In the new Millennial era, many entrepreneurs are scrambling to find a way to integrate social causes and corporate responsibility into their purpose-driven business plan. Millennials, typically defined as those born between 1981 and 1996, have shown a remarkable intolerance for companies who don’t associate themselves with the causes that are increasingly important to this rising generation.
Utah is the latest of four states where a new designation called a “Benefit LLC” (BLLC) has emerged as one way to allow a business to consider factors beyond profit when making decisions, providing legal protection against stakeholders. There are no tax consequences to the designation, instead, it is a signal to the public that a company is taking it’s corporate social responsibility seriously, and a recognition that contributions to the broader community can have value to a variety of stakeholders.
To be clear, the Benefit LLC designation is not just some kind of marketing ploy. A similar model, the Benefit Corporation, has existed since 2010 and has been adopted in two-thirds of the states. However, 80 percent of new businesses in Utah are LLCs, not C- or S-Corporations. Both Benefit LLCs and Benefit Corporations have similar responsibilities. These types of businesses must have public benefits, like environmental concerns or societal impacts as part of their mission—accountable to people, planet, and profits. They are required to produce an annual report
demonstrating how they have met these goals for the year.
Why should Utah businesses care? Any entrepreneur setting up a new business should carefully consider all of the advantages and consequences of every available business structure. If your company has a desire to do good as well as be great at what you do, consider the following benefits of the Benefit designation.
- Building community trust. Becoming a Benefit LLC gives your company the opportunity to be transparent about your goals, which improves relationships with all of your stakeholders. It also allows you to showcase the ways you give back to your community. This matters to Millennials, and increasingly to other audiences around the globe, who use this information to make purchasing decisions.
- Economic impact. Benefit Corporations and LLCs are rapidly emerging as economic leaders – think Patagonia, Method, and Etsy. As your voice within your industry grows, so will your exposure both within and without that industry. Putting forth new ideas is a sure-fire way to generate buzz and growth for your business. And as those new ideas are proven, other companies across the board will adopt them, creating more profit, jobs, and goodwill for everyone.
- Marketing advantages. While becoming a Benefit LLC is so much more than a marketing tactic; it does have the potential to improve your market visibility. Attaching this moniker to your business draws attention to the good that your company is already doing, which can gain media exposure and other third-party validation for your business. Gathering this type of positive press not only puts eyeballs on your brand, it can ultimately build goodwill to protect you from occasional, but inevitable, less-than-flattering news stories or customer reviews. The BLLC after your company name will also immediately raise the expectations of investors looking for a sound place to put their capital.
- Focus. Many new and established companies face similar challenges in the way their structure their mission and goals. While the bottom line should prevail in business, the secondary goals of your company make a huge difference in the way that you operate, hire employees, and ultimately go after profit. Establishing yourself as a Benefit LLC can help your company focus on the issues that matter to you and the ways you will work with the public to both earn a profit and make the world a better place, which in turn helps generate more business.
The Benefit LLC designation may not be the right fit for every startup, but it’s definitely worth considering. Odds are, your brand is already striving to bring new innovation to the table. And, most modern companies are at least aware of the social and environmental impacts they have. Merging these together and letting your customers know that you’re serious about not only making money but also contributing to causes that matter to them (and you), will change the way they think about your products and services. The more businesses that take this responsibility
seriously, the better off our state will be.
John Pilmer, APR is an award-winning, accredited public relations and
marketing communications advisor for emerging sector leaders. His Benefit LLC,
PilmerPR has accelerated growth for some 50 young companies. He holds an
undergraduate degree in Business Management and Marketing from Brigham Young
University, as well as an MBA from the University of Utah.