Goodsmiths description of a Good business

Good question. The simple answer is this:

“An organisation that creates a fair and sustainable income while also generating significant positive impact for society or in support of our fragile ecology”

And it’s at this point that the can of not-so-simple worms is opened.

What’s a fair and sustainable income? What sort of impact is required and how much impact is necessary to be deemed ‘significant’? Who’ s doing the deeming and on what basis? And that’s just the first layer of worms.

To complicate matters further, the ethical business sector is constantly changing and evolving, with new business models, terminology and innovative ideas constantly popping up. We think this is totally awesome but it sure does make a clear-cut definition tricky to stick to.

At Goodsmiths, we’ve been a part of the conversation for many years now, helping develop new ways of thinking about Good business. And we’ll continue to drive that conversation into the murky domain of new definitions to describe the emerging organisations that exist to generate income and create positive social impact.

For now, to help you understand why a business gets to call themselves a Goodsmith and why you can trust they’re working to make a genuine, positive impact in the world, they have to pass 2 tests:

1. The Purpose Test

First we ask a simple question, that sometimes gives less than simple answers. Does the business operate with the express intention of creating positive social or environmental impact whilst trading to fulfil this mission? I.e. is a genuine purpose baked into the business?

If the answer to this first question is no, then the business is not yet ready to become a Goodsmith. But if we agree that yes they are a purpose-led organisation, then they move on to the next test.

2. The “Taking Action” Test

Businesses that make it through The Purpose Test must also be doing something active about their purpose within one of the following categories to be a Goodsmith:

B Corp

Certified B Corporations are one of the few internationally recognised certifications at the tip of the global movement of people using ‘business as a force for good’. If you’re a B Corp, you’re in.

B Corps meet a high standard of overall social and environmental performance, transparency and accountability and complete a rigorous assessment process that is reviewed on an annual basis, somewhat like a yearly ‘warrant of fitness’ check.

Social Enterprise

Social enterprises with a Social Traders certification can jump straight on board. If an enterprise is not certified but can demonstrate to us that they meet Social Traders’ definition of a social enterprise, then they qualify too.

Redistribute revenue

Businesses that distribute a significant portion of their revenue (that’s a portion of every sale, not profit) to their cause are welcome on Goodsmiths. We currently set the bar at 2% of revenue, but we often review this (normally via the means of heated discussion in the office).

Fair trade

If a business supplies only Fair Trade certified products or operate on the principles of fair trade and ethical supply chains then Goodsmiths doors are open.

Direct impact

Some businesses choose to actually develop and deliver a social or environmental program themselves. If you’re already thinking about STREAT’s work with young people or Moon Rabbit’s program to support people with intellectual disability, then you’re on the right track.

Circular Economy

Businesses that operate in the circular economy are working towards a system without waste, where resources just go round and round and round and round and… you get the idea. They repurpose, reuse, and recycle the materials that make up their products, and we think they’re just great!

Employ marginalised people

Purpose-led businesses that actively seek to employ people from disadvantaged backgrounds, those with disabilities or long-term unemployed as a significant proportion of their workforce, get our tick of approval.

Educate the community

Many leaders of Good businesses are passionate about their cause. Some of them take it to the next level and build education into their operating model. This isn’t just a part time blog on the side, these businesses are actively working to educate the public about a social or environmental cause as part of their core business.

So, for us, it comes down to income and impact.

For the income bit, we don’t believe a Good Business should be making masses of money, unless of course they’re very transparently giving it away to support their mission and the impact they’re seeking to create. Then they can make as much as they want. If more money equals more good, more positive social impact, then why would we want that to limit that?

And for the impact bit, it’s fair to say that there are loads of different ways a business can do good; whether it’s a massive corporation writing big cheques to a charity, or a micro-business working directly with homeless people, both are clearly doing some good, having an impact.

If you’d like to share your thoughts on this, think we’ve done it wrong, like it or would like to offer some advice please get in touch.