Complete guide on the importance of CSR strategy for startups
In a startup space with limited resources and funds, business owners hardly prioritize corporate social responsibility.
Their main agenda is to establish a firm base, attract potential customers, and seek investments for financing business operations.
With narrowed financial capacity, one can hardly think of dedicating a portion of their profits towards CSR.
However, with growing social concerns, creating a CSR strategy has become critical for startups to build credibility among the public and investors.
Their goals of having a solid customer base, enjoying brand loyalty, increasing profits, and expanding operational activities have come down to corporate social responsibility.
Socially conscious startups have taken the initiative by creating budgets and allocating a fixed sum of money for social causes.
They realize this step is necessary to scale their business functions and establish a good brand image for the customers and shareholders.
What is a CSR strategy?
Corporate social responsibility is the obligation of a business to be socially active towards itself, society, and the stakeholders.
It's a business model where companies voluntarily engage themselves in social causes to raise awareness and impact the public at large.
The main argument for a business's social responsibility is that as the company operates in the environment and uses its resources, the company has a level of duty to return to the environment. And by practicing CSR, a business can donate its share of being environmentally conscious.
A CSR strategy is an action plan where the business owners plan and design the social causes they'll promote or run an event of their own.
The strategy specifies the amount to be spent, the causes to encourage, event designing and execution, and parties to approach; altogether, businesses undertake comprehensive planning to follow a guided and strategic approach towards the environment.
CSR for small businesses and startups is often neglected in the final business plan of the company, considering it a secondary objective.
However, companies with a dedicated section for CSR always have a competitive edge over those that overlook its importance.
CSR is not an overnight task for businesses to approach.
To contribute their share to society honestly, companies need to realize the importance of corporate social responsibility beforehand and incorporate changes in its values and purposes.
Why is a CSR strategy important, and how can it give your small business an edge?
Apart from the routine functions, CSR for small businesses is an inevitable activity in enjoying customer goodwill and increasing their monetary buy-in.
Mentioned below is the importance of corporate social responsibility for small businesses and the ways they can relish this process.
1. Attract the right talent
Encouraging people to apply for open positions is a nightmare in a startup environment. Due to the high level of uncertainty and stability, candidates resist working in a startup.
Monetary incentives do not solely drive the growing millennial population.
The younger population has become socially conscious and gets inclined to businesses and products that contribute their fair share towards corporate social responsibility.
A well-drafted CSR budget that guides and regulates the business operations to be more socially conscious is bound to give an upper hand to the budding startups looking to recruit people.
CSR activities help build employee confidence in the company, thereby increasing employee engagement.
2. Investor's interest
CSR strategy for small businesses is an essential step to gaining investor interest in the company's operating model.
Socially conscious startups that dedicate a portion of their shoestring budget right from the beginning have the edge over those who don't.
Environmental, Social, and Corporate Governance (ESG) reporting helps stakeholders and investors understand the past and current CSR strategies.
The report provides a transparent disclosure of the company's impact in the following areas:
• Environment
• Social
• Corporate Governance
3. Attract customers
Suppose your startup has limited financial resources, yet you continue participating in social activities. In that case, your brand's public image happens to shoot up considering your genuine efforts towards CSR.
The commitment to being ethical in business operations is what echoes with customers.
Active participation and enthusiasm in such activities help create brand awareness and increase the customers' brand loyalty.
4. An advantage over competitors
Many companies fail to realize the importance of CSR in their business plan.
They often keep estimating the reasons for poor customer retention and loyalty without paying much attention to the business's core values.
Without having a solid and established CSR strategy, companies continue to fail to develop healthy customer relationships.
On the other hand, the ones that maintain a steady CSR approach reap benefits in terms of high customer engagement, loyal client base, and increased brand goodwill.
5. Increased brand awareness and recognition
Businesses are recognized for the sale of their core products and services.
If they actively contribute to the social responsibility of the business framework, the customers are presented with a new identity.
This new identity of your business will help drive sales and reduce advertising and marketing costs - enabling you to save more.
6. Cost-effective & leaves a green footprint
Inarguably the best bet on the social responsibility of business is being more conscious of the environment by choosing sustainable and ecological alternatives.
