At the beginning of the year, many individuals and businesses engage in strategic planning, setting goals and objectives for the year ahead. While motivations for starting a business vary, they often include making money, becoming one’s own boss, and pursuing personal passions. However, some entrepreneurs are driven by a deeper purpose: making a positive impact.
An impact-based business model focuses primarily on creating positive change. These businesses fall into two main categories: purely impact-based and hybrid impact models.
Purely impact-based businesses are those whose sole objective is to make a positive impact, without any competing goals.
For instance, a philanthropic foundation might aim solely to assist the poor. Such businesses can be either for-profit or non-profit, and it is entirely possible for a purely impact-based enterprise to generate profits while staying true to its mission.
Hybrid impact businesses, on the other hand, have dual objectives: making a positive difference and generating profits. Many businesses fall into this category. For example, a commercial enterprise might run a philanthropic foundation alongside its profit-driven activities.
While the commercial arm focuses on revenue generation, the philanthropic side pursues social or environmental impact initiatives.
Impact businesses are inherently mission-driven, prioritising a higher purpose or greater good over monetary motivations.
While traditional commercial enterprises focus primarily on profit, hybrid impact businesses strike a balance between fulfilling their mission and maintaining profitability. Examples of impact-focused missions include combating climate change, promoting environmental conservation, eradicating poverty, and providing access to education.
Adopting an impact business model can lead to numerous benefits that positively influence performance and sustainability.
One significant advantage is the enhanced motivation and retention of employees. Research indicates that employees in impact-based businesses are generally more motivated and satisfied than those in traditional enterprises.
These businesses offer staff members the opportunity to align their personal missions with organisational goals, fostering a sense of purpose and belonging.
Additionally, impact businesses enjoy stronger customer loyalty and an enhanced brand reputation. Consumers are increasingly drawn to businesses that reflect their values and ethics. This alignment can bolster customer loyalty and elevate the company’s public image.
Another advantage is their ability to attract investment. These enterprises are well-positioned to draw investors interested in generating social and environmental returns alongside financial gains.
The impact investing sector is expanding at a rapid rate. According to the World Economic Forum, impact investing was valued at approximately $1.2 trillion in 2022.
As the world increasingly prioritises sustainability and social responsibility, 2025 presents an opportune moment to integrate impact into your business model. Whether you are restructuring an existing enterprise to incorporate more impactful practices or launching a new one with a pure or hybrid impact focus, this year could mark the beginning of meaningful and transformative change.
The writer is the founder of CMputhia Advocates. Email: [email protected]
