People don’t buy from a business just because it is doing something good for the society. So how do social enterprises succeed? How do they compete with the increasingly socially aware big corporations?
Elizabeth McKitrick is the founder of Second Nature Home Boutique, a social enterprise in the Trout Lake/Cedar Cottage neighbourhood in East Vancouver.
One afternoon, a few years ago, I entered the shop for the first time, expecting boutique prices for the boutique quality. But I was surprised! The well-made, beautiful pottery, linens, jewelry, woodwork, self-care and edibles were all priced comparably lower than same or similar items in other stores. What was going on? What a gem, I thought!
I became a regular and the shop became a place not only to refill soap and shampoo bottles, but also to learn about the city, the people who made the products sold at the store and the goings-on around the neighbourhood.
For the second episode of “Ten Minute Conversations”, I invited Elizabeth Mckitrick to tell us about the boutique, its social mission and how it survives and thrives in an expensive city such as Vancouver. Listen below to our short conversation and follow along for a summary and some commentary.
What is a Social Enterprise?
Most people are confused about what a social enterprise really is. A 2013 survey in UK revealed that only one in five people can correctly identify a social enterprise. Half of the public either thinks that a social enterprise relies on grants and donations to provide support to people (charity), or that the main purpose of a social enterprise is to return profits to individual owners and shareholders (traditional business). None of these definitions capture the essential nature of a social enterprise.
At its core, a social enterprise, has a mission to address specific issues within a society. The enterprise assumes responsibility to change an unjust situation for the better and sometimes even transform whole societies, and it does so by participating in the economy. It is this direct economic activity and the central steering role of a core mission, that marks a social enterprise.
This is how Elizabeth defines it:
A social enterprise is one whose social mission is just as important as their financial mission. So it’s on equal footing; you have to make a profit in order to be in business, but the profits are re-invested back into the business for the benefit of “all involved”.
There are a number of things that fall into the social mission for Second Nature. Elizabeth and her team are aware of the consequences of social isolation, and so they’re committed to make a place that encourages and enhances connectedness; a place where people can come and be known to one another, meet their neighbours and have a conversation.
The enterprise is also committed to promote conversations around the environment and how our ways of living and climate change might be related. Furthermore, the shop has equipped the neighbourhood with a soap refilling system to target plastic waste.
It is direct economic activity and the central steering role of a social mission, that marks a social enterprise.
The financials do terribly matter though. As we mentioned, people don’t buy from a business just because it is a do-gooder. A small percentage of people give a very high priority to ethical considerations (early adopters), but a significantly larger population, considers the ethics of a business only after everything else (price, quality, availability) is more or less the same. So a social enterprise, like any other business, has to find a way to provide good value.
Good Value: Price, Quality & Intrigue
The shop, purposely tries to keep its pricing low, because it is located in a mixed income neighbourhood. The majority of families and individuals in the neighbourhood, Elizabeth tells us, live on strict budgets. The way Second Nature manages to offer beautiful, local, handmade products at affordable prices, is by partnering with makers who are also in the same situation.
This co-dependent and co-development of makers and buyers, facilitated by a (not-greedy) social enterprise might just offer a fair equilibrium. The makers get all their costs covered and also receive 60% of the profits. The shop receives 40% of the profits. But the margins are moderate, not high. And sometimes even, the shop and the makers strategically decide to cut back on their margins to be able to offer certain valuable products that have longevity to them:
For example we have some linen towels that we bring in that are all ethically sourced, and they are pricy! but we do try to keep the margins down …we are not making 50% or 60% markup on them which we know some other stores are doing! (laughs) … you could use [these towels] for twenty years and wouldn’t have to buy another towel.
It is not easy work to curate quality goods and maintain good prices. Second Nature invests a lot of time and effort researching and testing the products. It is the shop’s direct alliance with an army of local makers that makes it possible to not only test and filter goods more effectively, but also to offer a very diverse array of products. “And that’s part of the intrigue”, Elizabeth believes, “people come in and go, oh! I’ve never seen anything like this before!”
For Second Nature, though, makers are not just strategic partners:
We also encourage people to go outside … It doesn’t have to go through us. We encourage the expansion of the makers’ influence. We are about promoting artisans and helping them to be solidly supported, so they can continue making beautiful things.
But why is it so important to support local makers?
The Importance of Circular Economy
When you support a local artisan, you’re giving the money into their pocket, so that they can buy other local products. And it’s strengthening the local community in a way that would not ever happen. It’s very organic.
Locally owned businesses in Canada re-circulate 2.6 times more revenue back into the local economy than multi-national chains. It’s not only that local business are more likely to buy local services and products, it’s also that they employ people in the community and support local events, sports teams and charities. So money gets recirculated many times and in many ways within the community invigorating the local economy and making it grow.
Elizabeth believes that the community’s understanding of this ripple effect has definitely increased in the past few years. “There is a desire to buy local”, she tells us. People are more aware of true costs of producing, consuming and disposal of a product and so are adapting new attitudes towards their purchasing. More people see paying a little more for local products as “investing in the life of another person or another family” and investing in a product that they love and are going to wear, keep and use for a long time. A departure from rapid consumerism.
About Ten Minute Conversations
We live in a decisive moment of history. Social philosopher, Tom Atlee, gives this image of our time:
Things are getting better and better, and worse and worse, faster and faster, simultaneously.
How can we amplify the things that are getting better and better? And how can we minimize the damage from the things that are getting worse and worse?
I like to explore these questions through the Ten Minute Conversation series, by talking to people who are addressing these questions through their work.
I really hope you enjoy these conversations and I really like to know what you think. So please don’t hesitate to drop me a line if anything resonates with you or captures your attention!