Last week, a client asked me to reschedule an upcoming meeting. This client’s office would be closed for a full week so that partners and employees could participate in advocacy at a critical time. People were encouraged to head out to protests, take time for self-care, or do anything else they feel called to do. “The moment calls us into the streets and to slow down, simultaneously,” one of the partners shared. This decision is very much aligned with the overall values of their business and what they created the business to do.
I felt joy and excitement rush from my feet to the top of my head. This is why I chose to focus on serving mission-driven businesses. I believe that if we all can harness and focus on our individual talents, as a collective, we can create the change that we want to see. And, by the way, this business generates significant profit. They are proof that companies can combine positive social change and financial success.
Right now, it feels like we’re at a significant inflection point. And yes, we have been here before. But I’m seeing awareness and acceptance that can create meaningful action. I’m hearing from people who want to serve a higher purpose through entrepreneurship. If you feel like you’re being called to create or run a mission-driven business here are four fundamental elements to consider.
“Follow your passion” has become a bit of a cliché, and I definitely agree that passion is not enough to sustain a business. But it can certainly help entrepreneurs push through those tough first years. The Bureau and Labor Statistics reports that about 50% of small businesses fail within the first five years. Figuring out what is most important to you and letting that energy drive your action can help you succeed where others have failed.
In his popular TedTalk and book Start with Why, Motivational Speaker Simon Sinek explains why some people achieve things that defy all assumptions. As a matter of biology, he says, all human behavior comes from our limbic brain, that part that’s responsible for feelings and decisions-making. The great leaders of our time — Martin Luther King Jr., The Wright Brothers and Steve Jobs — connect with the limbic system to spur action.
You can do this, too. If you tap into your inner values and motivation, you are much more likely to take action and resonate emotionally; it will feel satisfying to do what you have to do. This is especially important when you consider that staying in business requires lots of little actions — marking, producing, tracking — performed on a consistent basis.
How do you find that inner “why?” Consider these three questions developed by George Kinder and taught at Kinder Institute of Life Planning.
Question 1: I want you to imagine that your company is financially secure, that it has enough money to take care of its needs, now and in the future. The question is…how would you structure your company? Would you change anything? Let yourself go. Don’t hold back on your dreams. Describe a company that is complete, that is richly yours.
Question 2: This time you are sure you will leave the company in five years. There is no reason to assume that the company will go bankrupt in the meantime. Also, there’s no guarantee that it will go well. What will you focus on in the coming five years?
Question 3: This time you are forced to let go of the company right now. Notice what feelings arise in you as you confront the fact that there will be a moment where you have to let go. Ask yourself: What did my company miss? What identity should the company have had? What developments were never made?
Answering these questions for yourself, can help you determine what is truly important to you and what underlying emotions really motivate you.
You can also help flesh this out by clarifying your business values. In the past, I’ve used value exercises online as well as value cards. This gives you a lens through which to make your decisions and also serves as inspiration for you and your employees, if you have them, for what your business is about.
The key is getting to know what you truly value and what truly motivates you, without all the voices telling you what you should do. This is your journey. You should use your values as a lens for future decisions.
After you’ve clarified your passion or why you want to create this business, you move next to your vision. Here you’ll be specific about how your business will embody and reflect your passion. This process is a bit different from the normal vision statement that is commonly thought of as concise, inspiring statements that make good taglines like IKEA’s “To create a better everyday life for the many people.”
I’ve found it more helpful to paint a picture, that is, an actual vision of what you want to achieve. For example, I have a client who wants to write inspirational comic books for young black girls. I asked her to envision waiting off in the wings at Comic-Con International 2022, fidgeting with her good-luck necklace as she looks off stage into a vast audience filled with little girls all dressed up like characters from her books. Her mother and wife are sitting in the front row peering behind the curtain. After she’s introduced, she hears the crowd erupt, as she proceeds to the microphone. She gets to the mic and notices her wife mouthing “I’m so proud of you.”
This kind of visioning usually creates an emotional reaction. The Kinder Institute refers to it as “lighting a torch.” It really stokes the motivation and energy you will need to make your vision a reality. Visioning allows you to see, sense and most importantly feel what achieving this vision would be like. That’s the motivation you will need to take action.
