Eric Block On Responsible Branding

Photo: Getty

Tips to launch a purpose-driven business that can thrive in any economy.  BY BRYAN JANECZKO, CEO, NUNBELIEVABLE via INC. • Reposted: July 31, 2023

Once the must-have shoe made of sustainable materials, Allbirds is now flapping its wings against the winds of change – its stock is down 96% since its initial IPO. And though fashion is historically fleeting, tech giant Salesforce, which pioneered giving 1% of their time, product, and equity to charitable causes, has seen thousands of layoffs in just a few months. It’s now pledging to be “lean and mean” in efforts to hit 30% profit margins. Though their giving model currently remains, employees have been warned to not let “culture” get in the way of their leaner marching orders.

These stories may tempt you to jump to the conclusion that today’s world is more jaded and less concerned about for-purpose missions, especially with talks of recession in the air. However, I would argue the opposite is true. 

Launching a business when so much economic uncertainty looms may feel particularly risky. Launching a purpose-driven business probably feels even riskier – some might say downright inadvisable. Their skepticism is not entirely unwarranted. It’s hard to feel like the for-purpose model is thriving when its former giants are falling. 

Once the must-have shoe made of sustainable materials, Allbirds is now flapping its wings against the winds of change – its stock is down 96% since its initial IPO. And though fashion is historically fleeting, tech giant Salesforce, which pioneered giving 1% of their time, product, and equity to charitable causes, has seen thousands of layoffs in just a few months. It’s now pledging to be “lean and mean” in efforts to hit 30% profit margins. Though their giving model currently remains, employees have been warned to not let “culture” get in the way of their leaner marching orders.

These stories may tempt you to jump to the conclusion that today’s world is more jaded and less concerned about for-purpose missions, especially with talks of recession in the air. However, I would argue the opposite is true. 

Consumers today are seeking more meaningful, genuine approaches to mission-driven business than ever before. 72% of US consumers want to buy from companies that reflect their values and 71% of millennials will pay more for brands they believe in. Even with inflation at 40-year highs, 57% of Americans reported they purchased goods from socially responsible brands in 2022. Moreover, talent today wants to work for brands that align with their values. Over half of employees in the US won’t consider jobs that aren’t in line with their values.

So now is actually the perfect time to launch a purpose-driven brand. In my experience, mission-driven businesses attract talent, open doors to unexpected opportunities and connections, and provide a north star for both employees and consumers to get behind. 

Here’s how to launch a for-purpose brand that doesn’t just survive, but thrives. 

Don’t create a product, create a community 

For-purpose brands take a stand for something. Whether it be sustainably sourced materials, fair wages, donated proceeds, donated time, or any number of mission-driven initiatives, there are added costs associated with working towards social good that tend to increase product prices. That can be intimidating, but the first thing to know about a for-purpose brand is that it thrives within a community, and that community is its greatest asset. 

I think Bombas is an incredible example of the power of community for for-purpose brands. At its inception, Bombas sold expensive socks. Nice socks, but expensive. From a strictly business perspective, it’s easy to dismiss. But of course, the power of Bombas was in their mission: for every pair bought, a pair would be donated to someone experiencing homelessness. This type of model obviously adds costs to the business, but after just three years they were profitable. 

That was because of the power of their community. The right talent got on board because they believed in a larger vision. They then physically took that mission to the streets: hand delivering goods to shelters and transitional housing across New York City. Building those kinds of relationships brings more people in because they see the authenticity behind the brand. The DNA of the brand itself increases the sales pipeline of customers who want to put their money behind the purpose. In fact, 82% of today’s consumers agree that how a brand treats customers, employees and the community is important to their purchasing decision. 

As an emerging for-purpose brand, engage with your community in a way that aligns with your mission. Volunteer with a local organization, organize a food drive, highlight your customers on social media, and get creative with it!  

The mission is also going to open doors to opportunities that might not be there otherwise. For example, in my experience, a large retailer like Walmart or Kroger is more willing to take a meeting with a for-purpose brand, than just another CPG company with something to sell. 

Find your path to enduring success through simplicity 

Whether for-purpose or not, every business has to hit profitability, ideally sooner than later. This is particularly relevant today with funding dollars significantly less availablethan they were two years ago. Gaining traction and growing support within your immediate community is a proof point that investors will consider, but you’ve got to keep that momentum going.

In pursuit of that movement, a lot of new entrepreneurs make the mistake of rapidly expanding into new product lines or tackling new initiatives to further their for-purpose mission. In reality, when working towards that path to profitability, simplicity can be your secret weapon. There are three areas to simplify in order to maximize margins and growth: your mission, your packaging, and your business model. 

Simplifying your mission doesn’t mean shrinking, it just means getting really clear on what your north star looks like. A great example is Beyond Good chocolate products. There are many brands putting out chocolate bars with environmental missions, and rightly so. Beyond Good focused its role within that niche by working directly with local farmers and producing their chocolate in Madagascar- and paying a living wage. In a crowded space like the chocolate aisle in Whole Foods, having a unique, clear mission can be the difference between a sale and being left on the shelf. 

The same can be said for your packaging. In the case of CPG products, you’ve got to catch the consumer’s eye and communicate your mission clearly. RX Bar is doing this well. Without prior knowledge of the brand, you can take one look at its packaging and know exactly what you’re getting, which is a mission statement in itself. Their mission to make wellness an easier choice is represented in those easy-to-see and read ingredients.

Lastly, simplify your business by right-sizing your model to increase margins. Justin’s is a great case study on doing this well. Before the pandemic, they sold 40 different nut-based products, but the supply chain crisis meant changes were necessary, so they reduced their product SKUs to focus on what was really selling. Evaluating your SKU mix to optimize profitable SKUs and eliminate those that are not or don’t contribute to the bottom line is crucial to making sure you can keep your business successful while continuing to work towards your mission for good. 

Harness the power of PR to amplify your voice

We’ve already talked about how the power of for-purpose brands lies in their ability to build and actively engage with their communities. The flip side of that is the way today’s consumers can mobilize to turn against brands they see as behaving irresponsibly. Nearly a third of Americans reported boycotting brands last year for this reason. 

The current economic climate has consumers making tough choices regarding how they spend their money, but even with 46% saying the cost of for-purpose brands prevented them from buying their products, 70% said a company’s purpose or mission was an important determinant for support.

Public relations is a great tool to share the stories that make your product and larger mission unique. Even though budgets are often tight for emerging businesses, it’s a worthwhile investment to consider working with a PR professional or agency that can help you propagate your stories to a larger audience through the media. 

This is a much longer-term strategy than something like optimizing SKUs, but the payoff can be tremendous. Just look at a company like Airbnb. They’ve recently reported their most profitable fourth quarter ever and a profitable first quarter for the first time ever. Their CEO credits PR as their “most important channel” for success. 

Though starting a for-purpose venture right now may seem risky, I think it’s the ideal time to launch a business. When things get tough, which they always do, you have a larger mission to remind you – and your community – why you started this journey to begin with. The movement has gained so much momentum over the years and it’s only going to continue to grow.

To see the original post, follow this link: https://www.inc.com/magazine/202304/ben-sherry/how-a-federal-fraud-investigation-inspired-this-cpa-to-launch-his-own-company.html