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Being Ethical Ain’t Easy — The Birth Of A Social Enterprise

Photo by Susan Yin on Unsplash

People love the words sustainability, ethical and conscious consumerism. Saying the words is one thing, living them is another. Being ethical ain’t easy. Selling it is even harder. This is about the birth of a social enterprise.

Fair Trade vs. Free Trade

This is one of my biggest pet peeves. It’s something that actually makes me want to scream!

I’ve had friends, lovely customers, and even reporters blurt out that we were running a “free trade” shop. It’s somewhat laughable because they were so excited when they said it. It’s like they were sharing a marvelous secret…and they were. We’re not free trade at all.

So what’s the difference?

Fair Trade is an ethical business model based on social and economic justice principles. Free Trade is Walmart.

Fair Trade is all about equal pay, equal rights, human rights, anti-exploitation and so much more that makes the world a better and fairer place. It’s the original business model before capitalism. Everything was handcrafted, natural and organic long before the industrial revolution. It’s the only business model that makes the planet and people healthy as well.

Free Trade is profit over people, period.

Selling The Ethical Idea

Before you even open your shop, you have to sell the business model. Our story began with our local small business development center. We needed to write a business plan to get into a certain location.

When we first tried to explain the ethical idea to the director it was like being from Mars. Of course, he stumbled throughout the discussion calling it…free trade…see why I scream. A capitalist mind was being short-circuited by the concept of ethics.

Because running an ethical shop is a bit different than traditional free trade businesses, it posed a problem for parts of the business plan. We use certified Fair Trade dealers and wholesalers, so accounting issues popped up. It seems that an ethical business can’t fit into a capitalist model, lol.

It took us a few years, yes years, to get our business plan finished. I would recommend that any ethical/social enterprise make a business plan. It may seem useless but it helps you get funding, business credit and placement in prime locations. Think of it as your business FICO score.

Making The Pitch

We wanted to be part of a revitalization effort in our community. There were plans to create an Arts District with its cornerstone being a mini-mall. This was our target location. This was why we needed a business plan.

We got an interview with the executive director of the agency and made our pitch. Instead of the expected power point presentation, we made a movie. Short and simple it enabled her to visualize what we had to offer. We got approved. We had to wait until the building was built and they found a manager for the project. That was during the years our business plan was being built. Oddly enough the timing worked out.

Even though social enterprises are finally becoming a reality, there are still people who don’t get it. I suggest that if you’re trying to break into the market, be as visual as possible. Our movie showed what we wanted to do. If you’re a writer you know: show don’t tell. Same holds true with the pitch. Drill down and focus on the most important benefits of your business. People in the social/ethical biz get a reputation for being spacey and air heads. Change their minds.

The Downside Of Partnerships

Before you partner with anyone on your project do serious research on them. We didn’t do that. We seriously regret it.

Our situation is not the norm since our “partner” was the managers of the mini-mall. The executive director of the agency overseeing the buildout was replaced. The new director had his own agenda. We didn’t realize we needed to watch our back and lost everything because of it.

We opened our brick-and-mortar shop in 2013. We just couldn’t believe we’d done it after all the hard work. We never suspected we’d been had. I look back on this and think about how subtle things were. Nothing overt but we kept getting deeper into the trap. I don’t kick myself. I look at it as a learning/growing experience. A very, very expensive one. I don’t blame us, you can’t when its deliberate deception. However, if we hadn’t let the excitement blind us, we would have researched and averted disaster. The signs were there if we looked.

The Weird Thing About Ethical Businesses

Despite ethical businesses not fitting into the capitalist system, they’re desirable investment opportunities. From the beginning of our journey with the small business development center onward, we had many people wanting a piece of our action. They seemed to appreciate the potential. They wanted to capitalize on the situation.

Partnerships of that nature could also ruin your business. This is an issue of profit over people.

We had people making claims they had fair products. Being deceptive to confuse people is not ethical. They wanted us to sell their stuff. We wouldn’t. We had people buy similar non-ethical products and underprice us to cut into our sales. We had people buy items from us to resell them at a higher price to a niche market. We had people use our name and artwork to promote themselves. This stopped immediately because we had a copyright. Business is a nasty scene.

Protect Your Business Model

We had a great business model. We lasted 3 years despite the odds and partnership. We’re no longer a startup and have a credit rating. We’re solvent and are trying to break into the e-commerce market. I’ll admit I’m a little afraid of making a sale. Shipping scares me. It’s a new learning curve I’m not looking forward to.

Despite all of this, our startup business model is trashed. It took me 8 months of racking my brain to rebrand. I’m heartsick when I see all the products we’ve sold only to have the money go to the partner. We stopped being able to grow, which meant that the people we were helping stopped getting assistance too. The ripple effect of this went deep into the core principle of our social enterprise. It hurt more people than us.

It’s very different for a social/ethical business to take a hit. It’s not just the business owner who suffers. In our instance, it hurt women, children/orphans, and disabled artisans. It caused us to break alliances with certified dealers and wholesalers that could reach around the world and help artisans globally. The hardest thing was telling each vendor we dealt with that we had to stop buying.

Down But Not Out

It’s been a little over a year since we closed our shop. It’s been the best time of my life. I think that’s true for my husband too. He’s taken this harder than me, but has come to realize that we’re down but not out.

For 3 years all we did was work. No laughing. No rest. Austerity and extreme number crunching. I told him that things weren’t over. We’d regroup and go forward. We have.

Today we laugh, plan and dream again. We live simply and feel human again. It wasn’t the business that did it. It was the dysfunctional situation that we had to run our business in.

The other day I was telling him about an idea I have for growing our business. The first thing he asked was: “could we open another store?” Every time I go into little shops that have just opened up, I find myself giving them pointers and helpful advice (like how to open your cash register). I think the small business bug is in our blood. We just need to do it a bit better this time. No more starry-eyed excitement, we’re pro’s now.

Call To Action

I hope this little peek into the life of a social enterprise helped you. If you’re thinking of starting a small business these issues I’ve raised should be on your checklist of do’s and don’t. If you think any of your friends would benefit from reading this, please share. Social media is appreciated, but a clap is welcome too.

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