What exactly is a social enterprise?

According to Social Traders, an organisation in Australia that certifies these types of entities – social enterprises are:

Businesses that trade to intentionally tackle social problems, improve communities, provide people access to employment and training, or help the environment.”

I think the OR in that definition is pretty important because I feel like the general population is confused.

When I started my company The Refoundry, I made it purpose driven specifically to help mother nature. However, when I tell people that it’s a social enterprise, many believe that means I should be also be creating jobs for disadvantaged workers, donating all profits to other causes and attending every environmental forum in town.

It’s like someone telling an organic farmer that they must give away their profits to farming charities in other countries.

The farmer’s mission is to farm organically, just like my company’s mission is to make products out of recycled plastic. That’s it. Anything else is bonus.

This one decision alone already disadvantages my business because it costs significantly more to manufacture products in Australia than in places like China – especially with recycled plastic rather than virgin materials. However, it means that the local plastics here have a place to go after their first useful life rather than into the tip or waterways. And this is exactly why I started the business.

Today, even I had to remind myself of my company’s mission as I spoke to a company that does outsourced work from the Philippines. While my manufacturing will be done in Australia as part of the social mission to use Australian recycled plastics, it doesn’t necessarily mean that my customer service team needs to reside here too.

After all, if the consumer won’t buy my products because they are way too expensive, then my business will fail,. Then, there goes all the good I could have done for the environment too.

The challenges of customer service as a sole trader

Thinking ahead – one of the challenges of starting this business on my own is the need to always be present to answer customer service calls and mail out orders. While this will be fine at the beginning, I will eventually need to take some time off – like to visit my family back in the US. I might not have enough sales at the time to warrant hiring someone though.

So, I was chatting with a fellow entrepreneur about this today, and he gave me some info about drop shipment companies that he considered. He just saved me a lot of research time. I still need to find a way to cover customer service though.

I’m still going back and forth with my designer about Product #3. Better to take the time in the design phase now to avoid unnecessary costs in the future.

Note: this is Sunday of a long weekend. I’m glad that work doesn’t stop for weekends while I am in the Start-up Phase. Each day is costing me money until I start selling products.

Minimum viable manufacturing

Spoke to a former colleague who is a manufacturing expert. I asked him – what’s the minimum, viable manufacturing capability he would recommend? He said, one machine that’s flexible and able to do small batches because Australia does not have the demand to keep a bigger machine at capacity. He also warned me about the price of moulds. I had no idea that they could be in the 6 figures for some.

He just reiterated my view that I should outsource my manufacturing (at least for now). I still have way too much to learn which makes the risk intolerable for me personally and to any potential investor

How much risk do I take when my learning curve is already high?

Spoke to a friend about my idea of creating a recycled plastic manufacturing capability here in Canberra. He suggested that I look at leasing machines rather than buying them. I had already looked at used machines, but not leasing yet as prices aren’t readily available on websites.

There’s so much I don’t know about this industry. I think the learning curve is too high and risky to try to do manufacturing myself at this stage. It would be smarter to design something and outsource the manufacturing to someone else. I can always reevaluate building this capability later when I know more.