A new campaign to encourage start-ups to pledge a percentage of their proceeds, upon exiting, to helping others, has been launched.
Entrepreneurial Giving (EG), hopes that by encouraging entrepreneurs to embed purpose into their early-stage business strategy, it will help them succeed – and improve the negative image of the commercial sector.
Founder, serial entrepreneur and philanthropist Maurice Ostro OBE, thinks EG will help to change the prevailing emphasis on short-term profit maximisation at any cost, and encourage entrepreneurs to compete on how much social benefit they can generate as well.
Maurice said: “There needs to be a correction in the way we measure success in today’s society. We need to focus not only on what we make but on how we make it, and the impact on others. This will be good for the success of the business as well as the country.
“Today’s entrepreneurs are tomorrow’s change makers and if we embed a sense of purpose in them and their companies then we can look forward to a future where business is seen by wider society as working for their benefit too, which will help heal some of its divisions.”
EG will offer start-ups that are registered as a limited company a free, tax-efficient way of pledging. Members will join a community of like-minded business owners, learning the best ways to ‘do good to do well’ and receive on-going business-building advice. EG will also monitor statistics and produce regular reports to gauge its long-term impact.
Research shows that companies with purpose can often achieve better financial results than those without it. That’s partly because Britain’s modern workforce wants to do something more than just have a job that pays the bills.
The 2016 Millennial Survey by Deloitte, found nine out of 10 millennials said they want success to be measured by more than just financial performance.
Government statistics, revealed last week show that there are currently 1.2m SMEs that describe themselves as socially orientated out of an SME population of 4.8m.
Giving back is a sentiment that’s shared by a growing number of small businesses.
Helen Morris set up Shoreditch-based marketing firm Samsara Communications last year to meet a need in the booming wellness industry for strategic marketing.
Helen said: “Mine is a purpose-driven business – my mission right from the start has been to empower small wellness businesses by publicising the positive impact they are making in the world, whilst still aiming to be profitable and keep growing. I believe the two elements – having a positive purpose and profit – can happily co-exist. There’s an increasing appetite amongst consumers to buy into conscious brands and companies and Entrepreneurial Giving is facilitating that shift.”
Manchester-based Jayne Hynes, who runs frozen baby and children’s food firm Kiddyum, already donates to family charity HomeStart UK to help provide breakfast and support for families on low incomes and to food waste collection charity Fareshare.
Jayne said: “From the word go I wanted Kiddyum to support children’s charities and give back to society. It’s been important on a number of levels and the charities we chose fit well with Kiddyum’s mission to provide fresh, healthy food with less waste.”
Meanwhile, the UK sees an average of 600,000 new companies registered at Companies House every year, according to national enterprise campaign StartUp Britain. While not all of these become long-term businesses, it demonstrates a start-up trend that is not going away.
EG stands out because it’s targeting these commercially-driven firms as opposed to just social enterprises. It aspires to create real change by encouraging them to measure success on their social impact and not just on profit.
Maurice added: “This isn’t just about a few tech businesses donating large sums of money. We aim to inspire businesses from all sectors across the country to use their success to support their local communities.”
“The opportunity exists to change the business culture over time to one where social impact is an equally important measure of success as profit. If we achieve this, it will be a good day at the office for all of us.”
The campaign is backed by top entrepreneurs including Lord Bilimoria, founder of Cobra Beer, Emma Jones, founder of Enterprise Nation, Michael Hayman, co-founder of campaigning consultancy Seven Hills, and Lord Young, former trade minister and enterprise adviser to the government.
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