Entrepreneurs, take note! There’s big news on the B Corporation front – this August, Delaware became the 19th state to enact benefit corporation legislation, a move that signals the new business entity’s staying power.
While it’s true that 18 other states and D.C. are already on board the B Corp train, Delaware has an especially longstanding, notable reputation as a corporate haven, and as an important and influential player in the business community. In other words, people in business pay extra attention to Delaware, and when Delaware passed benefit corporation legislation, it was a very big deal. The state’s legal recognition of benefit corporations will spark more momentum for a movement that aims to sink legal teeth into the notion that companies should mold their missions to benefit society as a whole, instead of primarily focusing on maximizing profits for shareholders.
On the first day Delaware’s benefit corporation became available, a record-setting 17 companies jumped at the opportunity to incorporate under the new business form. This first-day enthusiasm is unmatched by any other state upon enacting their versions of the benefit corporation. Among Delaware’s first benefit corporations were many popular companies such as “green cleaning” company Method, and organic baby food company Plum Organics.
As more and more mainstream brands choose this path, more and more social entrepreneurs will consider the B Corporation as an option for their small businesses. And having more options is always a good thing so here at MyCorp, we thought we’d pull together a list of the 5 things we like about benefit corporations.
- Benefit corporations give entrepreneurs more opportunity and flexibility in using the power and scale of business to address important social and environmental issues.
- The new entity type provides market differentiation for small businesses that want to identify themselves as mission-driven companies who aim to prioritize both purpose and profit.
- Social entrepreneurs now have more options since benefit corporations can provide a happy medium between the traditional for-profit (C-Corp) and nonprofits.
- Incorporating as a benefit corporation cements a company’s social or environmental purpose into its corporate legal structure, which better ensures the permanence of its mission – even in a liquidity event like a buyout.
- By focusing on social responsibility, business owners can leverage the positive feedback from other business owners and customers regarding the public benefit underpinnings of their business
Got a couple more questions about forming a benefit corporation, or ready to start the process? Give call us at 1(877) 692-6772 or leave a comment below!