In 15 seconds

• Mission-driven businesses abound and are multiplying fast.
• They are so mission-driven that they aren’t talking to each other or about their work.
• The result: loads of profitable market opportunities remain untapped.  

In 5 minutes

There’s no taxonomy for mission-driven business

Most governments have coalesced around neatly defined structures that fit most of the needs and situations of profit-driven companies. Business taxonomies abound for profit-oriented entities: limited liability companies, corporations, and the like. Non-profits have clear contours and global recognition too.

But mission-driven businesses? They’re in murky waters. Legal structures catering to their unique needs are at best scant and arduous to secure. The lack of legal clarity trickles down into confusion in everyday language. Terms like social enterprise, ethical enterprise, sustainable business, and mission-driven mean different things in different countries and to different people.

Nearly no one is teaching – or learning – mission-driven business

Business schools attract top talent and prepare them to fulfill profit-driven missions. Precious few of these high-potential individuals are trained to drive a mission alongside profits. Many of them may even see mission and profit as opposing forces.

That’s where mission-driven idealists would agree with them. Idealists who want to make the world a better place often imagine profit as contrary to their goal. They are accidental entrepreneurs with no formal training, and their foray into the business world is incidental to their overarching mission. There’s not a lot of places they’d feel more out of place than in business school. Ironically, the business training that feels so icky to them is precisely what would equip them to take their mission-driven enterprise to the moon. Without it, they are at a dire disadvantage.

Mission-driven businesses lack role models

Corporations look up to the likes of Microsoft and Facebook. Non-profits stand on the shoulders of the Red Cross and Doctors Without Borders. But can anyone name an equally recognizable social enterprise? Mission-driven entrepreneurs are bereft of success blueprints. Those who’ve etched success stories, a la Patagonia, often don dual hats—projecting a corporate façade while fiercely guarding their mission-driven ethos. Effective? Yes. And given the lack of alternative pathways, who can blame them for taking that route? Nevertheless, this duality makes it challenging to establish a unique identity for mission-driven enterprises, ultimately slowing the mainstreaming of the notion of mission-oriented success.

Mission-driven business models aren’t simple

The most successful businesses employ a straightforward business model: market to Sarah, receive payment from Sarah, deliver promise to Sarah, improve delivery based on Sarah’s feedback, earn Sarah’s brand loyalty, and gain referrals from Sarah. Sarah’s presence throughout creates a virtuous cycle of ever-strengthening connections between Sarah and the brand. iPhone is a perfect example here – once Sarah enters their ecosystem, entropy keeps her there – and she likes it.

In mission-driven businesses, the client paying and the client receiving the product or service are often not the same. For example, Sarah the grantor pays, and James in a community far away from Sarah receives. In this scenario, Sarah’s brand loyalty and referrals are not a function of the business delivering on their promise to James, responding to his feedback, or building his loyalty. Suddenly, the business is divided between two masters with different metrics for success and different worldviews. To be successful, the business must keep both happy.

As if that weren’t enough, mission-driven businesses are continuously balancing conflicts of interest. Is diverting funds away from the front lines to recruit top-notch leadership a great investment in future impact, or a moral digression? What about diverting funds away from the front lines to pay more for eco-conscious and fairtrade inputs? As we said in our last article, these same questions are rarely asked of profit-driven businesses.

Mission-driven businesses are more vulnerable to market fluctuations

While profit-driven companies tend to focus on clients with reliably high purchasing power, mission-driven enterprises are more likely to serve clients with lower purchasing power. When the economy is struggling, their clients are more likely to become unable to afford purchases.

What’s more, to keep their offerings affordable to their clientele, mission-driven businesses often operate on razor-thin margins. That means even small changes in the prices of their inputs – be that materials, logistics, or staff – can put the business in the red.

Complexity repels funding

Business investors and buyers look for simple, straightforward business models with low vulnerability to market fluctuations. And they aren’t the only ones – loan officers, credit card providers, angel investors, and even government grantors look for low-risk models with high chances of success.

These would-be stakeholders use nearly universally known and acknowledged financial reporting metrics — such as labor efficiency ratio, net revenue, profit & loss statements, and EBIDTA — to evaluate businesses. These metrics are excellent tools for evaluating the health and progress of profit-driven enterprises. For many mission-driven businesses, however, they miss the mark.

And yet there’s no better alternative. Mission-driven businesses find themselves in limbo; their financial needs aren’t met by the gold-standard metrics, and their unique financial reporting often leads to misalignment with standard practices. They are left footing the bill for customized M&E reporting and assessments of their rippling, often cross-generational impact built in the absence of a counterfactual scenario – costs that never even cross profit-driven enterprises’ minds.

Complexity repels service providers

Most businesses have service providers clamoring for their attention every day, offering to address pain points they didn’t even know they had. Consultants, strategists, advertisers, marketers, accountants, fractional officers, software designers, public relations managers, software services, social media influencers…the list of business-boosting services tailored and targeted toward a particular type of profit-driven business is nearly endless.

