The pandemic has been an eye-opening journey for many businesses and individuals.
As they recover from the economic impact of COVID-19, some businesses are looking to rebuild not just economically, but to build back better by introducing purpose into their models.
“People are looking for some answers right now, and one of the places that they turn to is business,” said Jonathan Liebert, CEO of the Better Business Bureau of Southern Colorado. “They’re looking to see what businesses are doing — are they stepping up for important social and environmental issues? Are they speaking out on social justice?
“People are paying attention, and they want to do business with people and businesses that are aligned with their morals and their values,” said Liebert, who also heads the Colorado Institute for Social Impact.
They’re looking for businesses that not only support the local economy but make a difference in their communities.
Business models are evolving in recognition of this soul searching.
Some businesses have embraced a social impact model, which begins with a social or environmental purpose that is built into the fabric and DNA of the company, and which is supported by the company’s revenue, Liebert said.
A local example is Mountain Equipment Recyclers, which sells quality donated, consigned and retail outdoor gear and uses the proceeds to support local charitable organizations, especially those that seek to preserve the environment. One hundred percent of its net profits are donated to charitable causes.
Other entrepreneurs are adopting a purpose-driven model — a broader concept that uses a business as a vehicle to address a particular value or social initiative.
The value or initiative “is not the reason they exist, but it’s very close to what they do,” Liebert said.
The purpose-driven model is becoming more and more popular with consumers,
A 2020 study by the IBM Institute for Business Value found that 40 percent of customers seek products and brands that align with their values and lifestyle, and they’re willing to change their shopping habits to support them.
Business leaders also are recognizing the value and importance of the purpose-driven model.
Communications consultant Porter Novelli surveyed 150 business executives in July 2020.
The majority (85 percent) agreed that it is no longer acceptable for companies just to make money; companies must positively impact society as well.
Nearly 89 percent of the respondents said companies that lead with purpose have a competitive advantage in today’s marketplace and enjoy benefits ranging from retention of employees to increased customer loyalty and improved financial performance.
The bottom line, the survey found, is that “purpose-driven business is smart business.”
Another way of looking at this movement is to call it stakeholder capitalism — whereby a business evaluates its impact not just on shareholders but upon all of its stakeholders — employees, partners, other businesses and the community.
A good place to start is with employees, Liebert said.
The cause espoused by a business may be important to the owner or the board, “but is it something that’s important to your employees?” he said.
“We’ve worked with organizations where they never really explained it, and their employees are super confused. They’re like, ‘Why are we giving stuff away? That could be my bonus,’” he said.
Employees need to know that a social or environmental purpose is a well-thought-out business strategy, based on commitment to the community, that can attract more customers.
“Business owners or companies that engage their employees in the process … create a different culture. ‘You get to pick the charity; you get to volunteer for the charity you choose; you get to sit on the committee that decides where the funds go’ — those are all great ways to engage your employees,” Liebert said
A second consideration is the relevance of a purpose to the community and its appropriateness and fit for the company.
A business that wanted to address homelessness, for example, could start by giving to organizations that support the homeless. While that’s a good first step, to be truly purpose-driven, a business would do a deeper dive — “getting educated on it, sitting down with those nonprofits and figuring out the best way to, in tandem, solve those issues,” Liebert said.
The Colorado Institute for Social Impact has been a leader in developing and refining the concept of social return on investment.
Knowing SROI not only guides a successful and sophisticated purpose-driven strategy but also helps a company tell the story of its mission or purpose, Liebert said.
Eclectic CO, a retailer of local, sustainable and handmade products, was born out of a belief that artisanal makers and microbusinesses should have a central home that is profitable and allows them to thrive, owner Peri Bolts said.
“Creating an incubator for small and microbusinesses that often have a social or environmental purpose themselves is really the space that we occupy,” Bolts said. “We try to keep social impact at the heart of what we’re doing.”
The company’s store in Downtown Colorado Springs and a recently opened second shop in Old Colorado City also house businesses that keep materials out of the waste stream or carry exclusively fair trade products, she said.
Bolts and co-owner Ani Trejo have always planned for the business’s growth and weren’t deterred by the pandemic when they found the Old Colorado City space and decided to open the second store in November.
“We continue to have quite an extensive waitlist,” she said, “and we knew that there were more artists in Colorado Springs that we weren’t serving.”
Even with the pandemic and nine weeks of closure, the company grew 25 percent in 2020 over 2019, she said.
The company charges competitive rents to the artists and takes a small percentage from sales.
The stores have developed a customer base of people who are conscious of Eclectic CO’s mission and values.
“We’ve seen the conscientiousness behind shopping local and shopping ethically,” Bolts said. “It’s just really invigorated, especially since the pandemic. I think Colorado Springs uniquely supported small business and really made a focus around that, and it really hasn’t slowed down.”
Red Leg Brewing Company, a veteran-owned and operated business, has parlayed its mission to be “the craft beer of the military” into an enterprise that’s about to move from rental quarters to an $11 million taproom and event venue on Garden of the Gods Road, nestled against the foothills.
When Todd Baldwin started the brewery in 2013, “I couldn’t get a bank loan because I had no business experience,” he said. “I had just gotten out of the military. So I took out 18 credit cards and I balanced $250,000 in credit card debt.”
Over time, through the development of award-winning products, distribution to military bases throughout the country and extensive community outreach, Baldwin achieved his goal of owning his own building.
He expects the new facility to open sometime this summer on 2½ acres of property. It will include a 12,000-square-foot brewing area, a tasting room with a rooftop deck, a pavilion where 12 shipping containers will house local food vendors and a 1,000-seat outdoor music and event space.
“We wanted to build a project that was so unique that only someone local will be able to take on a challenge like this — a challenge that we thought our community would really like,” he said. “That only comes from responsible local development.”
Baldwin said his personal mission statement is that “community cultures are defined and maintained by small businesses.”
That statement reflects Baldwin’s philosophy that his company has a large responsibility “to be a good employer, to take care of our neighbors and to give back.”
Red Leg has raised hundreds of thousands of dollars for multiple charities, many of them connected in some way with the military.
Last week, the company sponsored its first charity running event at the new facility and raised $21,000 for Angels of America’s Fallen, an organization that supports the children of fallen service members.
“At the end of the day, it comes down to relationships,” he said. “If you’re not willing to have a relationship with your customer, with your community, with your employees, then your business is going to have a tough time continuing to grow. And when I say community, I also mean the community of business owners.”