IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Cynthia Weaver of Beneficial State Bank (www.beneficialstate.com)
Transparency Sells – The B Corp Value Proposition
Transparency is a trendy word these days. You hear the word volleyed about in a variety of contexts. Nonprofits have special scrutiny placed on them to account for every dollar in addition to program effectiveness. Publicly held businesses have a level of transparency required in providing an annual report to shareholders of their business financial activities and projections. However, unlike a nonprofit, a business’s annual reports have traditionally been about maximizing shareholder profits, not about their impact on their community, employees, or the world.
Within the last decade, the public’s demand for transparency on issues beyond profit has been elevated to a new level. In an April 2019 Forbes article, Mike Kappel says, “We’re held to a higher standard now more than ever. With online platforms like social media, review sites, and discussion forums, transparency is critical to business success.” Access to information is enormous. The internet and cell phones allow a far greater reach than before. Marketers know this. They can now reach millions more people in seconds. The revenue opportunity is exponential.
Mr. Kappel goes on to say, “From increasing employee retention to boosting sales, transparency can do a lot for your small business’s reputation and success. If your business is honest and straightforward, you may see a rise in your customer base. One study found that 94% of consumers would be loyal to a transparent brand…Transparency in business leads to trust. And, many consumers only want to support companies they trust.”
Influencing buying power is no longer just about the quality or trendiness of the product you produce. People of all ages, but especially Millennials (1980s to 1990s) and Gen Z (1990s to early 2000s) demand a behind-the-scenes look at how those products or services are created and delivered. Many factors such as the culture of the company, supply chain and environmental practices, treatment of employees, values of the management team, diversity, and equity inclusion, even distance from production to purchase are suddenly under scrutiny. How do you put all that into a marketing campaign that needs to resonate in seconds?
One proven way to enhance transparency is by becoming a certified B Corporation (B Corp). B Corp Certification doesn’t just evaluate a product or service; it assesses the overall positive impact of the company that stands behind it. And increasingly, that is what people care most about.
Certified B Corporations achieve a minimum verified score on the B Impact Assessment —which evaluates how the company interacts with your workers, customers, community, and environment – and make their B Impact Report transparent on bcorporation.net. The combination of third-party validation, public transparency, and legal accountability help certified B Corps build trust and value.
B Corp Certification is administered by the nonprofit B Lab. The first B Corp certifications were awarded in 2007. Now the B Corp Certified community is over 2500 strong in 50 different countries across 130 different industries. Consumers are beginning to look for the B Corp logo on their products, just as they seek out the Non-GMO Project and Certified Organic logos on food products.
“Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. … Some of the nation’s largest, most successful businesses have seen the value of becoming B Corp Certified.” Patagonia, New Belgium Brewery, Sundial Brands (owned by Unilever) and Ben & Jerry’s Ice Cream are certified B Corps, just to name a few. The directory of B-Corps is extensive and impressive.
But why would a business need certification to verify these potential intrinsic values? Couldn’t they just include these values in their marketing? Unfortunately, no. Along with the increase in access to information has come the desire by the public for proof behind the claims. It is no longer enough to talk the talk, a business must prove that it can walk the walk.
If a business takes the certification but does not pass, not all is lost. A smart business can still use feedback from the test to improve their business, in turn increasing their B Corp Impact Assessment score. It is a great way to evaluate its current cultures and practices and implement some changes. The positive impact of providing this feedback to management teams and employees can boost collaboration and shift the company’s paradigm. To accommodate a variety of businesses, there are several different B Corp Certification tests available, depending on the size, scope, and industry of the business.
There are approximately 28.8 million small businesses in the US, and it will be years before the majority become a B Corp. Right now, the more the merrier. Having this certification makes your business stand out as a rock solid investment, helps reach a greater and more conscientious audience, and creates a place that employees exhibit loyalty, a concept that has faded with the high expectations of younger generations.
Retaining experienced employees has a significant impact on the value of a business. In a March 2019 article by B The Change, Certified B Corp Leesa Sleep’s head of social impact, Jen-Ai Notman, talks about the impact their certification has had on attracting and retaining valuable talent. …‘When we’re talking about our cause and the B Corp certification, we’re able to summarize who we are as a company in a very succinct way. Just including that B Corp logo means so much,” Notman says.
Prospective Leesa employees are familiar with B Corps and mention it as part of why they want to work there, says Notman. “Everyone mentions it… Job applicants and newly hired team members say these community-minded B Corp values are one of the main reasons they applied for the job.” I’m sure every business can agree, a dedicated, loyal employee who perceives purpose in their role adds significant value to the company, value that often translates into actual dollars on the financial bottom line.
I should know. I work for a certified B Corp, Beneficial State Bank. I have been here for eight years. I can’t imagine working at a company that does not value transparency as we do.
Beneficial State Bank demonstrates how to put into practice the reason the B Corp certification was created in the first place. Clients repeatedly tell me they chose us because we are a B Corp. Investors seek to buy stock because of our triple bottom line-model (which can’t be done, by the way, because our equity is held only by charitable organizations, not individual shareholders). This proves to me that being B Corp certified matters, that transparency boosts the value of our company across all bottom lines. I highly recommend all businesses seeking to improve their value focus on enhancing their transparency, perhaps by becoming a Certified B Corp.
Cynthia Weaver is a Vice President Relationship Manager with Beneficial State Bank. If you have questions about the content of this article or would like to obtain information related to the loan & banking services offered by Beneficial State Bank, Ms. Weaver would welcome communication at (206) 909-6834 or firstname.lastname@example.org.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.