Modelling out a social enterprise.
An accountant turned entrepreneur helps Bhutanese weavers earn a living.
SOME social enterprises are founded to channel profits generated from the business to a social cause. And some enterprises are birthed because a social cause has been thrust into the arms of the founders who now need to find a sustainable business model to support the cause.
Ana by Karma, a social enterprise founded by Quin Thong that helps Bhutanese weavers make a living by selling their scarves, is the latter.
It started out like any other trip; sightseeing and getting acquainted with the local culture and people. Perhaps a little business dealings here and there.
But Thong’s second trip to Bhutan in 2014 unexpectedly became the start of Ana by Karma.
Thong met up with Karma Yangchi, a village housewife she had encountered during her first visit, and discovered that the weaver was struggling to make ends meet. She offered to buy Karma a sewing machine so that she could start her own small business.
But Karma wasn’t interested in free money.
So, Thong offered to sell the scarves that she makes instead.
And thanks to Facebook, over 40 orders of the scarves came in overnight. In two weeks, 100 were sold and in less than 16 weeks, more than 1,000 orders were received.
That encounter put the whole village of weavers to work, trying to fulfill the orders. And their success gave rise to Ana by Karma.
“Ana” means “sister” in the eastern Bhutanese language.
In the first year, Ana by Karma enabled the team of weavers to collectively earn about 34 years of income of a low-income Bhutanese family.
Thong, a Malaysia-born chartered accountant who is based in Hong Kong, couldn’t be more ecstatic than the weavers she was helping.
“We are a true social enterprise. We survive on sales. If I can’t sell, then we’ll have to close shop because we don’t survive on donation or external funding,” says Thong.
Ana by Karma’s scarves are sold through its website as well as through retail outlets in Malaysia, Hong Kong, Bhutan and China.
Thong stresses that a social enterprise needs to have a business model that enables the company to stand on its own feet while taking care of its stakeholders.
“When we talk about business model, we are talking about taking care of the stakeholders – the women, the social enterprise, the retailers and the customers. It is about finding a way to make the model work.
“A lot of social enterprises work like this: they have a selling price and a margin, but they refuse to give retailers a margin. They ask why are the retailers taking 5% when they are doing a good deed here. But the retailers need to keep their stores open too,” she says.
Thong, an ACCA-qualified accountant, emphasised that social enterprises should ensure that everyone along the value chain be treated and paid fairly.
“It is a mindset. We have to be more commercial. We are not running a charity here. At best, we give our ideas and time for free. But we never give money to the social enterprise for nothing. That is the way social enterprises should start thinking,” she says.
She also notes that these days, a lot of the social enterprises set up a business with the intention of trying to get funding from the government first before trying to meet a need or build a proper business. This, she opines, has led to many of their closure.
“Social enterprise is at a nascent stage. Nobody really knows what they are doing or knows which business model will work. I wasn’t sure about what I was doing. I just found my way step by step.
“We will all eventually find a model that works for us. Some will lose their way and some will come up to the next stage. And those that come up to the next stage will serve as the models of busienss that the new ones that come up after can follow. We need to go through this experimental stage to weed out the weak ones and then the good ones will grow. Soon, we will see real social enterprises making money on their own feet,” she says.
For a social enterprise to really thrive, the business needs to have a tight relationship with the social community it is supporting. The community must be engaged in the business as much as the business is engaged in the community, says Thong.
Thong’s work with the weavers in Bhutan has not only provided them with income, she also teaches them financial literacy and various financial terms to be better businesswomen.
The above article by Joy Lee first published on thestar.com in Aug, 2017.