Ok, so you want to be a regenerative entrepreneur. You think you have a concept that will help people, and the planet, and make you a profit. It’s pretty easy to tell if you are making a profit (is there anything left over in the bank account after all the bills are paid?) but how do you know if you are making the desired effect on people and the planet? How do you quantify your effect to compare different business strategies?
I asked myself the same question as I set out to assess my new edible garden business. I compared two services I am offering: Consultations and Workshops. Here is my attempt to quantify the triple bottom line of these services.
Consultations:
People
The garden consultations are helping people be more in tune with their site and grow more of their own healthy food. One client teaches cooking classes and shares her garden bounty with students, creating a domino effect. Another client’s son and several of his friends live in the downstairs apartment at her house, and sharing the garden and food also benefits them. In four consultations, I have directly affected 16 people, or an average of four people per consultation. If I could do consultations full time for six months, I would potentially impact 1560 people.
According to the USDA, an average family of four spends $355 per month on vegetables. (I can’t find the citation for this, I got it off another website that didn’t say where they got it.) If I can help them grow just 10% of their own during the three months of summer, I can help them save $106 every year. In addition, they will be eating healthier, more nutritious vegetables, have a more pleasant experience with their garden, fresh air and exercise.
Planet
According one study, (Heller and Keoleian. Life Cycle-Based Sustainability Indicators for Assessment of the U.S. Food System. 2000) we can reduce 75-90% of our food-related energy use by growing all of our own food. If a person can grow 10% of their vegetables for 3 months, then they can reduce their overall food-related energy consumption by about 0.65%. According to a study at the University of Chicago, the average American uses 400 million BTUs in food consumption annually. (http://geosci.uchicago.edu/~gidon/papers/nutri/nutri3.pdf) By growing just 10% of their vegetables in the summer an average person saves 2.6 million BTUs per year, the equivalent of 20.8 gallons of gasoline. If it takes me 3 hours to help one person reach this, it is worth about 7 gallons of gas per one hour of my time.
In my consultations I am also encouraging ecological gardening practices such as mulching, which retains soil moisture and creates a better environment for the soil life to do its job of feeding the plants. This makes healthier plants that are less susceptible to disease and reduce the need for pesticides or fertilizers.
Profit
I spent two hours at my first client’s consultation, as well as two hours driving (which I was able to combine with another errand) and about three hours drawing up the report. Seven hours for $85 is about $12/hour, not including gas, taxes, insurance and other business overhead. I need to reduce the total time to 2-3 hours in order to make consultations financially viable.
My second consultation was much closer to this goal. This client lived nearby, so I rode my bicycle, spent one hour at her house, and about two hours on her report. As I learn more, I will have fewer questions I need to research, and I will be able to do the reports faster.
If I were doing consultations full time for six months, I could do 390 consultations yielding $33,150. At current overhead rates, that would leave about $28,840. After taxes I would have $21, 630, not exactly a living wage. Luckily, this is just one piece of a diversified business, but if I really want it to pull its weight, I will have to increase the price.
Workshops
People
I had five people sign up for all six workshops, and 14 others come for one or two, for a total of 19 people. Those people collectively received 138 hours of instruction on how to live more sustainably. All five people who came for the whole series, and some of the people who only came for one workshop, reported back that they were already using what they had learned.
The participants who came for the whole series got the most out of it because each workshop built on previous ones, the participants got to know one another and develop bonds, and they had the ongoing support of the group to grow more food. They received 18 hours of instruction (as opposed to one hour in a consultation) If I was able to give them the skills to grow 40% of their vegetables in the 3 summer months, they could save $424 annually (for a family of four).
If I were giving workshops 40 hours per week, I could potentially teach 416 people per year, translating into 416 new, or improved gardens in Anchorage each year. If each of those people taught or inspired just two other people to start gardens, that would be 1,248 new people growing food. That might be enough to start a food garden epidemic.
Planet
With each person that has the basic understanding of Permaculture principles, and has practice using them to design and build a garden, a greenhouse, and a chicken coop, there are significant benefits to the environment. Not only are they growing their own food, but also they are doing it in a way that is low maintenance for them and regenerative for the planet. They also have the capacity to use Permaculture principles to design other systems or tackle other issues in their lives.
Quantitatively, if workshop participants were to grow 40% of their own vegetables for three months, they would reduce their food-related energy use by 2.6% annually, which is 10.4 million BTUs, or the equivalent of 83 gallons of gasoline. Theoretically, if my workshops were full with 12 people, I would spend 30 hours over six sessions to help them grow 40% of their summer vegetables, which would be equal to 33 gallons/ hour. This is a better return on my time than 7 gallons/hour for consultations.
In this exercise I am making a lot of assumptions, but I just wanted some sort of a comparison. For instance, I am using a USDA statistic that says an average family of four spends 26% of their food budget on vegetables. However, if you have abundant vegetables in your garden, you might tend to eat more of them, and your overall food budget might go down even more than 26%. On the contrary, if the family still wants to buy corn, tomatoes, peppers, and other things that are difficult to grow up here, their vegetable budget might not go down as much.
Profit
I charged $30 for the three hour workshops, or $10 per hour which was consistent with similar workshops elsewhere. I offered one free workshop if people signed up for the whole series, and interestingly, several of the people who registered and paid for the whole series missed at least one workshop. My goal was 10 participants per workshop, but the actual number fluctuated between 5-13. In the future I think I could handle up to 12 people per workshop. My total income for the workshops was $1195. Total expenses were about $40 for treats and handout printing, giving a net of $1155, or $192.50 average per workshop.
