With climate change high on the agenda and social inequality on the rise, it’s more important than ever that startups consider their impact on communities and the environment around them. Customers, stakeholders and socially-minded investors now demand that startups explain their purpose – the pure pursuit of profit alone is no longer enough. 

Encouragingly, and perhaps contrary to popular belief, purpose doesn’t have to be at the expense of profit. Research shows that mission-led companies experience higher market shares and three times faster growth compared to their competitors, all while enjoying higher satisfaction rates from their customers and their workforce.

The growing environmental need for mission-driven companies in addition to the proven link between purpose and profit creates a compelling case for entrepreneurs. So, what steps should business leaders take to design a profitable, scalable startup with a clear social purpose?

1. Start with your ‘why’

For a mission-led startup, purpose is more than an advertising tool or a way to capture more market share. Instead, a purpose should articulate why the company exists and the problem it aims to solve, and should be at the heart of every business decision. Companies that are truly purpose-led start with their ‘why’, rather than tagging it on as an afterthought.

Take Tesla as an example: the company first started with its mission to accelerate the world’s transition to sustainable energy, which as a result has led to it designing and manufacturing electric cars, solar panels, and batteries, electric vehicles and becoming the world’s most valuable car company. This approach of defining the mission and then working backwards is a blueprint that many mission-led businesses follow, allowing them to orient their business around their purpose, helping to ensure they are true to their core values and goals.

2. Educate your audiences 

No matter how big or important the problem you’re tackling is, it’s meaningless if no one knows about it. A mission’s success hinges on the startup’s ability to communicate the importance and urgency of the challenge to stakeholders, customers, and employees. Without their understanding and buy-in, even the most noble cause will struggle to gain traction.

By creating a compelling story that emphasises the societal or environmental challenge overlaid with the startup’s ambitions, purpose-driven organisation’s can win over audiences and motivate them to be part of a movement.

3. Look to unconventional funding routes

Traditional funders, such as banks and institutional investors, often demand that founders go through time-intensive development stages to prove their concepts, which can lead to funds drying up.

Non-traditional investors – such as fellow entrepreneurs, angel investors, or family offices – give startups access to faster and more regular cash injections, making this a more appealing funding route. These investors can also give startups access to extensive industry experience and strategic guidance, which most traditional investors won’t offer.

4. Walk the walk

In today’s hyper-connected world, consumers and partners have unprecedented access to information about how startups operate. This heightened visibility has led to a shift in expectations, with audiences expecting that businesses not only talk about their values but actively demonstrate them in every aspect of their operations.

Everything a startup does – from its HR policies through to its carbon and water conservation strategies – needs to be done in an environmentally and socially responsible way. By aligning their actions and their values, companies can build trust with their stakeholders, which in turn can open doors to new partnerships, enhance customer loyalty, and drive business growth.

5. Advocates, not customers

It’s essential to recognise that the people using the service or product are more than just customers –  they are emotionally invested in the brand. By spending time and money on a mission-led startup’s products or services, they are actively supporting the change it aims to bring about in the world.

A brand cannot effect change alone; it needs a ripple effect to create a broader impact. This is where the power of mobilising audiences comes into play. When these groups become advocates, they amplify the message and mission, reaching corners of the market that traditional advertising and PR cannot.

To achieve this, companies must invest in creating authentic connections with their audiences by listening to their needs, and incorporating their insights into their business strategies. This collaborative approach empowers stakeholders to become active participants in a startup’s mission, leading to innovative solutions and a more significant, lasting impact.

Prioritise profit, but not at the expense of your values

It’s crucial to remember that purpose without profit is simply a good intention. Only a financially healthy, growing business is capable of making a significant impact and affecting real change.

A purpose-driven startup must therefore turn a profit, but without compromising its mission. This will win the trust of customers and partners, while creating an attractive proposition for investors.

The key is to view profit as a means to further the mission, not as an end in itself. When faced with difficult decisions, purpose-led startups must use their values as a compass to guide them, rather than being driven by profit alone.

Steve Harding is founder and CEO at Showerkap, a pioneering UK tech company on a global mission to change people’s relationship with water. Its unique platform enables businesses to monitor and manage water in granular detail – delivering valuable insights that were previously hidden.