Over the past two or three decades, there has been a proliferation of businesses and industries all over the world. The push for innovative solutions and market share means that companies, although in the same sector, can look very different. Still, there's one ultimate principle any business owner always tries to follow: don't let your business run out of money. And this is where investors come in, especially for companies still in the growth phase that haven't started to turn a profit.
But finding an investor in today's world is no longer just about looking at a company's profit viability. Today's investors are keen on putting their money in businesses that are also socially and environmentally responsible. Gone are the days when entrepreneurs and investors amassed their wealth throughout their working life and donated a sizable wad of cash to a charity upon retirement. The growing consensus among investors today is that business success and corporate social responsibility are not mutually exclusive.
The era of the Millennial Entrepreneur and Investor
Where can you find these kinds of investors? A large crop of them are millennials and increasingly so. With Baby Boomers beginning to leave active duty en masse, it makes sense that the next point of interest for businesses seeking financial injection and long-term investment partnerships should be Millennials.
For one, Millennials' ranks have burgeoned over the years, thanks to the swelling immigrant numbers. As of July 2019, there were about 72.1 million Millennials in the United States alone. This statistic made them the generation with the largest population in the country, outweighing Baby Boomers.
A report by Cogent Research states that Millennials own and control 10% of the country's wealth. And this is despite how much harder it is to secure a career-focused job in today's world. Besides their 10% control, an Accenture report also revealed that Millennials are poised to receive around $30 trillion in inheritance money from their Baby Boomer parents within the next thirty years. Evan Fred, Head of Verification Dept. at Online Writers Rating, a writing service review company, refers to this impending reality as "rollover investment". He should know a thing or two about it being a Millennial himself.
There's another factor to consider with the millennials besides the fact that they are about to control a huge chunk of America's investment money. Millennial consumers already have a purchasing power of $2.5 trillion and counting. These two statistics could create a windfall of long-term investment partnerships and a loyal customer base. This is because if you position your business so that it is appealing to Millennial investors, it will also be worth the trouble to Millennial consumers.
Video: A Look at Millennial Investing Behaviors | JPMorgan Chase & Co.
We have presented some new business advice that will help you sell your business to a Millennial entrepreneur/investor or a Millennial entrepreneur network. These tips will work for you, whether you're a small business owner seeking investment or wanting to sell your venture to a Millennial entrepreneur or investor.
Be big on impact investing
For most millennial entrepreneurs and investors, impact investment plays a huge role in deciding whether to invest in a business. Impact investing requires your company to invest money in an idea that positively addresses a social or environmental issue while also turning a profit. Millennial investors want to know that while they are making money, the environment and people are not the worse off for it.
You also have to make sure that your CSR (Corporate Social Responsibility) efforts are not only practical but also financially measurable. For instance, let's say you run a large furniture brand, and your production rate requires you to manufacture furniture equivalent to 200 trees every year. An impact investment strategy for your company could be environmental, like planting three trees for every tree your company uses. You could also provide free furniture pieces for charities, schools, and more for every time you hit a predetermined amount of profit.
If you implement both strategies, your business wouldn't just be helping the environment; it would better the lives of people. One such company that employs this to perfection is The Plastic Bank. The company's mission is to get rid of ocean plastic completely. To make this possible, they have enlisted people in some of the poorest nations to help them collect and recycle plastic.
This tactic is not only helping to restore our oceans, but it's also giving millions of people a viable means of income. In Haiti alone, the company already has over 2,000 people collecting plastic. These people have helped the company to recycle over 7 million pounds of plastic.
There is no one-size-fits-all strategy for measuring impact investment for companies across different industries. Still, millennial investors need to measure your social and environmental efforts and see their relationship to your company's revenue. This possibility will make selling your business a lot easier.
Communicate honestly to your customers and investors
It's one thing to set goals, design strategies for achieving said goals and identify benchmarks for measuring progress. It's another thing to keep all this information under the rug, especially if you are finding it difficult to hit your objectives.
Regardless of how your company is faring, release reports regularly to keep everyone — customers and investors — updated. Don't try to embellish your successes or smoothen out your failures. Tell it as it is, you'll be surprised that this will endear you to investors and stakeholders. More than business success, Millennial entrepreneurs, investors, and even consumers — about 91% of them — are very understanding, forgiving, and willing to pull out their checkbooks to financially support a brand that is falling short of its business and impact targets but aligns with their values.
Just ensure that you don't hide anything. Communicate honestly, regularly, and exhaustively, and show commitment to arrest and turn around the situation. Current and potential investors or buyers want assurance that they'll always know what their money is doing at any point.
Contribute your quota to the mainstreaming of socially conscious business practices
A socially responsible business looks good to a millennial entrepreneur any way you look at it. Still, while thousands of companies and investors are heading in this direction, impact investing is still suffering from growing pains. This phase is only natural, though. There isn't yet enough data or sufficient mainstream adoption of socially conscious practices. When impact investing reaches this point, there will be enough insight to design guiding principles, implementation standards, and measurement benchmarks for companies across all industries.
This era of impact investing seems almost inevitably destined for mainstream success. But you can prove to be a progressive and forward-thinking brand now by contributing your efforts to making impact investing a mainstay of business practices. You can do this via regular reporting, providing data, and helping the socially conscious practices to achieve mainstream viability.
Many big brands, like Canada's Goldcorp, are already leading the match towards the era of impact investing. Take your place right behind them and match in sync. You are guaranteed to notice investors watching your brand with keen and genuine admiration and interest.
As of 2017, the value of mutual funds and ETFs dedicated exclusively to socially and environmentally conscious investments was just above $100 billion. This value has only one way to go — up. Millennial investors are filling up their portfolios with CSR-focused investments. The tips in this article will help you put your business well in their sights.
But first, ensure that establishing a solid image of corporate social responsibility is built into the DNA of your company. Be sure to embrace transparency in your reporting and operations. As long as your venture is on the plus side of profit and giving back via impact investing, you stand a much better chance of finding a millennial investor(s) that is willing to throw his weight — and his checkbook — behind you.
About the Author
Frank Hamilton has been working as an editor at review service Best Writers Online. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.