The brave few targeting mission-driven businesses with their service provisions are, on the other hand, are, well…few. Very, precious few. Much like funders, service providers need a business model they can understand and act on relatively quickly to keep their prices affordable and their clients impressed. Mission-driven models’ complexity makes servicing them harder. So mission-driven models are more often left to do it all on their own.

Mission-driven work attracts people with money hangups

Mission-driven businesses’ thin margins and desire to direct as much funding as possible toward the front lines means that they tend to lag behind industry-standard pay scales. Being underpaid is a turnoff for most highly qualified individuals, and mission-driven organizations tend to miss out on top talent. There is one subgroup who likes the idea of being underpaid for a good cause, though – mission-driven people with money hangups.

These individuals feel acutely the rife injustice of the world, and they sense that money is one of the big drivers of that injustice. They have a high aversion to spending on ‘non-essentials’ and would feel guilty about earning ‘too much’ money, particularly if it seems to be at the expense of advancing their mission. Ensuring they never have too much purchasing power reassures them they are not part of the problem and helps reconcile the guilt they feel about tragedies they can’t change. For these people, joining a mission-driven team for less money than they could earn elsewhere is a perfect fit with their value system.

As a result, mission-driven teams are composed nearly universally of people who dislike, fear, or just plain avoid money. The inherent belief that profit and mission are antithetical ultimately becomes an obstacle for advancing the organization’s mission. The hesitancy to make ‘too much’ money, combined with a commitment to never spend business funds on ‘non-essentials’, reinforces the vicious cycle of deterring top-tier talent, service providers, and funders. Over time, insufficient overhead spending translates to massive losses in impact – certainly not what any of the team members sacrificing their financial stability for the mission would have intended.

Mission-driven businesses are too self-effacing

Some of the ‘non-essentials’ that mission-driven businesses choose not to spend on are networking, marketing, and communications. Driven by their cause, these individuals might even feel guilty about looking up from their work long enough to even talk about what they are doing. That undivided focus leads to siloing that stymies progress toward their goals. They continue to go it alone, unaware of similar initiatives, potential collaborations, outstanding service providers, and growth opportunities that could exponentially amplify their impact.

And so the 11 million mission-driven businesses worldwide still have no unified voice, no shared terminology, and no shared identity. They continue to make do in the absence of dedicated academic courses, informed marketing strategies, and aligned financial metrics. Even successful mission-driven enterprises remain largely under the radar of governments, business associations, educational institutions, funders, lenders, service providers, top talent, collaborators, and other stakeholders that could change the game if only they knew about the 11 million players already on the pitch.

Let’s change that.

None of the problems that blight mission-driven enterprises are inherently impossible to solve. The robust ecosystem that thrives around profit-driven businesses is evidence of the ingenuity that is supplied when the market demands.

Reversing the vicious cycles that drag down mission-driven enterprises begins with finding a leader. Mission-driven businesses need to band together. They must find a unified voice, a shared banner, and leaders and role models from within their ranks. These leaders have made it against all odds, and they have the time, funding, and platform to represent the mission-driven community to the outside world.

One key to successfully building this community will be engaging the burgeoning number of businesses for whom mission is a co-benefit rather than the central tenant of their existence. As our high-carbon economy has become increasingly costly, the market has birthed business solutions that reduce consumption and emission of carbon. While these businesses may be primarily profit-driven, the fact is that they have done much to advance a crucial mission. The mission-driven community must encourage, welcome, and offer tangible benefits to these businesses; they are uniquely positioned to help reverse some of the most tenacious downward cycles that limit mission-driven enterprises.

Next, under the guidance of their leadership, the mission-driven community must learn to speak to the outside world in its own language. The goal is not to convert everyone to mission-driven idealists. Rather, the mission-driven community must demonstrate its tangible value and demand the support mechanisms that will help ensure its success.

The first demand to be made is legal business taxonomies aligned with the natural structuring of mission-driven enterprise. In many countries, these taxonomies may look something like those built to accommodate religious institutions. The establishment of legally unique structures will give footing to financial mechanisms, including loan underwriting, built to suit those structures.

As the mission-driven community gains recognition with legal and financial entities, educational institutions and service providers can help accelerate their progress. Business schools have the opportunity to reduce the natural siloing between profit-driven and mission-driven individuals by introducing the profit-motivated to mission-driven business concepts as part of standard coursework, and creating an environment attractive to mission-driven professionals. Service providers can make their offerings more accessible to mission-driven businesses by reducing their upfront risk with commission-based models and flexible terms. As academics and service providers begin to focus their attention on the unique characteristics of mission-driven models, innovations in financial metrics, marketing practices, and other key areas will follow.

 Mission-driven enterprises are proliferating at unparalleled speeds. As these entities grapple with a profit-driven ecosystem, the call for leadership becomes paramount to ushering in a new era where the mission is as celebrated as profit. By articulating their value in globally resonant terms and advocating for tailored legal and financial frameworks, the mission-driven community can shift the lines between profit and purpose.

When mission-driven businesses find a leader, they will be a force to be reckoned with.

Written by: Megan Mayzelle

Written Progress is ready to help you talk about your mission and maximize your impact. Reach out today for a no-pressure complimentary consultation to help you get started.