Purposely is a response to the government’s Mission-Led Business Review, which found that few companies realise they're legally able to embed purpose into the heart of their business. It's been developed with the support of government and with input from Companies House.
What’s the purpose of your business?
There are many entrepreneurs, ranging from small café owners to large manufacturers, who set up their business not only for profit but also to deliver wider benefits to society. They run their businesses with a strong sense of purpose. This purpose might be to provide valuable products and jobs for local people; to be the most innovative company in its sector; or to provide affordable housing.
22% of UK small and medium sized enterprises (SMEs) have a specific social or environmental goal – that’s over 1.2 million enterprises. Purpose-driven businesses represent over 4% of the economy, with a combined turnover of £165 billion.
Purposeful companies perform better
The question you might be asking is, will my business take a hit if I put a strong emphasis on purpose? Encouragingly, there’s increasing evidence that businesses committed to a clear social, environmental or economic purpose, outperform their counterparts. Research shows that a strong sense of collective purpose can drive employee satisfaction, customer loyalty and long-term shareholder value. According to Message House research for UnLtd in September 2017, entrepreneurs believe that a clear purpose can help their companies to focus, attract clients and differentiate themselves from the competition.
This sounds positive, in theory. But, how do you know whether a business truly acts in accordance with its purpose, or is just using talking about purpose as a PR hook to attract more customers? There's a risk of ‘purpose’ becoming a new buzzword. Message House research in January 2018 shows that 40% of the public believe purpose is just used for marketing and corporate spin.
This is why there was a compelling need for a tool which helped founders to ensure that their commitment to the mission remains at the heart of the company as the business grows.
How to embed purpose in your business
Most start-ups are unaware that company law already allows them to put purpose into the DNA of their business – in their company articles. Embedding purpose in this way has a profound impact. It allows founders to fundamentally redefine success for their business.
You can put the interests of employees, beneficiaries or other stakeholders on a par with shareholders’ financial interests. Specifying a purpose beyond profit places a duty on directors to take decisions in line with that purpose. It represents an unambiguous commitment and underpins authenticity to internal and external stakeholders. It helps a company to encourage a set of cultures and behaviours that matter to you as the founder.
This flexibility in company law is a brilliant, but so far underused, opportunity. Even the few founders who are aware of it find it costly and time-consuming to create bespoke articles.
To make things simpler, we created Purposely: a free and simple-to-use online tool that helps you incorporate your purpose into your articles. You will be prompted to think about your company’s purpose and how you would like to build it into your business. Based on your responses, you will be presented with amended company articles suited to you. If you decide to adopt these, you can then submit them to Companies House.
Benefits of embedding purpose
Speaking to a variety of business owners over the course of our research really brought to life the challenges faced by a founder with a clear purpose.
One young business owner was worried what would happen to the strong ethos and social mission of his business as his board and team grew. Another founder was looking for significant equity investment to scale up their businesses. It was crucial to find the right kind of investors who knew what they were buying into and accepted that the purpose was integral to the business.
In these cases, and many others, embedding your purpose into your articles can give your business clarity and strategic focus, while protecting your purpose. It means you attract the right kind of talent, the right investors, and clients who buy into your vision.
And that might well be what it takes for your business to outperform its peers.
Find out more about why and how to incorporate your company’s purpose at www.getpurpose.ly