Learning Efficiency from Social Businesses

When trying to set up one’s own business, it can be very beneficial to study other people’s experience. That is why organizers of the Biz4all-2 programme often invite practicing social entrepreneurs to share their inspiring stories about the challenges they overcame when they were building their businesses. Many participants of the social entrepreneurship training programme note how useful it is to be among like-minded people: listen about other people’s problems and solutions to then take a different look at their situation and possibly see new areas to develop their projects.

Biz4all-2 training is part of the "Social Entrepreneurship Incubator” programme organized by ODB Brussels (Belgium) in partnership with TNU Network University (Netherlands) with financial support from the European Union. You can read more about the programme launch and its first trainings on our website:

•    Biz4all-2. People Do Not Buy Goods (Services), They Buy Solutions to Their Problems

•    Social Entrepreneurship Training Programme Biz4all-2: Change is Your Friend

•    Social Entrepreneurship Training Programme Biz4all-2: problem = opportunity

•    Social Entrepreneurship Training Programme Biz4all-2: Diaspora Representatives and Graduates

•    Social Entrepreneurship is Above All a Business

First, Maksim Padbiarozkin, ODB Brussels, introduced the teams to business models of social entrepreneurship, highlighting the most successful ones:

•    Reverse auction mode is built on aggregating demand. Here, businesses compete to offer the lowest price to customer. This model is being used by large global companies like Ebay, as well as a number of local Belarusian companies, e.g. onliner and kufar. It brings sellers and buyers together in a virtual space, ensuring a fair rating system.  

•    Market capture model. This model requires a large start-up capital to undercut the prices of goods or services offered by competitors. The business thus captures a large share of the market, gradually lowering the costs as their revenue grows. Amazon is a successful global example of this model.

•    Franchise model, used by McDonalds and other large global brands.

•    Premium products at a high price. A great example here is Apple. Their target audience includes people who care more about the quality of the product and its uniqueness than its price.

•    Joint use model the costs are shared by a number of people and are thus lower. Examples here are Uber and Airbnb.

Next, Alyona Lis, Head of ODB Brussels, spoke to participants about Goodwill, a social American corporation founded in 1902. The corporation uses several business models at once. As a rule, social enterprises are small or medium-sized businesses, but this chain of charity stores and workshops is an exception. Goodwill has 3,200 outlets (not only in the USA), with a total annual turnover of $5 billion. To solve social problems, they use direct sales, employ people from vulnerable groups, create franchises and collect donations.

 

Good Wills stores are stores that accept items from people as donations, repair them when necessary and sell them. An average sale in a Goodwill store is 10 to 15 dollars, thus providing people with affordable clothes and household items. Besides, it reduces the burden on the environment, giving items “a second life”. From the beginning in the 1900s, the stores employed migrants and people who had trouble finding a job. Today they also hire people with severe disabilities, ex-convicts, and people who for various reasons could not find employment for a long time. The system runs smoothly, ensuring that the business is stable, develops and brings profits no matter what.

How a grant initiative grew into a stable business

We already covered “Selskaya Stolinschina” (“Rustic Stolin Area”) company on our website: “Selskaya Stolinschina”: How a Social Enterprise Solves the Problem of Plastic Waste. Viktar Velesnitsky, Director of non-profit foundation “Stolin District Rural Development and Entrepreneurship Support Centre”, frequently receives delegations, sharing with them how his team managed to develop a non-profit organization into a sustainable enterprise that collects recyclable film. Viktar travelled to Minsk for the March 10-11 training to share his personal story with the teams of Biz4all.

Viktar Velesnitsky, Director of non-profit foundation “Stolin District Rural Development and Entrepreneurship Support Centre, creator of “Selskaya Stolinschina”  

In Stolin District, more than half of working-age population is engaged in agriculture. This trend came about in late 1970s, when people started to grow cucumbers and other produce in greenhouses to export them to Russia. Every year, villagers grow about $50 million worth of vegetables on their own personal farms.

Increasing production volumes caused the region to amass a lot of plastic film, which at the end of every season was taken to landfills or simply burnt, emitting toxic dioxins into the atmosphere.

Seeking to resolve the problem of recycling film waste, in 2011 “Stolin District Rural Development and Entrepreneurship Support Centre” founded a unitary enterprise “Selskaya Stolinschina” (“Rural Stolin District”). Every year, about 500 tons of plastic film in the district was either discarded or recycled in a hazardous manner, meaning that something needed to be done. Starting a large project with a huge investment was very risky. That is why the foundation applied for a mini grant of $2,000 from the Global Economic Fund (GEF), used to organize a marketing survey. The goal was to see what could motivate the village residents to stop burning and discarding their film and start bringing it to a collection point. “First, we asked local municipal governors to give us information about the volume of film that was discarded in their districts every year, but they were not that willing to share that information. So we went on Google Maps, identified those territories where we had statistics and then extrapolated the data using satellite imagery, in order to assess how much film could be collected from the region as a whole.” Then, we selected one village council as a pilot region: we drove around people’s houses, organized group meetings and asked them what would motivate them to bring and deposit the film. It turned out that people rated the price factor to be the fourth most important, while the priority for most people was the convenience of collection points location. Viktar says enthusiastically: “When we were setting it up, we rarely used the term “social entrepreneurship”. We like to call it a “socially useful organization”, which benefits the society. At the moment, we are engaged in a number of social entrepreneurship projects, trying to survive and compete with other businesses, since we already have local competition.

