There is no doubt that profits are significant to any business or startup. Still, the more you observe today’s society and business world, the more it’s evident that gains shouldn’t be the sole focus of modern-day entrepreneurs. Nowadays, profits can be more of a bi-product of focusing on your company’s missions or impactful social purposes since detecting the impact you want to have on society can undeniably lead to significant profits and sustainable success.
According to the U.S. Bureau of Labor Statistics, roughly 20% of new businesses fail during the first year of being open, 45% during the first five years, and 65% during the first ten years, and only 25% of new companies make it to fifteen years or more. Plenty of business leaders and executives devote their time to analyzing the business owners that beat the odds in an attempt to recognize the secret of success, and their findings may surprise you.
There’s no need to study all that data, though. Just look at some of the best companies around you like Patagonia, Nike, or Kickstarter. They are all examples of highly successful businesses that put purpose in the first place on the pedestal.
And many of these purpose-driven organizations are registered as public benefit corporations, a relatively new corporate entity that came into existence to respond to purpose-driven businesses that strive to pursue both profits and purposes. Companies like these are for-profit organizations that balance maximizing the stakeholders’ value with a legally binding pledge to social or environmental missions.
In case you are starting a brand new company, you can write it down as a public benefit corporation in thirty-seven U.S. states, as four more are currently working on the legislation. More or less, the procedure of incorporation is the same as with any other corporate structure. If you’re already running a company that you want to transform into a public benefit corporation, first and foremost, you will have to amend your governing documents to begin the procedure.
So, think about your favorite brands, and why do you support them. Is it because they turn immense profits, or because you resonate with their mission? This new trend of socially and environmentally responsible companies should certainly not be overlooked if you’re on the verge of starting your new company.
Here are the top four reasons why businesses should be built for both profit and purpose.
Business Purpose Can Differentiate You From The Competition
In nearly all industries, consumers are overwhelmed with options. A lot of companies sell indistinguishable products that are virtually identical. So, for your business to thrive, focusing on a specific social or environmental purpose is a fantastic way to help your business stand out from the competition. Plus, it can allow you to provide a unique selling proposition that your customers will probably find compelling.
If your business can solve your client’s pain points, your clients will quickly spread the word to everyone with similar issues. Even though there are various new digital marketing techniques, word of mouth will forever remain the strongest one. When clients hear recommendations and top reviews from people they trust, they tend to listen and act on them. Concentrating on impacting your clients’ lives rather than your profit margins is one of the best ways to build a successful company.
Take Duracell as an example. This battery producer sets itself apart from its main competitors through its PowerForward program that helps communities recover from natural disasters by providing free internet access, charging phones, and offering free batteries during power outages.
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Enables You To Easily Recruit The Best Talent
Suppose you strive to gain a strong competitive advantage and build a successful company. In that case, you will undoubtedly need to hire the strongest team, especially when you’re still small and rapidly scaling.
To employ the best team, you need to operate a company that’s attractive to the millennial generation, which a Deloitte study predicts will make up 75% of the U.S. workforce by 2025. According to the survey, millennials are willing to work for companies and organizations that foster innovative thinking, develop their skill sets, and make a positive contribution to society.
Suppose you opt to register your company as a public benefit corporation. In that case, you can clearly show that you take your purpose and mission seriously, and it’s a public commitment your employees can stand behind.
Running a positively impactful business, taking good care of your workforce, and offering workplace autonomy and opportunity are all huge talent attractors and standard practices for companies that care for both profit and purpose.
Quickly Grab The Attention Of Investors
As the world faces a wide range of sustainability challenges, modern-day investors are starting to re-evaluate traditional portfolio approaches and give more importance to funding socially and environmentally sustainable projects and businesses.
Sustainable investing involves environmental, social, and governance factors that might establish a positive and lasting impact on the world. To put it simply, investors nowadays are looking to put their money into businesses and ideas that do good to society.
We increasingly observe the trend of companies raising capital and having successful exits registered as public benefit corporations. According to Mr. Larry Fink, chairman, and CEO of BlackRock, which is possibly the world’s largest investment firm – companies must not only deliver financial performance but also show how they make a positive contribution to society.
The Public Benefit Purpose Is Central To Your Business Model
Public benefit corporations tend to be the perfect fit for organizations where the core business is strongly driven by adherence to the public benefit. In other words, the more successful the company – the more impact on the public benefit.
An excellent example of this would be an organic food business with a public benefit to encourage access to healthy food. The gist of it is that the more organic food the company sells, the more it accomplishes its public benefit purpose. The business’s public benefit purpose is significant and hard-wires its dedication to providing access to healthy food into its core business. The goal is also easily measurable since the company can track its growth in providing organic food to the masses.
Nobody can say that profits aren’t important. The bottom line is; they are incredibly important. However, recent studies show that the choice between purpose and profits is a false one since many companies that focus on purpose to drive performance see higher profitability margins at the end of the day.
Purpose-driven companies can earn much more for their shareholders than regular, narrowly profit-focused enterprises. Take your cue from these visionary companies, and keep the purpose of your business at the forefront as you begin your operation, and profits are likely to follow.
We, as a full-scale digital agency, help our clients and partners with enhanced online strategy and better decision-making going forward. Want to 10x your business revenue and take it to a new level? Reach out to Dignitas Digital today!