Small Biz, Big Profits

A new type of business model could change the way we do business. In essence, an new type of entrepreneur is appearing in the business world, we will call them “philanthropic entrepreneurs.” These entrepreneurs don’t only want to make money, but make a living while helping a good cause. Mainstream businesses had better beware, because customers are liking the change.

One great example is My Nice Tie. After about a year of struggling to make money, a unique business model was presented to My Nice Tie.  Its called the Win-Win-Win Model. In typical business transactions to parties benefit, the customer wins by enjoying value from a product (hopefully), and the business wins through profits.  In the Win-Win-Win model, both the customer and business win as stated before, but one other party participates in the transaction, and that is those in poverty.  This business model takes some, or all of the profit and loans it to entrepreneurs in third world countries at 0% interest. The business sacrifices some of the profit for a time, the customer knows he or she is helping a good cause, and the ambitious in third world countries are given a chance not otherwise possible.

My Nice Tie realized that this business could help many people all over the world. Currently, 20% of the purchase price of each necktie is lent to entrepreneurs in third world countries at 0% interest. This model was only implemented two months ago, but as soon as My Nice Tie generates enough profits, it will begin to lend all of its profits for six months to a year.  These loans will eventually be paid back, and the business will operate with a slight cash-flow delay.

This is done through an organization called KIVA. The recipients of these loans are ambitious and enterprising. Some are peanut makers that need as little as $25 to buy the necessary equipment to become profitable. Others are delivery drivers that could start their own business if they could only get $50 to buy a bicycle.  They have ideas and they come to KIVA to ask for funding. KIVA is not the only micro-financing company in existence, but it is unique in that it connects everyday people in developed countries with everyday people in struggling countries.  For My Nice Tie and other companies, KIVA is the tool that allows the business model to work.

It doesn’t take a rocket scientist to know that customers want to help people in need. If they could buy a product that helps verses a product that doesn’t, which one will they choose? I guess we will leave that question up to you.