The pursuit of profit is no longer enough.
Most entrepreneurs become entrepreneurs because they want to create a positive impact on the world. They have a purpose and a mission. They see a problem and they find a way to solve it.
However, it can be easy to lose sight of this as we go further down the road. Investors demand returns, we start to work longer hours, and our egos start to get in the way.
However, purpose and profit are delicately intertwined. It might be possible to have one without the other, but as times change, the case for having both becomes far more compelling, and yes, more profitable.
Three reasons why your business needs a purpose
1. It acts as a North Star
When you are clear on your purpose and what you stand for, it's easier to make decisions and assess opportunities. This could range from the employees that you bring into your team, to the partners you collaborate with, to the clients that you are trying to attract.
Recently, I had to decide between two payment gateways for our online marketplace. Both had similar offerings and similar pricing. I spent days trying to find ways to differentiate the two until I discovered something that made the decision easy for me. The first company was a reputable US-based business. The other? A South African start-up! Can you guess which one I went for?
At iZULU, our purpose is simple – to celebrate and support local businesses, and that is our guiding light.
As a startup or small business, you cannot afford to explore every opportunity that presents itself. Focusing your efforts on the right activities translates to streamlined costs and produces better results that are more aligned with the direction of the company. You might not always get it right, but you will have a focus for your decision-making.
Having that compass to guide you towards suitable opportunities you want to explore means that you have the liberty to experiment, and through doing so find out what avenues to cut quickly and what core areas to focus on. Focusing on a few core areas impacts the bottom line.
2. Customers love a purposeful company
Think Airbnb, Apple, Nike. What do these companies have in common? Apart from being hugely successful, they all have a strong purpose and a narrative that they communicate strongly in their marketing and branding to connect to their consumers.
In these times of crisis, people instinctively want to be a part of companies that promise to change things for the better and have a positive impact on them and the world around them, but the reality is that many companies are falling short.
That, of course, means that there is a real opportunity for businesses to appeal to our purpose-driven generation by actively showing their commitment to purpose. Doing so gives companies who do it well a competitive edge – data shows that customers are more loyal to purpose-driven brands.
As business owners and entrepreneurs, it’s time that we stop seeing purpose as a "soft" concept with no impact on the bottom line and look at the pitfalls of not entrenching a strong purpose within our organizations. Having a purpose by itself is not enough - it needs to be entrenched into the culture and processes of the company. Taking the effort to do this is an effective long-term play.
3. The world needs it
The world is getting richer, but inequality across the globe is on the rise. Climate change is threatening our future. Unemployment is at 36% in South Africa.
The bottom line is that the world and its people need businesses and organisations that are willing to take a stand and actively work to make everything better.
Having a purpose means being grounded in the needs of humanity, not just the need for profit. But the real test is figuring out how to make it more than just words in a memo. For purpose to matter, it needs to go beyond initiatives, it needs to be the very foundation your business is built on.
How will you entrench purpose into your business?