The number of startups who have begun to include a social purpose into their businesses model rises each day. But there comes a time (for most founders) when they must step aside -- and hand down the reins.
Exiting their business for a life of contemplative Instagram shots and conference panels.
Knowing this, how can founders protect their social mission? How can founders ensure the purpose and mission they have worked for all their lives -- will keep a stronghold once they leave?
What to Do, What to Do
Anytime you talk about sustainability (how something survives) it comes down to planning. The more thought you put into the interaction of a social purpose combined with your business, the more fruitful and impactful it will be. Ask yourself, how large of a role do you want the social purpose to play in your business? Is it buried deep down into the business model? Or does your social mission merely happen by chance?
Once there’s an awareness of how this interaction should play out, then founders can find ways to implement or protect it from exposures.
Ways to Incorporate Your Social Purpose
If your social purpose is weak and has no influence on you nor your employees -- as expected -- it will be much easier to phase it out.
Remember that you can recruit socially conscious co-founders. You can build a social purpose into your business model, and you can use a business entity that accommodates a socially conscious focus.
- Recruit the team thoughtfully. When recruiting co-founders, staff, advisors or when finding investors for your business -- look at their values, priorities and social impact record. It’s easy to inject social purpose into the work when surrounded by people who prioritize this process as highly as you do.
If sustainability is a pillar of the business, you don’t want a co-founder who subscribes to Deforestation Weekly.
- Build it into the business model. There are three different ways a social purpose can interact with the business model. One way is to make the entire business model around it; making it an integral part of the work. Apparently, if a whole business model is built around impact, it makes it pretty darn hard to remove. The other is for the social purpose to be an ancillary part of the business model, but not integral. For example, where your product happens to help the environment but that isn’t its sole purpose. And the last is where the social purpose doesn’t interact much with the business model but is still prevalent in the business. For example, where the staff are active volunteers or the company actively donates. As you move into the latter two, these become much easier to shift and phase out.
- Draft clear governing docs. These documents are not just annoying pieces of paper your lawyer drafts. You will have certificates, charters and bylaws -- and they each serve a real purpose.
In these governing documents, you can outline the characteristics, qualifications, and values you want to see in your board or advisory members.
If your social purpose lends itself to a specific demographic, you can create accountability boards or committees. Heck, you can take it a step further and draft a special purpose clause to build a fence around what the organization can and can’t do; as well as who the company must keep in mind when making decisions.
- Use the business entities available. The idea of “conscious capitalism” has become so popular that some states have particular business entities to accommodate it. We’ve all heard of: The Flexible Purpose Corp., and Benefit Corp. (not to be mistaken with the B-Corp certification), L3C, and others.
If you’re forming an organization, see if the state you intend to register in has them available. If the state doesn't accommodate one of these entities, determine whether it might be worth developing this body in the state of your choice. A couple of things about this type of undertaking.
One: not all of the same options are available in every state. If this is the case, you can always resort to number three by writing the social purpose into the formation documents.
Two: you can use the structures (like privately held corporations) that are available and accommodating.
Lastly: because not every option is available in every state, companies counting on a national presence must keep in mind that individual states may not recognize their entity.
There are two sides to the planning stage. One is execution, how do I accomplish what I want to achieve this? The other is protection. Once I achieve this “goal,” how do I protect it?
We’ve looked at ways of including a social purpose in your business, but it’s important to get clear on possible threats.
Some of these could be:
-Short term profit pressures
-Investors and shareholders
Once you’re clear of the threats, you can use the list above to try and mitigate some of the threats. Also, it is a good idea to use brainstorming solutions that might protect against the risk.
For example, if you are worried about shorter term profit pressures impacting your mission you could choose a privately held corp. In privately held corporations, there won’t be as much of an issue, nor will investors and shareholders be a problem.
Stepping away from the business can be tough, especially when there are core principles the founders worry will be lost.
You will be making an attempt to protect these fundamental principles from founders who can make decisions, or act in a way that stunts the company. It's far easier and much healthier to think strategically about your issues rather than holding tight to roles, not delegating or even worse, keeping secrets.
What are ways to maintain these principals AND grow the company? This process is possible, and we’ve seen companies like WholeFoods and Patagonia master it.
What it comes down to are visionary founders who, during the formation of the company will take the time and the initiative that will ensure a social purpose is clearly understood.
Social Purpose Takes Planning
Over time, securing that the infrastructure of the business will stay in alignment with its mission as the organization scales -- takes effort. Whether you have an idea or are well into running a company, you can add or maintain your social purpose at any time.