards individuals and emerging companies that are getting started with a social enterprise.

Building a Values-Driven Business: Market Yourself

This may seem like an obvious piece of advice, but according to Nelson, it's common for social entrepreneurs to get so passionate about their mission that they forget that they also have to be incredibly creative about promoting their products and their business. "You can't rely on social mission to sell your product," she says. "You can have a great product and great business practices, but if you don't promote it, you won't sell anything." If you don't have a dedicated marketing person on your team, there are firms that specialize in doing creative for social enterprises. Some well-known firms to check out are: Metropolitan Group, Free Range Studios, Mission Minded, and BBMG.

Building a Values-Driven Business: Remember Your Cash Flow

Just as marketing should be integral to your business, turning a profit is just as essential. In order to make a difference through social enterprise, your business has to be financially healthy. According to Nelson, there's a saying in the social entrepreneurship community: "No margin, no mission," and Hollender at Seventh Generation was a case in point. He says the biggest mistake he made when he was first starting out was he focused too much on his mission at the exclusion of profits and, as a result, the company functioned largely as a non-profit for the first 13 years in business. During that time, Hollender was forced to constantly raise additional capital until he was able to balance out the business side with his passion. Keeping your expenses lean and bootstrapping as much as possible at the beginning will help you achieve that crucial balance. You can't afford to be naïve about your numbers, either. Nelson advises entrepreneurs who may not have a knack for the financials to get help from someone who can pay attention to key indicators and report on the trajectory of your profit margins.

Dig Deeper: How to Manage Cash Flow

Building a Values-Driven Business: Consider Becoming a B Corp.

As a social enterprise, you will discover that you are often held to a higher standard by customers, and even by potential investors. "The stakes are much higher now for businesses that are attempting to do good by doing well," says Nelson, so be prepared for your every move and decision to be scrutinized, with your missteps potentially becoming public crises. However, many successful companies – think The Body Shop, Odwalla, Ben & Jerry's – have walked this path before and come out on top. As a result, they have paved the way for a new business classification called the B Corporation, which serves as a distinction for a company's sustainability standards, in addition to its traditional founding legal structure of S Corp, C Corp, or LLC.

The idea for creating a set of sustainability metrics and performance standards by which social enterprises can be recognized and held accountable came out of B Labs, a non-profit formed in 2006 by three friends passionate about the do-good business model. There are currently about 280 companies representing over 60 industries that have been certified as B Corps since mid-2007, according to B Labs co-founder Jay Coen Gilbert. While B Corp is not yet legally recognized as a standalone business classification, companies that have received the distinction are part of a significant group of social enterprises (including Seventh Generation, Method, and White Dog Café) that have chosen to operate according to a higher set of standards.

Any company can become a B Corp through a simple process set forth on the B Labs Website. Businesses must first take a survey that assesses the company's score in relation to their sustainability performance. If they receive a score of at least 80 (out of a possible 200), businesses may then go on to amend their founding documents to provide for stakeholder interests. "Once you have been approved in the assessment, we provide you with the exact wording to incorporate into your governing documents," says Coen Gilbert. "One of the major purposes of the B Corp model is to make it easier for entrepreneurs to change the DNA of their business so they are legally protected when it comes to their mission, but are also required to consider the impact of their decisions on other interested parties," says Coen Gilbert. He describes the B Corp classification as an overlay to the existing corporate structure at a company, which further helps bake their values into the way the business functions. B Labs is currently working towards getting legislation passed in several states that would formally recognize the B Corporation as a distinct legal entity. So far, legislation has already been introduced in Vermont, with Maryland, New York, and Pennsylvania poised to follow.  

While there are unique challenges facing social entrepreneurs in the quest to lead successful values-driven businesses, Hollender believes it will get increasingly easy for companies to take on social responsibility. In part, this is due to organizations like B Labs and the American Sustainable Business Council that are helping to mobilize social enterprises to influence policy change. "The good news is that this couldn't be a better time to start a values-oriented business," says Hollender. "There is a greater demand and consumer receptivity to these types of businesses than ever before."   

Building a Values-Driven Business: Additional Resources

Visit these organizations' Websites to find a wealth of information on socially responsible businesses.

Social Venture Network's Tools & Best Practices

B Labs – B Corporation

American Sustainable Business Council

Business for Social Responsibility

BALLE – Business Alliance for Local Living Economies

Social Enterprise Alliance