Five Factors- Part 6- Material

Lastly for our series on looking for natural advantages for your business, we come to the question of material. What does it take to run your business, specifically, what consumable materials are needed to make what you are selling etc? (Here we are thinking specifically of what it takes to make/produce etc, not other materials like office supplies etc.)

I come to this question at a personal level. In my initial foray into social enterprise, we were working to start a high end pie shop that created employment pathways for people coming out of crisis life situations. We had a number of natural disadvantages, we had a high monthly rent, and our market was an extremely small segment of the population who would be willing to spend 2x’s more for pie and drive further to get it. (Gulp!)

Beyond that, we were making pie with the highest quality ingredients. We considered this an essential part of our business from a number of perspectives but that meant that our material costs were very high and the amount of material waste we created (shelf life of ingredients etc) was also high. As you might guess, this is a tough model to sustain. Our high end pie needed more natural advantages and we simply didn’t do the work of finding them in our business strategy.

So when you are thinking about your business plan and you start working through material costs, you will find many ways to create a potential advantage for your business. Can you procure material for free somehow? Does your business need consumable material at all? 

The best example of this line of thinking would be Goodwill. You might have an issue with certain aspects of their approach but they rely on a 100% donated material base in order to accomplish their social mission of developing job skills in folks. This is the kind of natural advantage all social enterprises can make use of in some form through creative brainstorming on the front end. 

There are all manner of ways to limit costs by thinking creatively. Coffee shops can perhaps get free equipment rentals by partnering with a particular coffee company. Recycled materials can be repurposed and sold at a large margin. Physical assets can be donated to nonprofits and utilized for the business. In all these ways, material cost is limited without sacrificing the mission and viability of the business.

This last blog series on finding natural advantages across the five factors we’ve explored is certainly not intended to be an exhaustive or foolproof way to ensure business success. Our aim has been to bring up critical areas for consideration on the front end of your business planning that will help create the possibility of greater success over the long haul. We’d be happy to flesh these ideas out more with you so, if you’ve got questions, let us know!

About Adam Gustine

Adam Gustine leads CovEnterprises for Love Mercy Do Justice and the Evangelical Covenant Church. He is also the founder of Jubilee Ventures; an economic incubator in South Bend, IN. He and his wife, Ann, live in South Bend with their three kids.

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