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All private businesses aim to make a profit. That much is obvious. But what about having a purpose beyond only profit. Here I want to talk about a "purpose driven brand" and potential pros and cons. If you were to sum up what a purpose driven company is, then you could say it's being able to "do good while doing well".
Most businesses use profit as their prime tool for guidance, it affects the vast majority of decisions and is a key focus. But what about the idea of letting another purpose dominate decisions. To boil it down to a super simple scenario. Imagine being a retailer and you want to stock a particular product type. It will retail at £10. You have two choices when buying the stock in, one costs £5 per piece and one costs £6 per piece. In this scenario most businesses are going to go with the one that costs £5 because their profit will be higher. But what if the one that's cheaper is made of materials that are more harmful to mother nature, won't last as long as the more expensive one, and is shipped from the other side of the world. If a business also has a purpose of making the world a better place by stocking more sustainable and eco-friendly products. Then all of a sudden the more expensive product comes into play. In fact if sustainbility became the businesses core focus, then the more expensive second product becomes the winner.
What are the benefits of being a purpose driven brand?
Here are a few benefits I can think of:
- If you run a small business and it's a reflection of you, then you're likely to feel even more proud of it if is driven by a noble purpose.
- There's potential to get business growth from it. For example in my example of having sustainability as a driver, you could get free marketing off the back of that, and it could make some people more likely to shop with you and even become loyal customers.
- You reduce the risk of consumer backlash. With consumers now more savvy than ever, major companies can feel the wrath of consumers when they are ousted for practices that are badly damaging to either society or mother nature. Whether it's huge levels of tax-dodging, using excessive plastic, or not investing in sustainable energy and prefering planet-killing forms of power instead.
- Having a purpose can make a brand stand out and make it feel more unique. The mindset when creating products or services can be different thanks to the purpose that's driving it and that can lead to innovation and unique ideas.
What are the downsides to being a purpose driven brand?
- Immediately the one that springs to mind is without a brutal focus on profit, you will reduce the profitability of your business in the short-term. As mentioned above there can be long-term benefits which may actually result in higher profits, but that's the long-term.
- You are likely to face greater challenges compared to being solely profit driven.
- If your business is driven by a noble purpose you will have to maintain the standards, if you have a high status with people who think you're a sustainable business and then you slip up you could feel a huge backlash. Whereas a company that always makes no effort to be sustainable won't feel the same problem because consumers are used to it making no effort.
- You may end up forever juggling lots of things because you have more than one driver in your business it may pull some decisions in opposite directions sometimes.
A big thing for me with all of this, is that there's one thing to say you're a purpose driven business and another to actually be one. As an example, it can provide easy PR wins for big companies to say they're reducing their plastic usage. But is it truly a driver in their business or simply a temporary attempt to avoid consumer backlash? If you want your business to be purpose driven think deeply about it and make sure that it's purpose seeps into it's very bones. It's the sort of thing that can look reasonably easy when brainstormed on a piece of paper, but is often harder in practice.
If you're interested in this topic like I am, then you'll find plenty of books available to buy. They will allow you to delve into it far more than any short online article can do.