This part of the process will be hard to do on your own and without training, but it may be something you already see in your mind. Here are some key elements of bringing that vision to life:
Include important details, such as people and places important to you, from the passion process
Consider a specified time frame no more than three years out
Take note of the feelings that arise after creating that vision
Sit in the vision. Don’t dwell on any obstacles (we take care of those later).
I like this method because it allows the vision to be flexible. As we will discuss, your vision may change as you continue to grow your business. And that’s okay.
Now that you have identified your why and know your vision, it’s time to start developing a strategy. This is your roadmap for how you achieve the vision you’ve put together. When talking about overall strategy for any business I love the Lean Startup Method. There are several versions of the lean startup method written by entrepreneurs like Steve Blank, Alexander Osterwalder and Eric Ries. I’m partial to the principles and method outlined by Ries in his book The Lean Startup:
Entrepreneurs are everywhere: You don’t have to work in a garage to be in a startup. The concept of entrepreneurship includes anyone who works within this definition of a startup: a human institution designed to create new products and services under conditions of extreme uncertainty. The Lean Startup approach can work in any size company, even a very large enterprise, in any sector or industry.
Entrepreneurship is management: A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty.
Validated Learning: Startups exist not just to make stuff, make money or even service customers. They exist to learn how to build a sustainable business. The learning can be validated scientifically by running frequent experiments that allow entrepreneurs to test each element of their vision.
Build-Measure- Learn (BML): The fundamental activity of a startup is to turn ideas into products, measure how customers respond and then learn whether to pivot or preserve. All successful startup processes should be geared to accelerate that feedback loop.
Innovation accounting: To improve entrepreneurial outcomes and hold innovates accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, and how to prioritize work.
Overall, the concept favors experimentation, feedback and repeated adjustments over elaborate, rigid planning. This method allows you to work smarter, not harder, by developing a minimum viable product that allows you to begin learning about your process or service as soon as possible. In turn, you end up continually testing your vision. It’s a type of “validated learning,” or a rigorous method for demonstrating progress in the midst of extreme uncertainty.
I know this type of strategy may be intimidating for many people, especially if you’re a perfectionist. But building a business is more about progress than perfection. This progress and adjustment will help you get closer to your overall vision, even if you’ve pivoted from your original vision.
Finally, we talk about the minutiae. In other words, what steps and actions will you actually take within your strategy to accomplish what you need. That will include looking at elements like your ideal client, your ideal day/week/year, as well indicators you will use to measure your BML feedback loop.
I encourage you to focus especially on where the money goes. You’ll need an accounting system that helps you quickly and effectively keep track of money flowing in and out of your business. Additionally, this system should ensure profitability.
I’ve always been a huge fan of the bucket system of accounting, where you have separate buckets for different types of expenses. This method for businesses was popularized by Mike Michalowicz in his book Profit First but is in line with many other methods like the envelope system, David Bach’s Automatic Millionaire and Elizabeth Warren’s 50/20/30 budget. In short, the method separates a percentage of business revenue into different purposes such as:
Michalowicz offers benchmark percentages based on business revenue. For example, a business with $250k – $500k in what he calls real revenue (top line revenue minus material and subcontractors), would have the following split:
Operating Expenses – 40% of revenue
Owners Pay – 35% of revenue
Taxes – 15% of revenue
Profit – 10% of revenue
You can also get benchmarking data from accounting software like Quickbooks (which is still important to have).
This is a cash system, so you can see in real time how much money you have in each category. Overall, the system works because having a finite amount of money causes you to act accordingly. It also reinforces the concept of the business should provide for you and your clients, allowing you to make a difference in their lives and also give you the life that you want.
These simple tweaks make a big difference. One client came to me with $1 million in gross revenue but was also deep in debt. In less than a year, we were able to pay down most of the debt, create a safety net for the business and improve his business and personal financial position even during the COVID-19 pandemic. This separate structure has also been helpful for clients keeping track and separating Paycheck Protection Program (PPP) funds and Economic Injury Disaster Loan (EIDL) funds.
I hope this helps give you guidance on structuring your business to maximize profit and purpose. We need mission-driven businesses now more than ever to help heal the wounds our country currently has.