As your startup grows, so does its impact. This chapter helps you measure and manage that impact more effectively. The goal is to sharpen your impact indicators and identify any potential negative effects early on. That way, you stay focused on your mission – and credible in the eyes of investors and stakeholders.
This section is for you if …
- you’ve launched an impact-driven startup.
- you’ve clearly defined your target group, the problem you’re solving, and the impact you want to create.
- your MVP has been tested and validated.
- you’ve mapped out your impact potential, market opportunity, and financing model.
- the resources you need are in place.
Not quite there yet?
Then check out the chapter that matches your current stage.
In this section, you’ll learn how to …
- make sure your business model continues to deliver impact.
- develop impact indicators for step 7 of your Impact Ladder.
- spot and address risks and unintended effects early.
Developing impact indicators for step 7 of your Impact Ladder
You’ve already worked your way through steps 1 to 6 – now it’s time to tackle the final and most challenging stage: measuring the actual impact of your startup. This level is the hardest to reach, which makes it all the more important to approach it thoroughly. Here’s how to get started with developing your impact indicators:
1. Gather ideas for indicators
Start by brainstorming indicators that could reflect the societal impact of your business model. Examples include:
- Measurable contribution to the UN Sustainable Development Goals (SDGs)
- Changes in relevant social metrics (e.g., CO₂ reduction in your target region)
- Long-term improvement in quality-of-life indices
- Tangible shifts in laws or political systems
Tip
Uses resources such as the UN SDG indicators for inspiration.
2. Structure your indicators
A clear structure helps you use your indicators effectively later on. Group your ideas into meaningful categories. Make sure you include a mix of quantitative (measurable data) and qualitative (more subjective insights) indicators. See how they relate to one another – often, qualitative insights build on quantitative findings. For example, survey data can help interpret how a program has improved quality of life.
3. Make them S.M.AR.T.
The indicators should be formulated according to the S.M.A.R.T. principle:
- Specific: clearly defined and unambiguous
- Measurable: Quantifiable
- Attractive: Relevant to your goal
- Realistic: Achievable with available resources
- Time-bound: Has a clear timeline
4. Prioritize your indicators
Not all indicators are equally useful, and too many can complicate your tracking efforts. Focus on the ones that best reflect your impact and can realistically be measured. Ask yourselves:
ns:
- Which indicators align most closely with your impact goals?
- Which data can you collect with your current resources?
- Which indicators matter most to your stakeholders or investors?
Identify and address potential negative effects
Measuring your positive impact is important – but so is identifying potential negative effects your business model might cause. This 7‑step guide helps you carry out a simple but effective risk analysis:
1. Define the scope of your system
Narrow down the area you want to assess so you can stay focused. Analyze the specific problem you aim to solve, without getting lost in too many details. This helps avoid overwhelm and lets you use your resources efficiently. For more on this, see “Problem, target group, and stakeholder analysis: Your first step toward launching an impact startup.”
2. Identify all relevant stakeholders
Make a list that includes both supporters and potential critics – customers, users, partners, decision-makers, and more. That way, you capture all perspectives. Details on this are found under“Problem, target group, and stakeholder analysis: Your first step toward launching an impact startup.”
3. Map your system components
Create a visual map of the system your startup operates in. Connect the key actors, processes, and resources in your model. This will help you spot interactions, risks, and unintended side effects.
4. Analyze interactions
Explore how your solution interacts with other parts of the system and look for feedback loops. Ask yourself whether it might trigger unexpected consequences or long-term side effects – for example, if helping one group unintentionally harms another.
5. Account for external factors
Identify outside influences – like political shifts, economic trends, or environmental risks – that could affect your business model. These can either strengthen or weaken your approach.
6. Assess potential negative impacts
Examine which groups or systems might experience downsides as a result of your work. Estimate how likely and how serious those risks are so you can prioritize the most pressing ones. This forms the foundation for targeted responses.
7. Develop mitigation strategies
Create strategies to reduce or eliminate the risks you’ve identified. That might mean adjusting your solution, shifting your focus, or changing how you deliver your product or service. The goal is to design your processes with both positive and negative impacts in mind.
Case study: TOMS Shoes
The story of TOMS Shoes shows how well-intentioned business models can lead to unintended consequences. The company’s model of donating one pair of shoes for every pair sold – its “One for One” approach – ended up weakening local shoe markets in countries across the Global South. Steps like shifting toward local production helped reduce some of these negative effects.
- System boundaries: TOMS’ “One for One” model and its impact on local shoe industries in the Global South
- Relevant stakeholders: TOMS Shoes, customers in industrialized countries, shoe recipients in the Global South, local shoe producers and retailers, local communities, NGOs, TOMS suppliers and manufacturers, investors
- System components: TOMS’ production and distribution, donation program, local shoe markets in the Global South, global supply chain, marketing and brand image, financial resources and investment
- System interactions: Positive feedback loop: More sales lead to more donations, boosting the brand and driving further sales. Negative feedback loop: Donations can hurt local markets, worsening poverty and increasing long-term dependence on aid.
- External influences: Global economic trends, shifts in consumer attitudes toward ethical products, political stability in recipient countries, advances in footwear production technology
- Potential negative impacts: Displacement of local shoe producers and retailers; dependency on donated goods in recipient communities; potential quality concerns with donated shoes
- Mitigation strategies: Focus on local production to support regional economies; expand the “One for One” model into areas like education and health; partner with local NGOs to support sustainable development; invest in training for local shoemakers and support local businesses
Important note: When evaluating potential negative effects, don’t just consider financial impact. Ask how much control or influence your startup has over the root causes. Some societal problems can only be solved through regulatory action, since voluntary efforts may put impact-driven startups at a competitive disadvantage.
Also consider internal risks – such as poor labor conditions within your own company. To uncover these issues, start with process mapping as part of your ESG management strategy (see “Grow with impact: team, processes, and culture for impact startups”).
ESG management
Here you’ll find criteria to help you build a solid ESG (environmental, social, and governance) management framework tailored to your processes.
You can also explore whether a Social Life Cycle Assessment (S‑LCA) might be useful for your solution. S‑LCA is a method for assessing the social and socio-economic impacts of products, services, or systems across their entire life cycle. It helps organizations understand, evaluate, and improve their social impact – ultimately contributing to more sustainable and responsible production and use of goods and services. Learn more here.
Next step: Track your KPIs
You’ve now laid the groundwork to secure the long-term impact of your business model – and identified potential risks or negative effects your work might create at different levels.
Before you move on to measuring KPIs and building a baseline scenario, take time to prepare your team, structure, and organizational culture for the growth phase and start shaping a strategy for your business growth.