I spent a lot more time preparing for the workshops than I anticipated. Even though I thought I knew a lot about these topics when I created the schedule, I found I needed to become even more familiar with them in order to teach them to others. I read an entire book on the soil food web the week before the workshop. Designing an effective outline with engaging activities and developing a useful handout took significant time. I also scrambled around gathering materials, and trying to get our own projects with the chickens and the greenhouse somewhat finished before the respective workshops.
Most workshops took a better part of a week to prepare for, averaging about $5/hour, but this heavy investment of time could pay off well for repeat workshops. With just a few hours of preparation and full attendance of 12 people, I could earn up to $360 per workshop or $72 per hour.
If I were doing workshops full time, I would be giving 8 per week, earning $2,880 if they were all full, or $74,880 for six months (to compare with consultations.) This is significantly more money, but I would also need to find 416 people each year to take the full 6-week course. Alternatively, I could offer a greater variety to fewer people.
You can see from this synopsis that I should focus on workshops for the biggest bang for my time. I hope this helps when it comes time to evaluate your own triple bottom line. If you think of things I haven’t considered, let me know!
Monday, November 15, 2010
Don't Call Me Green!
There seems to be quite a buzz these days about Green Businesses. But what is a green business… one that has a recycling center for plastic bottles, or uses toilet paper with recycled content? Yeah, right! Businesses that claim to be green in this way are said to be “green-washing,” and it is so pervasive that the word “green” has very little meaning. So, maybe we can come up with a term that is more fitting.
It seems that for businesses whose sole goal is to turn a profit, it is very difficult to green up because many of the social and environmental costs are externalized, that is, they are not held accountable for. Truly sustainable businesses use triple-bottom-line accounting, where they see positive social and environmental effects as important as earning a profit. In fact, all three must exist to make the business truly sustainable. This idea is graphically represented in the diagram below.
The triple bottom line
This diagram is very similar to a graphical representation of the ethics of Permaculture. In the diagram below, the green represents the ethic “Care of Earth” which correlates to “Environmental Stewardship” in the previous diagram. The red is “Care of People” which correlates to “Social Progress.” The blue is the ethic of “Fair Share” or “Return Excess to the System” which correlates to “Economic Growth.”
Permaculture Ethics
Some people took this idea one step further. If one who starts a businesses solely for profit is an entrepreneur, someone who starts a business to benefit the environment is an eco-preneur, one who starts a business to benefit humanity is a social entrepreneur, then one who seeks to do all three is a sustainopreneur. I can’t say I really like the word, but I really like the concept that you need to have a balance of all three for it to be sustainable.
But why stop there? A business that is sustainable is one that is neutral on the earth. However, a regenerative business finds ways to renew, restore, and revitalize natural earth systems, thereby increasing its ability to provide for human needs. It is truly about care of the earth and care of people, as a means of making a profit.
So, who is an entrepreneur? An entrepreneur is “someone who creates value by offering a product or service, by carving out a niche in a market that does not currently exist.” (http://en.wikipedia.org/wiki/Sustainopreneurship ) Sounds like a Permaculturist observing the nature of a forest garden and choosing a species that offers the exact product or service that will balance the system. The article also states that entrepreneurs view problems as possibilities, obstacles as opportunities, and resistance as a resource. So entrepreneurs are seeking to solve the same challenges in business as Permaculturists are solving in natural systems or communities.
As I seek to grow and develop my new business, I don’t want to be called green. I’m going to set my sights higher than that. You call call me a “regenerative entrepreneur, and if you can call yourself that as well, I’d love to hear from you!
It seems that for businesses whose sole goal is to turn a profit, it is very difficult to green up because many of the social and environmental costs are externalized, that is, they are not held accountable for. Truly sustainable businesses use triple-bottom-line accounting, where they see positive social and environmental effects as important as earning a profit. In fact, all three must exist to make the business truly sustainable. This idea is graphically represented in the diagram below.
The triple bottom line
This diagram is very similar to a graphical representation of the ethics of Permaculture. In the diagram below, the green represents the ethic “Care of Earth” which correlates to “Environmental Stewardship” in the previous diagram. The red is “Care of People” which correlates to “Social Progress.” The blue is the ethic of “Fair Share” or “Return Excess to the System” which correlates to “Economic Growth.”
Permaculture Ethics
Some people took this idea one step further. If one who starts a businesses solely for profit is an entrepreneur, someone who starts a business to benefit the environment is an eco-preneur, one who starts a business to benefit humanity is a social entrepreneur, then one who seeks to do all three is a sustainopreneur. I can’t say I really like the word, but I really like the concept that you need to have a balance of all three for it to be sustainable.
But why stop there? A business that is sustainable is one that is neutral on the earth. However, a regenerative business finds ways to renew, restore, and revitalize natural earth systems, thereby increasing its ability to provide for human needs. It is truly about care of the earth and care of people, as a means of making a profit.
So, who is an entrepreneur? An entrepreneur is “someone who creates value by offering a product or service, by carving out a niche in a market that does not currently exist.” (http://en.wikipedia.org/wiki/Sustainopreneurship ) Sounds like a Permaculturist observing the nature of a forest garden and choosing a species that offers the exact product or service that will balance the system. The article also states that entrepreneurs view problems as possibilities, obstacles as opportunities, and resistance as a resource. So entrepreneurs are seeking to solve the same challenges in business as Permaculturists are solving in natural systems or communities.
As I seek to grow and develop my new business, I don’t want to be called green. I’m going to set my sights higher than that. You call call me a “regenerative entrepreneur, and if you can call yourself that as well, I’d love to hear from you!
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