Four key tips for running a successful social enterprise
Monday, May 26, 2014/
If you’ve wiped your bum on Who gives a Crap toilet paper, serviced your bike with Good Cycles or drank a glass of Kooks Wine, you’ve supported a social enterprise.
A growing number of businesses in Australia are now social enterprises, created to solve social and environmental problems.
They’re a growing phenomenon in Australia, with the number of social enterprises increasing by 37% over the last five years.
But how do charitable businesses sustain themselves in the long term?
SmartCompany spoke to entrepreneurs who have successfully started social enterprises and experts in the area to find out their top four tips on how to run a sustainable social enterprise.
1. Align your message with your product
Chris Tucker, from Kooks Wine, says social enterprises are much like any business in that the company’s message has to fit with the product. In the case of Kooks, the pairing of quality wine with acts of generosity saw the social enterprise sell 50,000 cases of wine within their first 12 months of operation.
“We were able to use the essence of what we were trying to do as a company – which is marrying good wine with being generous and supporting community building – to at least have the conversations that otherwise weren’t going to take place if we were talking about our product alone,” Tucker told SmartCompany.
Tucker says Kooks would have found it more difficult to gain attention or support from suppliers had its brand not been built on being “positively generous”.
“Other than cost alone was the fact we were prepared to deliver on providing some positive outcomes in the spirit of generosity,” he said. “We were able to get distribution by having the conversations that resonated well with the companies we wanted to talk to.”
Kooks Wine is now stocked in Dan Murphy’s, which is Australia’s largest wine retailer. The product is also the only wine served in the main cabin on all domestic and international Jetstar flights. According to the airline, on-board wine sales are now up 17%.
“Their research has shown customers are acknowledging the positive message,” he said. “We went through a tender process, but the thing that got us across the line was the positive outcomes we were advocating.”
Tucker says consumers are enthusiastic about supporting Kooks because it has such a clear vision for community building.
“Wine is about sharing and that spirit of friendship and connection and that is what we’re going to advocate and support through our message,” he said.
2. Understand that a social enterprise is still a business
James Murphy is the founder of KereKere, a café that started at Melbourne University by allowing customers to choose a charitable cause that will benefit every time they purchase a beverage. Now based in Southbank, the business is going from strength to strength.
“What we’re trying to do is foster generosity in the community,” Murphy told SmartCompany. “We look at bringing generosity into our daily lives.”
Tucker says the café’s name refers to a Fijian custom where a relative or neighbour can request something that is needed and it must be willingly given with no expectation of repayment.
“I grew up in Fiji, so that notion of sharing and caring was what I grew up with,” he said. “I’m a trained social worker by background, so for me the business is about finding a way to give back on the one hand but at the same time have a sustainable business. Starting a business with its roots in social justice is what resonated with me.”
Apart from serving food and coffee, the café also puts out fresh fruit for passers-by and hires young people from disadvantaged backgrounds. However, Murphy says while it’s important to want to do positive things for the community, another key goal is to create a sustainable business.
“Regardless of being a value-based business you need to be able to compete on the normal business stuff on the quality of your products, the price point – all of that,” he says. “We just want this to be another way to do business and we want to see more generous business owners.”
Tucker agrees and points out that a brand needs more than just its charitable side in order to succeed.
“You have to have a product you’re trying to sell be equivalent or better than what people can buy off the shelf anyway,” he says. “At the end of the day people are self-interested. The product has to be of the right quality to start with.”
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