Five taboos purpose-led startups need to dispel to be successful
There is a lot of wisdom that comes from having built up a successful sustainable business from the ground-up. Although I can now attribute them as 'learnings', many purpose-led start-ups perceive them to be modern-day taboos. The truth is, for your startup to not be a part of the 20% that don’t survive beyond their first year, or the 60% that go bust within their first three years, you need to be able to dispel the following five taboos for your startup to thrive.
Money IS important
Let’s start with the biggest and most enduring taboo of all that plagues so many purpose-led, green and sustainability-focused start-ups. I’ve met countless fiery souls who feel so committed to change the world with their business that it’s a taboo to talk about profit. But this can be fatal for your startup.
How are you supposed to develop, produce and sell your product or service if you don’t make any money? Growing a startup is costly. Focusing on your income is a must if you want to survive the first year.
There’s an expectation that green entrepreneurs have bigger hearts than others. That we are all in the game to make a difference for humanity and the planet. That making money is not important at all, and if your business is making good money, it’s better to keep your head low and be a bit ashamed of it.
You have to make a business plan and set financial goals from the beginning. Sustainable products are often more costly than conventional ones, so you need to consider that. How are you going to compete with cheap, conventional products? The gains are going to be more long-term than immediate.
Let’s use our plantable Sprout pencil as an example. You can buy three times as many “Made in China” plastic ballpoint pens for the same price as one Sprout pencil. Still, we have sold over 30 million plantable Sprout pencils in more than 80 countries to date.
We can’t compete with plastic merchandise from Asia and we don’t want to either. We never discount or try to compete on price. We do it our way. We have created a new demand in the market for conscious customers – who have conscious clients and want to be perceived as such.
The takeaway is that making money from the beginning might not be your priority, but it shouldn’t be a taboo either.
It’s OK to shift the focus onto money if that is what will appeal to investors
To make a business grow, it often requires external funding from investors, loans, or possibly even crowdfunding. And this is where it might get difficult for you to get help from investors. If, for example, your focus is merely on the environmental benefits of your product or service, it’s simply not attractive for an investor, who typically has profit as a measure of success.
A study by Warwick Business School showed that green entrepreneurs must balance “what is important to me” with “what is important to them” if you want to attract capital and create a successful business. The researchers of the study followed six green startups for four years, and the conclusion was that entrepreneurs had to balance “what’s in it for them” higher, to achieve success.
Even though it can be frustrating and stressful to focus more on profit, and less on being 100% sustainable, it has to be done. Making your business economically sustainable will allow it to be more eco-friendly - and hence make a difference - in the long run.
Your startup doesn’t need to be built on a brand-new idea to be successful
Good ideas are like gold. People spend their whole lives chasing a good idea. And many use it as an excuse for not launching their business and remaining stuck in the same unfulfilling routine. But here’s the thing: good ideas are overrated. You don´t have to reinvent the wheel to create a successful business. An idea is absolutely nothing if you don´t act!
The world is full of good ideas. We all have them now and then, some even repeatedly. But it just depends on what steps you take to implement it. There are plenty of start-ups and more established players who are wildly successful and achieve great things, not because they had a great idea, but because they are taking products or services that have been around for ages, and just making them better. So don't wait around for divine inspiration for your next great idea because you might be waiting forever.
You do NOT need to go all-in on purpose and sustainability from Day One
Setting ambitious goals are important if you want to improve and move your startup in a more sustainable direction. But goals can be so overwhelming that they prevent you from acting. Instead, break your goals down and into small steps. Ask yourself: what is the first thing we can do right now to be a bit eco-friendlier? It could be small things like replacing all the lights at the office with LED lights. Or bigger things like looking at the production and shipping.
If you have production overseas, it is not always very sustainable. Shipping over large distances uses a lot of CO2 especially if shipped by air. Look into having production closer to your market. Often the higher production costs are offset by lower shipping and easier access and ability to follow production. Also, by having production close to home, it is much easier to make sure production is done under ethical conditions.
The problem with sustainability and being purpose-led is that the issues and challenges can be overwhelming, even for large corporations. For this reason, it often ends up looking like greenwashing, because the goals are so enormous that it can seem impossible. Make a vision board of the company’s journey towards your sustainability goals and place it where it is visible to everyone in the team. And remember that the most important thing is to set partial goals on your journey and to improve your standards step by step.
As an example, at Sprout World, we wanted organic seeds in the pencils from day one, but we realised that they would make the price go up to a point where the pencil would be too expensive, even for the most fanatic environmentalist. Organic seeds are not just costly, they are also hard to get, which would have forced us to cut down on the plant varieties we offer. So, we started with non-GMO seeds. Today some of our seeds are organic, and some aren’t. But that’s OK, if we work on improving our footprint in general. Right now, we are looking at our packaging, and we’ve just opened up a European online shop as a more sustainable alternative to Amazon.
It's OK to hire someone for their attitude and culture fit, not their CV
If you don’t have a team with the right attitude, your ideas and goals are worth nothing. One of the most important things I’ve learned when finding the right person is their mindset. Finding someone who shows a genuine interest in your mission and purpose is helpful but more importantly, hire team players, people who are always willing to help across the board, especially in the early years of a start-up.
A great rule is to hire only people who you can see yourself spending 8 hours on a flight with and actually having a good talk.
Having a supportive team around you during these early years is vital and do make sure that everyone feels ownership in the success of your startup. If your team is successful, so is your business.
And ensure the hire is a good culture fit. Make sure that everyone is motivated and enthusiastic about their role because the job is never boring, and their colleagues are great to be around. This is especially helpful during these particularly tough pandemic times when your team needs all the support they can get. People say that culture eats strategy for breakfast. This isn’t true. Culture eats everything for breakfast, lunch and dinner too.