Entrepreneurship is About Compromise, Especially for Impact Businesses

A grow­ing num­ber of entre­pre­neurs are try­ing to make a dif­fer­ence through their busi­ness­es.  Whether it be Diver­si­ty, Equi­ty & Inclu­sion (DEI), address­ing cli­mate change, eco­nom­ic dis­par­i­ties, or health and well­ness con­cerns, these entre­pre­neurs are build­ing their busi­ness­es to address spe­cif­ic social objec­tives, while attempt­ing to also become eco­nom­i­cal­ly self-sus­tain­ing and scal­able. 

The need and oppor­tu­ni­ty for these busi­ness­es is real. 

Regard­ing DEI, it’s just good busi­ness as accord­ing to CNN, 44% of mil­len­ni­als in the U.S. are non-white, up from just 24% of the baby boomer gen­er­a­tion – and data from McK­in­sey even shows that com­pa­nies that cham­pi­on diver­si­ty have a 25% high­er chance of finan­cial­ly out­per­form­ing those that don’t. Glass­door has found that 67% of job seek­ers con­sid­er a diverse work­place an impor­tant fac­tor when decid­ing to accept a posi­tion. 

With ris­ing heart dis­ease, dia­betes and oth­er chron­ic health prob­lems linked to diet and lifestyle impact­ing hun­dreds of mil­lions of Amer­i­cans and cost­ing the U.S. econ­o­my more than $4T per year, the health and well­ness trend is mas­sive and much need­ed, which cre­ates a mas­sive eco­nom­ic oppor­tu­ni­ty as well.

Sim­i­lar­ly in cli­mate change, with glob­al tem­per­a­tures expect­ed to rise as much as 10 degrees Fahren­heit by the end of the cen­tu­ry, there is both a soci­etal imper­a­tive to address issues and mas­sive eco­nom­ic oppor­tu­ni­ty as high­light­ed by the recent approval of $555B in fed­er­al spend­ing on cli­mate relat­ed efforts.

In fact it’s almost impos­si­ble as a start­up founder these days to not try to address many or all of these issues through their busi­ness. It’s only nat­ur­al for founders to want to attempt to be “on the right side” of what­ev­er issues they see. They want to address cli­mate change or heath and well­ness while also hav­ing the most pro­gres­sive and inclu­sive employ­ment prac­tices and sales and mar­ket­ing strate­gies. They want it all. They’re cre­at­ing some­thing new; why shouldn’t it be the best of every­thing?

 These are won­der­ful goals and an admirable foun­da­tion for any new com­pa­ny, but it’s vir­tu­al­ly impos­si­ble to address them all at once, par­tic­u­lar­ly in the ear­ly stages of a busi­ness. At Pow­er­Plant, we push our entre­pre­neurs to be bru­tal about trade-offs: if you can only accom­plish one major impact through your busi­ness, what would it be? If you and your busi­ness are known for one thing, what would it be? It doesn’t mean a busi­ness focused on deliv­er­ing finan­cial ser­vices to low-income com­mu­ni­ties can’t pay atten­tion to its car­bon foot­print, but with lim­it­ed time, tal­ent, and trea­sure, what is most impor­tant and where do you focus? 

There are ways to focus on the core and track and improve in oth­er areas. We help our com­pa­nies cre­ate spe­cif­ic KPIs (Key Per­for­mance Indi­ca­tors) or OKRs (Objec­tives, Key Results) to man­age areas of focus and through ESG track­ing (Envi­ron­ment, Sus­tain­abil­i­ty and Gov­er­nance) can track oth­er objec­tives that are impor­tant but not top areas of focus. Done right, they cre­ate a bal­anced score­card that teams, boards, investors, and oth­er stake­hold­ers can under­stand and fol­low as part of month­ly or quar­ter­ly report­ing. Just as a com­pa­ny focused on growth doesn’t ignore mar­gin and expens­es, and nor one that is focused on prof­itabil­i­ty can ignore sales, oper­at­ing a suc­cess­ful busi­ness requires both bal­ance and focus.

Par­tic­u­lar­ly in the ear­ly stage, entre­pre­neurs have to pri­or­i­tize if they want to get any­thing done.

Entre­pre­neur­ship is about trade-offs. No founder can do it all, no mat­ter how much they might want to. Cre­at­ing and grow­ing a start­up is sim­ply too dif­fi­cult; it requires total focus on the goal, what­ev­er that might be. If you are a start­up work­ing to rein­vent health & well­ness, that might mean you don’t use the state of the art new pack­ag­ing that is com­plex, expen­sive and unproven. Maybe it is not as sus­tain­able as you’d like to start; that can always be improved upon lat­er on. Or maybe diver­si­ty and inclu­sion are para­mount, in that case you might have to sac­ri­fice oth­er objec­tives like mak­ing sure that every ingre­di­ent is organ­ic or that your sup­ply chain is 100% trans­par­ent or regen­er­a­tive.

That does not mean aban­don­ing impact, how­ev­er. Star­tups can still make big things hap­pen. In our expe­ri­ence the best way, per­haps the only way to make a major impact in one area is to make the sole and mani­a­cal focus of your busi­ness. Focus breeds results, and pro­vides the run­way that grow­ing com­pa­nies need to adopt oth­er goals down the road. 

Just not now.