Creating a mindful profit: How does one happen and is it sustainable?

The idea of making money running an ethical business is not a problem in itself, the real trick is in maintaining and sustaining it.

Let us tackle the issue from the start-up. The aim for any new company is to sell sufficient of its products/services as quickly as possible in order to break even. Sales and marketing are critical in raising awareness and attracting interest. The majority of which will initially not purchase. So there is pressure to discount or agree bespoke pricing in order to ensure sufficient cash to keep going. The financial pressures can outweigh the ethical considerations at this stage in order to establish a viable business.

First Watershed

Assuming we pass the initial watershed of 18 months when many businesses go bust then we start to be able to be selective in our sales and aim to grow with the “right” customers accept a margin that reflects our ethical quality. This however brings its own dilemmas as to the level of margin versus the competition. And there will always be competition despite many start-ups claiming to be unique and exclusive there is always the option of the customer doing something else or finding an alternative.This leads to pressure on costs so as to offer a good price in order to gain market share. Because at this stage in the life-cycle of the market share is essential if a company is to be sustainable. There is no reason why a Mindful company cannot be a market leader but it must be aware of the need for profit trimming in order to gain that share . It is usually at this second stage that most Mindful companies have the best opportunity to make substantial profit. Which should be exploited in order to establish a basis for product and market development in order to keep ahead of the competitive threat.

Following the successful establishment of a niche/ sector other companies will be attracted and enter. At this point the mindful company has to compete with others who are much more financially motivated and will source from inferior suppliers, pay less for production and not give as generous a margin to intermediaries. But they will offer the prospect of larger sales and hence profit to their suppliers and distributors as they apply more commercial terms and therefore attractive pricing to the market. Whilst the world is still run primarily on a short-term profit maximising premise the Commercial trader has an advantage over the Mindful company.

How to Compete

Most commercial companies are still fairly rapacious in their attitudes as their motivations are financial. Though most do not wish to do harm but they serve markets and masters who only are satisfied by financial motivations. The holders of debt and equity want a return on their investment as they need to serve masters of their own – pension funds or investors. Similarly commercial companies have pressures to pay staff well to reward and retain them; to pay suppliers and contractors and distributors for their performance. Although the same pressures are applied to Mindful companies the pressures are greater when the only form of recompense is monetary.

Money is the primary exchange medium of our society and especially so in liberal economies. If we are to develop successful Mindful enterprises then we have to appeal to another currency as well as the monetary one. The idea of social good is appealing but to what extent is it “bankable”. What level of margin can be claimed for ethicality, what premium for preserving resources? The Mindful profit is a combination of money and loyalty. The loyalty to supply against better prices from competitors, the loyalty to repeat purchase when offered cheaper alternatives and the loyalty to do a better job for poorer pay in return for the knowledge that no harm is done or benefit is given to the needy.

How to Achieve Mindful Profit

There are a couple of options I will explore here. The first one is from the Communist era. The idea of countertrade or barter. Trade in hard-currency was a problem for Eastern European countries in the 1970s. So they entered into counter trade in goods that they produced in abundance for technology that they lacked (in one instance the sale of tens of thousands of tons of beetroot for technology). This method of supplying the product and service ultimately wanted by a supplier has several advantages. In that the supplier gains the ultimate solution that money would have purchased and they are satisfied without the intermediate stages of money transaction and contracting other suppliers. On the other hand it requires an additional level of management for the Mindful company to organise the countertrade. Nevertheless given the lack of this activity at present it does offer an interesting competitive alternative.

The second possibility is perhaps more social or socialist. If the Mindful company is tapping into a niche interest and acceptance of a need then in order to achieve that dominant market share position it needs, it has to appeal on its merits rather than on price. The engagement of its supporters needs to be more than just social media and through a benefit from the benefit of ethical trade. I.e. a dividend of some sort from the success of the enterprise. In the 19th century this was founded as the Cooperative movement and in the 21st-century we can see this in the form of Crowdfunding. Though the latter is still mainly financial in its return. The challenge for the future is to find a means of non-financial return that is acceptable to financial backers who are still required to support a successful Mindful Company. The growth of a support and benefit network must be the marketing aim of a sustainable Mindful Company.

Charles Nixon
Founder and Chairman
Cambridge Marketing College