Let me start with a story.
We started wanting to do good, really.
When I first incorporated as a company on 5 June 2020, the purpose was to support those with mental health challenges to recover.
To those ends, we collaborated on a kitbag from Scotland’s International Futures Forum, and even created a set of postcards to encourage people during the difficult COVID times.
But we made all of $116 in our first year of business. It made for nasty reading.
We were stubborn. In 2022, I stuck in and insisted on doing more projects for social good. This time, we wanted to be funded by grants.
We ended the year in the black, but just barely.
That’s when we began to think differently about business.
We wanted to understand if there was anything we were missing, and whether we were just blind.
Here’s what we learnt, and what might be helpful for you, especially if you’re a small business (under 100k yearly revenues) in Singapore.
Corporate purpose is not ESG
You can see NVPC explain this clearly below.
Different purposes at different points
One of the key questions I had was,
How do you balance profit and purpose, if you’ve barely any money to survive?
When I asked this at the joint session with PWC, the consultant there politely told me how perhaps there were different journeys to be taken at different points.
Corporate purpose can feel like another exercise like ESG, where it looks and sounds good, but it doesn’t do much.
That’s why if you’re just starting out, profit can be a pretty good purpose.
Trying to do both profit and purpose may leave you chasing two competing priorities, going everywhere, but getting nowhere.
Take it from me.
We tried to do both profit and purpose, and found ourselves hopelessly lost and floundering.
You can simply look at the above numbers to see how badly we struggled in our first year of business. We tried to do things for free, like providing training on mental health, but found ourselves close to eating grass.
Don’t get confused about your business model
Over the course of my work, I interview founders of many different businesses and social enterprises. Those that I’ve found have really, really struggled, are those that try to do good and make money.
You will often find them griping at the back of another workshop by the likes of RAISE, or founder networking events, at how the market is ‘against’ them because of how the government grants fund much of the work from charities, which are then able to sell them onto potential clients, for a much, much lower fee.
What’s more, they have a charity status to boot!
Who wouldn’t buy them?
That means your business model is screwed.
With a capital S.
No, scratch that.
Capital everything. SCREWED. If your business model is competing with charities that have grants to subsidise costs and more experienced experts, why should anyone buy from you?
The marketing may not really work
I’ve not had a single client who’s bought me just because I’ve said I’m a social enterprise.
And for those who say you should start with why (aka Simon Sinek fans), once again, I’ve not seen that work. Unless you’re a company the size of Apple.
When you’re a startup, you need to first have a great product, before you try to communicate that through your marketing.
Hat tip to Michael Port, the CEO of Heroic Public Speaking, and author of The Referable Speaker for sharing this.
Marketing may get you your first customer, but not the customer that’s retained in your business, because of how great he finds your service or product.
Ultimately, corporate purpose may explain why, but you need to let that ‘why’ permeate how you think about your products.
Call me stupid, but I’ve not figured out how to make purpose flow through into my product creation process.
When you’re penniless, you might not think that much about purpose
We like to think about high and mighty things like purpose, but just as you can see in Maslow’s hierarchy of needs, if your basic needs are not fulfilled, you might just not be able to fulfil your other needs.
How do you make a business that works?
First be clear about what your ultimate priority is.
I remember showing my entrepreneur friend a copy of my first product, the postcards, which he then remarked,
Are you trying to make money?
I had no answer.
Frankly, I thought I was.
But it was clear that no one bought postcards, and no one even sent them anymore.
And when you first start, it should really be about how you’re going to make money.
The purpose can come later.
Mike Michalowicz talks about this in his book, “Fix This Next”, where he shares how companies should really focus on the sales first, before everything else.
But we like to distract ourselves with the next shiny thing, especially when ‘experts’ on LinkedIn talk about purpose.
Just ask them how many million dollar companies they have started.
Don’t look at their CV. Anyone can come into a company and run a system.
Starting a system from scratch takes an entirely different set of skills that just aren’t intuitive.
Be relentless about the product
After 3 years running a sweatshop doing a little of everything, we’ve come to realise that the core, core, product needs to be the best in the market.
That’s when people will continuously be amazed by what we sell.
And they come back.
Refer their friends.
Rinse and repeat.
If you know what you sell, and why people buy that, you will build a business that works.
Over and over again.
Just ask yourself about profit, product, first, before you think about the purpose.
Maybe that will work better.