555-555-5555mymail@mailservice.com
Becoming a profit for purpose business
For some business owners, making money isn’t the only motive for running a company. Here’s what it means to operate a profit-for-purpose business, and how to approach transitioning your existing business into one.
Businesses are made up of a range of different facets. They offer products or services that are needed by a specific market, they provide fulfilment and a livelihood to their employees, and they are generally run with the aim of turning over a profit.
https://www.myob.com/nz/blog/profit-for-purpose-business/
In recent times though, some business owners have been looking to add another dimension to their offering: a purpose that goes beyond profitability – a purpose of social impact.
These ‘profit-for-purpose’ businesses are not to be mistaken for non-profits or charities. While they operate like any other for-profit business would, they also utilise their resources to support and advocate for a particular cause and run their operations in line with the ethos of that cause.
Running a profit-for-purpose business can be very rewarding, but it doesn’t come without its own set of challenges, so being aware of the benefits and knowing how to navigate the difficulties is crucial in taking on this endeavour properly.
To gain practical insight into how operating a profit-for-purpose businesses works, we reached out to entrepreneurial sisters Jess and Stef Dadon, who recently morphed their profitable shoe business, Twoobs, into a profit-for-purpose company.
Despite seeing great success in their for-profit business, the Dadon sisters decided that they wanted something more out of Twoobs and chose to make environmental sustainability an intrinsic part of their offering.
“We realised that we wanted to use our brand to affect genuine change and recognised the opportunity we had to move toward a completely sustainable offering,” Jess told The Pulse.
The benefits of going profit-for-purpose
According to the Dadon sisters, aside from the obvious benefits associated with social impact, there are many other positive aspects of running a profit-for-purpose business.
“We found that taking our business down the profit-for-purpose pathway changed our business for the better,” Stepf said.
“Many of our customers were excited about this change, and changed from regular consumers to brand-ambassadors, something which is very difficult to achieve without standing for a purpose.
Stef also emphasised the benefit that this move had on their business’s employees’ approach to their work.
“It’s difficult to motivate young people solely based on mercenary rewards. We found that adding a purpose beyond profitability to our offering gave our employees a level of excitement and fulfilment that had not been there before.”
“The follow on impact on the rest of the business was just amazing to watch.”
Having successfully transitioned from a regular for-profit business to a company that is driven by purpose, the Dadon sisters had a number of pointers to share with other business owners contemplating making this change as well.
1. Consider your motives
The first pointer, which came from Stef, was for founders to make sure that their motives for making the transition come from the right place.
“Making the change to profit-for-purpose should not be in order to introduce something exciting into a mediocre business model,” she said.
“Impactful change occurs when founders are confident about their ability to run a successful business and have strong relationships with their customers and employees.
“Make sure you tick those boxes before venturing down the profit-for-purpose route.”
2. Transparency makes all the difference
The next piece of advice came from Jess, and it was all about being genuine.
“Don’t oversell your impact,” Jess said.
“Offer full transparency to your customers and employees. Don’t just use buzzwords and throwaway lines in your marketing communications. Make sure to find out where your ability to affect change actually lies and tell that story to your customers.
“By being honest with your people, you’ll receive the credibility you need in order to bring them along the journey with you.”
3. Purpose requires education
The next tip that both Jess put forward was the important role that education plays in devoting your offering to an important purpose.
“Self-reflection and education are two of the most important parts of starting a profit-for-purpose offering,” she said.
“When we started, we had no idea about what sustainability actually was, and what it meant to the two of us as individuals and business owners.
“We did months of thinking, reading and learning, just to make sure we were setting ourselves up to do it right, and the learning is ongoing.”
4. Expect some disappointment
The final pointer came from Stef, and it was all about bracing oneself for the downsides of changing your business offering to operate in line with the ethos of your purpose.
“Running a profit-for-purpose business requires passion, and the reality is that not everyone will share this passion, and some may even take a disliking to it,” Stef said.
“If you’re not disappointing someone, you’re not pushing forward, so when taking on this big task, don’t be afraid to lose some of your customers.
“The depth that you will create within your business will not only make up for it but will ultimately make your business stronger than ever.”
Running a profit-for-purpose business isn’t for everyone, but for those who do decide to take it on, the advice here is clear.
Having genuine motives, being completely transparent with your people, upskilling on your particular area of impact and preparing for some disappointment along the way will enable your business to enjoy all the benefits that running a purpose-driven company has to offer.
To discuss all your account matters please call us on 09 438 1001