Enabling CSR programs in your organization can positively impact people's minds by encouraging them to contribute their part in saving our planet's resources.
Industries are a major benefactor of hazardous gases and greenhouse emissions.
They need to opt for environment-friendly choices that do not impact their production levels but are healthy for the planet altogether.
How to implement CSR practices for your startup?
While mapping the road of CSR for small businesses, the management is struck with a common question – How to start CSR in a company?
Blindly creating a rough outline of the CSR model will not help startups as this isn't their primary objective to fulfill; other activities of sales, purchase, and marketing will be negatively impacted because of irrational CSR budgeting.
So how do you create an effective CSR policy for your startup without distorting your main channels?
Listed below are a few actionable tips for startup business owners for a successful CSR policy.
1. A strategy that can go along with the company's vision
Your CSR strategy should align with your company's objectives and vision.
To achieve your CSR goals, you don't have to change your course of business to a different direction; otherwise, balancing the two might pose difficulties.
Create a simple and achievable CSR program with reasonable budgeting without changing your existing work processes.
2. A business code of ethics
CSR is not limited to third parties only. If the management fails to incorporate healthy ethical practices and values within the company – it has significantly failed in creating an impact.
Therefore, corporate social responsibility begins with the employees being honest and respectful to one another, the company, and the environment.
3. Create a CSR department
It might sound a bit pricey for startups in their early stages, but it is necessary for the smooth flow of other functions.
If the current employees work on their primary job objectives and CSR simultaneously, it might create a rift between handling multiple tasks at once, and they might find themselves unable to achieve either of the goals.
Hence, creating a separate CSR department will help the employees focus on their part without creating any chaos.
4. Survey employees to understand their interests, values, and expectations
As mentioned earlier, CSR begins within your business. Helping out your employees, assisting during tough times, and creating a healthy and approachable environment are all a part of CSR policies.
To create an effective CSR policy for your employees, it is always advisable to understand and consider their interests and expectations.
If the policy is what they require to function at its best capacity – there's no harm in surveying their opinions.
5. Attend volunteering events
Volunteering is a self-guided initiative that companies adopt to participate in charitable and social events.
Attending events like these helps understand the situations of the non-privileged section of society and allows the CSR department to create plans according to their capabilities.
6. Get involved in donating and charities
Though startups have limited resources and profits in the initial years, the importance of corporate social responsibility cannot be overlooked wholly.
Companies can contribute at least one to five percent of their profits in donations to orphanages and nursing homes. The percentage can vary according to the profits generated.
7. Organize small fundraising events
Fundraising events help you save more in case of a tight budget and low profits.
Companies can start a fundraising event for a social cause and invite prospects to view and understand the thought process behind the initiative to know how their funds will be utilized for the purpose.
Fundraising events can be conducted once a year on a big scale to reach maximum people.
8. Offer employees cycle-to-work schemes or vouchers for meeting weekly targets
Small contributions implemented by many are enough to start a spree.
The contributions can begin at an individual level:
• Commuting via cycles, electric vehicles, or opting for carpooling
• Switching off the computers when not in use
• Avoiding paper-based alternatives
9. Paid time off to volunteer
When contributing towards CSR through volunteering or fundraising, employees shouldn't consider it an off-site activity.
These activities should be conducted with full enthusiasm and high spirit. Hence, salary deductions for this purpose are not acceptable under any circumstances.
10. Developing partnerships with local authorities
Partnering with local suppliers and sellers can increase brand awareness among the public.
By purchasing their products and services, you offer your share in supporting small and local businesses.
11. Donate to industry-related organisations
Donations within your industry help attract new companies and meet high-level industry officials.
Getting into the inner circle of these officials can expand your CSR capabilities apart from helping you scale heights.
12. Initiate an environmental audit
Timely auditing of your CSR reports enables you to understand the effectiveness of your planning and implementation.
You comprehend the success ratio of each event and estimate your future capabilities.
Neglecting corporate social responsibility is not the right way to save your budget and reduce expenses.
CSR strategy is not an expense but an investment for your business. It might not help you generate direct revenue, but it might establish an excellent brand loyalty of customers and goodwill in the public eye.