Running a startup that also aims to make the world a better place isn't as easy as it sounds. The challenges are spelled out clearly in the "triple bottom line" framework (social, environmental, and financial returns).

Such businesses will face several challenges in turning a profit, and delivering on their social promise. Investors, after all, are eager to see that the model is actually viable in the marketplace.

"When you think about startups, you generally think about businesses that are high-growth, disrupting the industry in some way," said Erica Dorn, the managing director at Etsy.org, at a breakfast panel in New York City on Thursday. 

"In reality, a lot of micro-businesses build the fabric of our community," she explained, referring to the 22 social enterprises participating in Etsy's social entrepreneurship incubator, Etsy.org, including Ovenly, a Brooklyn-based bakery that primarily employs refugees and formerly incarcerated workers.

During the panel, other executives including David Klein (CommonBond co-founder and CEO) and Michael Karnjanaprakorn (Skillshare co-founder and CEO,) discussed the challenges and benefits of operating as a for-profit business, with a not-for-profit aim.

Here are a few concrete pieces of advice from the panelists:

1.  Bake charity into your business model.

CommonBond partners with Pencils of Promise, a non-profit organization to help fund education needs in Ghana, Guatemala and Laos. Klein emphasizes the importance of making the social mission a founding principle of your company -- not an afterthought. 

"The social promise is a reflection of who we are, and if investors didn't want to invest in who we were, that was okay," he said. Early on, conversations with other social entrepreneurs, including Warby Parker founder and CEO Neil Blumenthal, helped him to better execute a one-for-one model (with each degree funded, the company will pay to send one child to school for an entire year, including their cost of tuition, uniforms and supplies.) 

"Ensuring that you have strong social mission forces you to figure out [the economics], whereas if you didn't hold yourself to that standard, you might not force yourself to figure it out," he said.

2. Communicate your goals clearly to your investors -- and select them accordingly.

"You can't be Pollyanna-ish about it," says Klein. "You have to think about the economics behind it. You have to incorporate it into your marketing CPA, and then tell a really good economic story."

Karnjanaprakorn agrees: "We pick our investors just as much as they pick us." Skillshare, which offers online courses to those working in creative industries for just $10 a month, also gives free classes to those who can't afford to pay, using a similar one-for-one model. (For every year-long membership, the company donates a second membership to a student in need.) 

3. Don't be heavy-handed with advertising.

It's important to be somewhat modest about your social mission, because consumers can grow wary of ads.

"If you're going to have a social mission, it's important that it is perceived as authentic. In the beginning, we didn't talk too much about it," said Klein.

Karnjanaprakorn has a simple solution. He advertises by putting his teachers and students at the forefront -- which speaks to both the philanthropic mission, and to the business model. 

4. Practice what you preach.

It's important that you create a healthy company culture. Entrepreneurs participating in the Etsy.org workshop, for instance, receive lessons in how to lead teams. This encourages them bring those principles into the workplace.

"Everything should start internal first. You have to live and breathe those values," said Karnjanaprakorn.

Published on: Nov 20, 2015