Pivot and profit

Entrepreneurs, especially social entrepreneurs, are often challenged by numbers. While social entrepreneurs think of social and environmental profits ahead of financial gain, one must not discount profit or the simple act of making money. While those with a strong business appetite only think of financial profit and being able to sell for X times in a few years, the social entrepreneurs either just fade away or pivot to be able to survive.

One such entrepreneur is Reese Fernandez-Ruiz of R2R (or Rags to Riches, when we both started in the same decade of 2010s). I recently interviewed Reese for my podcast called “Good and Green” because she could be the poster child for social enterprise. She started with a dream of solving the artisans’ common problem of hand-to-mouth operations making foot rugs out of scrap cloth. To make them more sustainable, she ventured with a few friends to improve the lot of who they used to call “Nanays” (mothers) and who she now refers to as “artisans” because they do these products all by hand.

But the path to sustainability is paved with challenges and Reese knows what these issues are through her journey, now counting 18 years. Two sons and a husband later, Reese told us about how she kept pivoting every time the business faced a challenge of almost closing down for good. In fact, in 2016, she almost threw in the towel but gave it one last chance, telling the universe that if these five things happened, she would carry on. And the five things happened! That was the sign from above that she should not give up and that there was a light at the proverbial end of the tunnel.

What are some tips she shared with us that may guide new start-ups and social entrepreneurs hanging by a thread?

Profit is not a bad word. Understand that business has to make profit so your enterprise will not be threatened by mounting debt and may be forced to close.

Understand the numbers. Often creative entrepreneurs just leave the numbers in the air as if they could solve themselves. Reese had to learn to read numbers so she can make the proper margins to survive.

Pick and choose advice. She spoke about mentors who offer advice but some may not be applicable in your case. Have the discernment to pick and apply only what feels right to you.

I gathered that Reese and her team made a few more adjustments in the business strategy and they were never afraid to close non-performing stores, to streamline operations and they made sure efficiency was achieved through vertical integration.

You may say “but that is what business should be. Be the hard-nosed business person who makes a lot of profit.” But for Reese, it was to maintain almost 200 working artisans, mostly mothers, and giving them a chance for better lives. She also accepts the fact that some of the second generation may not want to be artisans but may choose other careers and that is fine by her. Acceptance is key. Those who choose to follow their parents’ path are welcome to train and be skilled in various jobs now available at R2R.

The lessons we picked up will benefit today’s new start-up entrepreneurs. To pivot and not be afraid to change course is a skill that you will learn over time. We still see many closures of stores and businesses with advisories on social media, maybe because they did not want to bother to pivot and revisit their mission and vision.

But everyone must start with that goal, that vision. If all you see is making money and selling your company in three years for X times (it is part of investor-speak to say X – 3X, 4X, etc.), think again. You are not a social entrepreneur. You are a regular money-centered business person and that is OK, too. After all the purpose of business is profit, as Adam Smith, an 18th century economist and philosopher, believed.

But society needs more people like Reese because she weathered all the challenges and kept to her vision of helping artisans, pivoting to make profit, so they could be sustainable as a business. And that may be the dream of many idealistic youth of today who want to help societal challenges as well as environmental issues. And so we go back to discovering social entrepreneurs who we can support so their tribe will increase and this just makes for a better world.

We need more sustainable examples of entrepreneurs who truly help a cause, a group and eventually a whole country or a specific industry.

The other woman entrepreneur I will interview on “Good and Green” podcast is Zarah Juan (yes, we are related) but she is another model for a sustainable social enterprise, always looking to help women weavers while making some profit to keep her business afloat. Zarah started as an ecobag maker for a department store chain but pivoted by using the same sewing skills of her team to help other women. She moved from commodity bags to specialty whilst meeting women weavers from Bagobo Tagabawa tribe in Marawi and up north in Tublay, Benguet. This is a difficult pivot because it required travel to distant lands, teaching artisans from different cultural communities and solving many challenges with each weaver group.

But today Zarah has used her skills in bag design, merchandising and marketing to create products appealing to many consumers, not just as a fashion item but as a part of Filipino culture. Her secret to being an entrepreneur is her experience in minding her mother’s sari-sari store after school and during summer vacations.

Listen to these two women in our March episodes and learn how women make a difference in the communities they chose to adopt as their own or who have in turn adopted them as their own daughters.

Happy Women’s Month!