Early in February I was interviewed by Nick Brusatore about Saul Good Gift Co., and showed him around our warehouse in Vancouver’s Downtown Eastside. Nick’s been on the lookout for innovative green businesses to invest in to help them grow. To date I’ve managed to grow the business through debt financing, originally utilizing my student line of credit while working on my MBA. I’ve been careful not to accept or raise money when I haven’t needed it, instead I’ve gone for a bootstrap strategy for business development, making the most from what we’ve got, and ensuring our business is profitable before capitalizing and growing to scale.
The basic concept is simple. Businesses need resources to grow (human and financial). If you don’t have ample supply of what you need then you’ve got to go out and get it. Over the 3+ years of being in business we’ve been lucky enough to not come across cash flow challenges. Part of this has been because we take a 50% deposit upfront on our large orders which helps to pay our vendors for materials we need to fulfill the job. Profits that we’ve generated have been reinvested back into the business to finance marketing and website development (and redevelopment!). From what I understand most angels want an equity share in the business for the capital they contribute. If the capital is used to grow the business and make it more profitable, the founding owner, although now owning less of the business, owns a smaller piece of a larger and more profitable company. In this case, less is more.
Finding the Right Investors
Using business as a tool to raise awareness and address social and environmental issues is part of our corporate culture. Maintaining this as part of what we do as we grow is important if we’re to fulfill our mission, not only now but into the future. Ensuring that everyone that invests in our business shares these values is a key part of ensuring this happens. In the spring of 2007 I went to the Business Alliance for Local Living Economies (BALLE) conference in Berkeley, CA and was first introduced to B Corporations. B Corps are companies that have made changes in their corporate charters to reflect their social and environmental values. In addition, certified B Corps meet a standard developed for sustainable businesses that walk the talk and are creating good in society, creating value for a triple bottom line: people, planet and profit. When it comes time to raise money and capitalize Saul Good I know I’ve got to feel really good about the people I bring in as investors understanding that relationships are key to business success and maintaining our values.
The road ahead
As you hear me say in my meeting with Nick, we’re not currently looking to raise money. We’ve been able to build capacity on our own without raising capital to fulfill the corporate gift and gift basket market in Vancouver, BC, Canada. Our business model is such that as the business scales to service other cities we’ll source local products to that location as we see this as key to our differentiation. We will at some point need investment to accomplish this and look forward to the challenge of getting there and the opportunity of making it happen. We’ll keep you posted!