More than four in 10 small business owners prioritise “purpose” over profits, a major new study has revealed.

The finding forms part of new research published by leading cloud accounting software provider, Xero.

According to the report, small businesses are increasingly changing the way they measure success, with many now benchmarking against non-monetary drivers, such as employee wellbeing, the environment and prosperity.

The study, which involved some 500 small business owners, shows that 43 per cent of entrepreneurs prioritise other factors over profits.

Additionally, 62 per cent of business owners believe that understanding and promoting their business purpose is important to consumers.

Xero says purpose can manifest in many forms, such as charitable giving and corporate social responsibility (CSR), as well as enhanced employee benefits, such as a generous maternity package and workplace mental health support.

Commenting on the study, report author Emma Gannon said: “Young people are job-hopping more than ever, and the pressure is on for companies to retain the employees who are making your business thrive.

“If your employees want some flexibility, a meaningful new business project – or something beyond just monetary value – will keep them with the company for longer.”

The research, entitled Business Rewired, also found that 60 per cent of small business owners believe the “job for life” idealism is dead, with the gig economy providing a constant flow of skilled, flexible workers.

Ms Gannon added: “In the future, it won’t make sense to work with the same 30 people sitting in the same office as you, but to work with contractors and specialists around the world. It will be even easier to employ, converse and hire talent from all corners of the world.”

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