Is a B Corp right for your startup?
At SouthFound we have been seeing a rise in the use of the B Corp designation when startups formally organize their business. Before you rush of to jump on the bandwagon let’s make sure you understand what a B Corp is and if it is right for your startup.
What is a B Corp?
A B Corp is a certification/designation that companies can obtain that demonstrates their company’s focus on doing good. They are for-profit companies that are also very focused on operating their business in such a way that they see solving social and economic issues to be just as important as making money.
Another way of thinking of a Benefit Corporation is that is has a built-in mission within its corporate culture to provide a benefit for it customers and the general public. For example, the company might use sustainable practices in growing the food that it sells.
According to BenefitCorp.com there are currently 36 states that recognize Benefit Corps and about five more that are working on the certification.
There are some well-known companies that have had the B Corp designation for quite some time. For example, Patagonia and Ben & Jerry’s Ice Cream.
Is a B Corp right for you?
Operating under the B Corporation certification brings both positive and challenges with it.
For example, for those consumers that know what the certification means it can be a good marketing tactic. Having the certification can also help steer internal debates and decisions. While the stakeholders of a C Corp should make decisions strictly based on the financial impact to the company, B Corporation stakeholder decisions are not strictly tied to profits.
On the other side are the challenges. As I stated earlier not every state recognizes the certification. Being a Benefit Corporation also means that your company will be required to pass additional audits.
Most of the startup founders I have talked to that went for the B Corporation certification did so because they wanted their company’s mission of social good to be clearly evident to their customers.
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Next up I will be talking about the four step process we recommend for establishing an online brand.
P.S. If you looking for tips on how to meet investors, what they look for in a startup, and more check out our Funding Power Pack.
