The B Corps phenomenon has arrived from the States and has the potential to make a huge impact in the UK says Jim Duffy
When your mind is made up about something and you are set on doing it, there’s literally no stopping you. You make a plan with sheer determination to achieve something, make a change or create something new. Something sparks in you and you feel that you just have to do something about it – on your own or with others. But, what about when you want to create or change something and you need a business model or structure to make it happen? What about when you have a social cause or driver and it needs to be formalised to attract the correct funding and resources to it?
This is exactly the dilemma that the social entrepreneur faces. Usually, but not always, the social entrepreneur is pretty unsophisticated at the beginning. So, we just get started and meander our way through. Then, the choice of options opens up and can be fairly daunting. In fact, the landscape of social enterprise is vast and can be a minefield if not considered with care.
There is the traditional social enterprise model. This is where the social entrepreneur creates a company limited not by shares, but by guarantee. The company has no shareholders, pays no dividends and the value created is more social than financial. It is still set up as a formal limited company and has to report its accounts to HMRC and Companies House. But, the key differentiator between it and a for-profit company is that there is no exit or sale value. It is limited by what it can do with any excess funds and, indeed for many, this can present a problem. I know of several social enterprises in Scotland alone who have millions in surplus and it just sits in the bank and on a balance sheet. Not ideal…
There are further iterations of the social enterprise, including Community Interest Company (CIC) models where a percentage of the surplus can be distributed as dividends. It’s probably best to consult a good lawyer, Google or umbrella organisations for social businesses – there’s lots of good material out there. But, something has caught my eye. There is a new kid in town that is open for business that will attract a great following and be attractive for many entrepreneurs, social or otherwise. It’s innovative and provides greater flexibility for the social venture to grow. It’s called B Corps. Like most new inventions, it has come from the US and has a real following there, while gathering pace here in the UK.
Essentially, B Corps is a profit for purpose social enterprise. It allows the social entrepreneur to be more entrepreneurial, while cementing the values, mission and ethos of the business into the legal stuff. Entrepreneurs don’t hang around forever. Your typical entrepreneur wants to build something over a three to eight year period and then punt it. They usually work like Trojans in this time period and then jump off with a pocketful of cash. I’m reminded here of an image I see on social media platforms that reads: “Entrepreneurship is living a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t.”
The B Corps entrepreneur may also not want to go on forever – the clue is in the name. So, the B Corps model is ideal for maintaining the vision of the company, should the founder move on. If an entrepreneur exists for profit, then the buyer can essentially do what they want with it - change and tinker with it. However, not so with the B Corps model. The buyer, or new CEO assuming the company has not been sold, must carry on with the initial vision that is burned into the soul of the company – legally and culturally. A great example of this is the acquisition of Ben and Jerry’s ice cream by Unilever. Ben and Jerry’s was and is a B Corps and while Unilever bought it, this B Corps company has remained focused on social as well as commercial objectives. It has not lost its identity, nor the strong connections with its stakeholders: it is still a socially responsible business that generates a healthy profit. Contrast this with the Kraft takeover of Cadbury and you can see a big difference… not just in the taste of the chocolate (allegedly).
The Scottish Government recently invited a B Corps guru to speak at the Scotland Can Do annual conference. Bart Houlahan was inspirational and certainly caught the eye of many Scottish businesses – not least my own social enterprise, Entrepreneurial Spark. Bart co-founded B Labs, which is the global body that certifies a company with B Corps status and monitors this to ensure standards. It’s a bit like your company getting the Fair Trade stamp - you have to be cognisant of what it means and live and breathe it. It’s not just a stamp like a car MOT, only as good as the day the test took place. It is constant, needs to be worked at and ongoing.
I’d like to see more Scottish and UK companies of all shapes and sizes considering B Corps. Whether just starting or already way down the road, it makes no difference. All it takes is a mindset shift and a willingness to change and become part of something which I believe will be special. It sends out a signal about who you are and what your company represents. For me, a business framework where we can explore all kinds of new commercial and sustainable models, while being constantly consistent on developing our social purpose in bringing about positive social change.
• Jim Duffy is the Chief Executive Optimist of Entrepreneurial Spark