B-Corporations: Everything Small Businesses Need To Know

Small businesses are an important part of every community as they are perfectly positioned to cater to the specific needs of their immediate environments. They keep revenue circulating within communities and create job opportunities, which jointly have a positive impact on the economy.

Community based small businesses focus on first cultivating long-lasting relationships that benefit both their clients and themselves, as opposed to solely focusing on turning a profit. To effectively achieve these objectives, small businesses are turning to several newer types of certification, including B-Corporation or B Corp certification.

What Is a B Corp?

Before delving into the intricacies of B Corp certification, we must first establish what a B Corp is. A B Corp may be defined as a company that takes the personal initiative to measure up to the highest standards of social and environmental performance.

Put differently, a B Corp is an entity that strives to challenge the status quo associated with business – that a business can either make a profit or make a change. A B Corp goes against such conventional thinking by offering a consolidation and alternative – that a business can make a profit and make a change.

A B Corp acknowledges that in order to accommodate both profit and mission/purpose, certification must go beyond the usual product-level and service-level accreditation. B-corporations welcome a rigorous certification process that ensures that they incorporate the ideals of public and legal transparency and accountability.

These principles work together to guarantee that a B Corp, unlike normal businesses or companies, is not just all talk. By willingly subjecting itself to strict vetting by an independent third party, a B Corp intentionally affirms, "I am intentional about being a force for good rather than just doing the bare minimum of what is required for good press."

A B Corp should, however, not be confused with a benefit corporation. These are actually two different things. Though a B Corp and a benefit corporation both strive to make a change and profit, the latter is legally empowered to do so. Simply put, a benefit corporation is the corporate version of a B Corp.

Can Small Businesses Be a B Corp?

The answer is an emphatic yes. Any company or business can become a B Corp irrespective of its size, industry, or structure (legal, social, or otherwise). Though the possibility of becoming a B Corp is afforded to arguably all companies and businesses, most B-corporations are privately-owned small to medium-sized businesses and companies.

B-corporations have increasingly become popular in recent years. Unknown to many, the pioneer/first B-corporations earned their certification in 2007 and were initially only a handful in number. Today, statistics show that there are over 3,500 certified B-corporations in over 70 countries worldwide.

Why Should My Business Be a B Corp?

The first and most obvious reason you should pursue B Corp certification for your business is that it is the right and noble thing to do. By becoming a B Corp, your business would be announcing that it cares equally, if not more, about the immediate and extended society and environment than it does about filling its coffers.

Becoming a B Corp also sets your business apart from competition and can demonstrate that your business shares the values of your customers. This would help your business garner the right kind of attention, since quite a number of individuals and corporations have become so socially and environmentally conscious over the years.

This ever-growing social and environmental movement refuses to associate or even engage in business with entities that do not follow what they say they stand for. This new reality has prompted some businesses to become B-corporations to remain relevant in today's ever-evolving, ultra-competitive market.

Benefits of Becoming a B Corp

First, as a B Corp, your business becomes part of a large B Corp community and can thus access data and information to learn best practices from other similar types of businesses. Experience may be the best teacher, but it's also a costly teacher. It is better to learn from the others in your peer group.

Second, by being a B Corp, your business is highly likely to be afforded some privileges by other businesses in the community as part of a larger effort to positively impact society and the environment jointly. 

Third, for your business to become a B Corp, it has to undergo a thorough certification process. Though this may sound like subjecting your business to unwarranted scrutiny and pressure, it inadvertently has the benefit of discovering areas of your business that you can improve. 

How to Become a B Corp

The only way to become a B-corporation is to be certified as one. The requirements and processes for certification are laid out on the Certified B Corp website and are overseen by B Lab – the universally-recognized governing body.

The first step requires a business to take the B Impact Assessment, which is provided online. The assessment's objective is to gauge how your company or business interacts with its various stakeholders (customers, community, environment and staff/workers).

After completing the assessment, a business must then look at how it can incorporate its stakeholder's best interests into its governance structure. This process is facilitated by a Legal Requirement Tool, which has been provided. A business' legal requirements and timeline (to meet said requirements) vary depending on its location and structure.

B Lab then scores your B Impact Assessment (BIA) to see whether your business meets the 80-point threshold required for certification. You will be expected to update your BIA and reach the prescribed threshold every three years to remain certified.

During this stage, you are required to have a virtual meeting with B Lab staff, who then review your BIA. You are also required or allowed to submit privileged information in support of your assertions. A one-time, non-refundable submission fee of $150 is paid when submitting your BIA for review.

The final step to getting certified involves two main steps. The first involves signing the B Corp Declaration of interdependence and signing your B Corp Agreement. The last involves paying your annual certification fees, which vary by region and increase depending on revenue and the size and complexity of your business.

The annual certification fees cover B Lab's operational expenses and are calculated based on the principles of inclusivity, transparency, and fairness. However, you may have to wait for 6 to 10 months for the review process to be completed because of the certification requests that are already in the queue.