Growing sustainable businesses
Why help sustainable and organic businesses?
There is truly no alternative for me as it aligns my personal and professional values. It’s prioritizing the health of ourselves, our communities and our planet over short-term corporate profits. The world will continue to face very daunting forces that threaten all of our health and well-being and it’s imperative that we each do all we can within our means to address these issues and to take a long-term view. It’s truly on all of us.
For some, it’s utilizing waste streams to create recycled products or generating value-added consumer goods from organic raw materials. Others preserve water usage and utilize clean energy sources. There are so many phenomenal companies out there and I want to help all of them.
My work with New Resource Bank is my own contribution at this stage of my life and career. By exclusively supporting businesses that foster sustainability at their core, we’re creating a viable banking product that is the “organic” alternative to the large money centers supporting the world’s worst offenders behind closed doors. Our goal over time is re-allocate capital to companies that have a positive influence on the world and slowly drain the source of funds from companies that are parasitic in nature, bringing us closer to a more sustainable and just world.
Organic food businesses face many challenges
It depends on your vantage point, but it’s becoming an increasingly saturated market. I happen to think that is wonderful for the industry and the average consumer. We work with a number of CPG (Consumer Packaged Goods) companies that are creating thoughtful, healthy and innovative products in the organics space. I’m inspired by each of them. The inputs tend to be more expensive at this stage in the lifecycle of raw materials. Moreover, companies in the organics space tend to give back to their local communities more and invest more in their staff.
Ultimately, this results in a higher price per product and lower margins for the company. While consumers will pay more for quality, there is definitely a natural limit to that premium. So with low margins, in order to create financially sustainable businesses, organic food companies need to compete with volume by scaling their operations intelligently. That typically requires some investment in equipment and infrastructure, personnel with the appropriate expertise and inventory management. Each of these in their own right is a major challenge.
I think an important thing to remember is that we don’t have to constantly be recreating the wheel. There are many around us that have faced similar challenges while on their own path and they are great sources of information.
Start thinking about growth early!
It’s important to start the dialogue with financial institutions early on, realizing that the process can be longer and somewhat more tedious than we would all like, especially if your business doesn’t have a credit history. FDIC insured banks, for example, are regulated entities and have to abide by various rules, but within that general framework there is quite a bit of room for flexibility and latitude. In fact, financial institutions come in all shapes and sizes. Sometimes it’s just a matter of finding the right fit.
Creating a dialogue with various financial institution before your business is truly in need will enable you to navigate those waters calmly. You’ll be able to learn which institutions are good alternatives for you and which aren’t based on your own circumstances.
I think financing becomes exceptionally stressful for many companies because they don’t seek it out until they are really in need. And at that point the field may be limited to more predatory institutions.
Don’t be afraid to ask for help…
I alluded to this previously, but there are a number of folks in the industry that have walked these paths before us and it’s a good idea to leverage that knowledge, in whatever capacity you need. Reach out to other people in the industry and ask them how they’ve solved for a certain problem.
If that’s financial, start conversations with representatives from local community banks, CDFIs, grant providers or a mission-focused lender like New Resource. Tap into local networks of business owners to see what they’ve done. If approached with sincerity, I’m confident you will get the help you’re looking for.