Now, six years later, 50% of film in the district is collected and sent for recycling, thanks to efforts of “Selskaya Stolinschina” and another local enterprise. “Selskaya Stolinschina” develops a competitive environment: the price of recyclables keeps growing, and they also started to sell new film, which helps the company make good money. In 2016 they made a profit, reinvesting the money to start a new line of business: they rented 6 hectares of land and started a blueberry plantation, which went on to yield its first harvest last year. “We have high hopes for this line of business this year. When we created our business plan, we thought we’d be selling it at the price of $1 per kilogram, and in the past year we sold it for $4. However, other countries also have blueberry plantations, so the cost will go down. But even at $1 this is going to be a good source of revenue”. “Selskaya Stolinschina” plans to collect 150 tons of film a year.

Collection of film in Stolin

Photo: media-polesye.by

At the end of his presentation, Viktar underscored: “Any social enterprise should understand that it will have to compete on equal terms with all the other businesses. You have to set strategic goals and move towards them. Everyone has to face some challenges, but it is important not to be afraid of them, minimize your risks and solve problems. If you do that, you will succeed.”

“ArtIdea”: employing people with multiple developmental disorders

Natallia Ampleeva, founder and director of unitary enterprise "ArtIdea”, spoke about employment opportunities for people with disabilities and the challenges the company had to overcome to streamline the business and start selling high-quality competitive products on the open market. Natallia has a child with a first-degree disability, so she knows from experience that a special needs child can and should learn a number of skills, if you do it right.

Natallia Ampleeva, founder and director of unitary enterprise "ArtIdea”

"ArtIdea" workshop employs people with multiple developmental disorders under the state programme of labour adaptation of disabled people, which funded by the Ministry of Labour, Employment and Social Protection. When a labour adaptation year comes to an end, the workshop helps employees to look for a job in the labour market. Natallia says: “In our workshop, no one — not even the most well-trained young people — can produce an item from start to finish. Everyone performs their part in a conveyor-type operation. You can’t treat an enterprise that only cares about profits the same as you treat our company, which helps people develop their skills and creates specialized jobs for people no one would otherwise work with. We direct a lot of time and resources to solving this social problem”.

"ArtIdea" has already coached and released thirty people into the labour market. At the moment, the workshop employs 19 people, 16 of them are persons with disabilities, and 12 have multiple developmental disorders. It is true that the government provides some benefits to such enterprises, e.g. a reduced rate of contributions to the Social Security Fund, however, according to Natallia, that is not enough. “That is why we are actively involved in all the discussions of social entrepreneurship. We want enterprises like ours to be put into a separate category instead of being treated the same as traditional businesses.”

The seminar concluded with a master class by Uladzislau Kaurou, co-founder of social enterprise "Nashi Maistry" ("Our Craftsmen"). Under the guidance of Uladzislau, participants tried to define what social enterprises had in common with traditional businesses and with charitable organizations. You can read more about the social enterprise "Nashy Maistry", which employs people with alcohol addiction, on our website: Social Enterprises of Belarus: “Nashy Maistry” is the First Workshop in the Country for People with Addiction and Katsiaryna Kaurova, Co-Founder of «Nashi Maistry» Social Enterprise: Believing in Goals and Mission of an Organization.

Uladzislau Kaurou, founder of "Nashi Maistry" ("Our Craftsmen") social enterprise

Uladzislau shares his own experience: "Business and social entrepreneurship are very similar: they are both based on business principles. Charity and social entrepreneurship are totally different. Learn from businesses, observe how they are doing things, because a social enterprise is totally different from a non-profit organization. A social enterprise is a business; you do have a social purpose but you have to learn how to do it in a way that would ensure your products and services are in demand. Learn from businesses and recruit intelligent team members who have the makings of businessmen".

Text by: Valeriya Nikalaichyk

Photo by: Alyona Lis 

The goal of the programme is to develop a package of social entrepreneurship training programmes in Russian using innovative international practices, as well as the experience of Belarusian diaspora representatives who have become successful entrepreneurs in European Union countries and the USA.

The material was prepared within the framework of the "Social Entrepreneurship Incubator", implemented by ODB Brussels in partnership with TNU Network University (Netherlands), Belarusian Youth Public Union "New Faces" and International Civil Association "Union of Belarusian of the world “Motherland", with support from the European Union.