What is Impact Entrepreneurship? And how is it different than traditional business practices? “Entrepreneur” is defined as a person who starts a business and is willing to risk a loss to make money. A second definition is one who manages and organizes a business. Traditional entrepreneurs are in the risky business and often only for the financial gain. It doesn’t matter if this business is polluting the environment, filling our streets with plastic toys and poisoning our kids. It doesn’t matter whether it is tobacco, alcohol or coal mining, guns and propaganda, or cute apps that get children addicted to electronic devices. It doesn’t matter if the gadget self-destructs after one use. An entrepreneur is typically seen as a business leader and an innovator starting new businesses for profit. Entrepreneurship is about maximizing the return on your investment and financial gain. To judge a company’s success, you must first increase shareholder value and then chase hockey-stick growth. This is partly due to our capitalist society, which is an economic system that allows private ownership of the production equipment and profits from their operation.
Non-profit status is granted to companies that are founded solely for the purpose of making a positive impact on society and making a difference. These companies struggle financially as their main source of funding is philanthropic gifts. As such, they must have a very small budget and spend a lot of resources on continuous fundraising. This is not a cost-effective way of doing business. Many criticize non-profits for not being effective because they focus on the smallest amount of money, creating impressive marketing materials, and throwing extravagant parties for their wealthy donors. Instead of making the greatest impact on their mission, they tend to be inefficient. Their progress towards their mission is totally decoupled from how much money they receive, which again distracts from the mission. How do we solve the problem irresponsible entrepreneurs, inefficient non profit organizations? This is where impact investing, entrepreneurship, and impact investing can help. Impact entrepreneurs are building businesses that make a difference in the world. If you’re searching for more information on sustainable finance, check out the mentioned above site.
They are able to make a positive change and generate a profit. Entrepreneurship is made possible by being ethical and transparent, living your values and living your passion. While it’s difficult to make your living while making the world better, it is possible. You might not get the same financial reward (or your might). Sometimes you might need to wait for a long time before you get rewarded. It is not easy, but many people prefer this investment model because they feel good doing it. What is Impact Investment? Impact investment is different to traditional investment. Traditional investment only looks at the bottom line. In traditional investing, there are only two questions. What are the potential financial benefits? It is important to reduce the risk and maximise the financial reward. It doesn’t really matter how it is achieved unless you are an Impact Investor. Impact investors must know the details of how the money is being used. Who is managing it. Where is it going? What impact is the money making on the world. Lastly and most importantly, the impact needs to be measured. Otherwise, how do you really know if you are making an impact?