Would you like to be the best business in the world or be the best business for the world?
Look closely at the two options. The key differentiators are in italics. A company that wishes to be the best business in the world ultimately does not share the same outlook as the one that wants to be the best for the world. These latter companies use business as a force for good. They are known as B Corporations: purpose-driven corporations that create benefit for all stakeholders.
What’s a B Corporation?
Incorporating as a B Corporation means following a slightly different process than that of forming a limited liability company (LLC) or a general corporation.
B Corporations are considered to be a hybrid of a standard corporation and nonprofit. This entity allows B Corps to earn a profit, and holds their entity accountable to higher social and environmental performance standards. Further, many B Corporations choose to earn their B Corp Certification with the help of nonprofit group B Lab. Businesses effectively alter their corporate DNA to balance profit with purpose once they make the shift to become a Certified B Corp.
This unprecedented time may present small businesses with the opportunity to switch to a Certified B Corp. If this sounds like the right entity for your business and its purpose, here’s what you need to know before making the pivot.
1. Ask yourself if you could sign “The B Corp Declaration of Interdependence”
This is a document B Corps sign at the end of their B Corporation certification. Before you begin the process, however, it’s a good idea to figure out if you’re capable of being in a B Corp leadership role.
As mentioned earlier, B Corporations balance profit with purpose. The B Corp Declaration of Interdependence states that those in B Corp leadership positions “envision a global economy that uses business as a force for good.”
If you got into business with the sole intention of making money, it’s not in your best interest to form a Certified B Corp. This entity is best left to those individuals that may be able to do the following with their businesses:
- Act as and be the change they wish to see in the world.
- Turn a profit while providing offerings and services that do no harm and benefit one and all.
- Understand that their companies must be able to adopt specific standards of purpose, accountability, and transparency.
Once you know you’re able to sign this document and fulfill its final step, you’re ready to begin the certification process.
2. Take the B Impact Assessment (BIA) test
Your company is prepped to “B the change,” but first you’ll need to take and pass the B Impact Assessment test.
What’s the BIA? This is a free, confidential tool that helps measure the social and environmental impact of your business. The BIA consists of three steps:
1. Assess. The BIA walks test takers through questions that help them learn what it takes to build a better business. You may view sample questions on the website for a clear understanding of what will be asked during the BIA. The test itself is administered in two formats: snapshot and full impact. In a little under 30 minutes, you may receive a quick snapshot of your test results.
This snapshot will allow you to review the areas your business excels at and where it may need improvements. The full impact report takes about two to three hours to complete. Most individuals who want to form a Certified B Corporation will take the full report and examine their results holistically afterwards.
2. Compare. During this time, you may compare your score to thousands of other (anonymous) businesses. This allows you to see how other business owners responded to the same topic.
3. Improve. In order to pass the BIA, test takers must receive a minimum of 80 points out of a possible 200 points. If you did not pass, there are ways you may improve your score. BIA offers the ability to create a customized improvement plan for your business. This plan may be implemented with the help of their free best practice guides.
If you did score high enough to pass the BIA, you’ll move on to the next step.
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3. Schedule a virtual assessment review
Upon passing the BIA, a member of the B Lab staff will schedule a virtual assessment review with you. During this time, you may be asked to submit materials that detail how your business will commit to the general public benefit. These documents must be reviewed with a B Lab staff member.
4. Meet the legal requirements
Upon completion of your virtual assessment review, your business needs to meet necessary legal requirements. B Lab offers a free legal requirement tool that allows you to understand how your company can meet its legal requirement for B Corp certification. Depending on your state of incorporation and entity structure, you may need to fulfill the following items:
- Adopt a benefit corporation status to reincorporate the business.
- Amend current governing documents, such as updating articles of incorporation, in an approved Certified B Corp language.
- Clearly communicate how adopting legal changes and making the B Corp shift is useful for business, if your company has investors or board members.
5. Sign the B Corp Declaration of Interdependence
You’re almost there! All you need to do is sign the B Corp Declaration of Interdependence and Term Sheet, and pay your annual certification fees.
Congratulations: you have officially joined the ranks of more than 2,100 Certified B Corporations!
Your Certified B Corporation may focus on its triple bottom line of people, profit, and planet—which works to benefit countless individuals everywhere during unprecedented and prosperous times alike.
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