The #Takeoff series is about crowdsourcing issues important to Canadian small businesses. They tell us about their defining moments and we write about their stories, the issues, and strategies for success or how to overcome obstacles.
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When Dylan Corbett and Danika Gagnon decided to start a company in 2013, they agreed it should do more than generate profit. The two friends sketched out a plan to create a socially responsible clothing brand that would make some sort of difference in the world.
When Mr. Corbett went on a backpacking trip through Africa last spring and volunteered with an after-school soccer program in the Gatina slums of Nairobi, they found it.
“I was amazed by the positive impact this local charity had, with their limited resources,” recalls Mr. Corbett, 26, who has an undergraduate business degree and works as an engineering technologist in Fort McMurray, Alta. The organization, the Gatina Youth and Empowerment Program, uses sport to promote values such as co-operation, tolerance, fairness and discipline. It also runs a farm to grow vegetables to sell at the local market, says Ms. Gagnon, 28, who has a background in communications and works as a media relations officer in Ottawa.
Last October, Mr. Corbett and Ms. Gagnon forged a partnership and formed the Hunger Republic, an Ottawa-based online apparel company that provides aid to communities in need for every item sold.
The funds for the startup came from Mr. Corbett’s savings, and the two friends have continued to work full-time in their jobs. It cost Mr. Corbett and Ms. Gagnon a total of about $10,000 to launch the business, including website and logo design, designer fees and buying all of the initial apparel. The Hunger Republic’s monthly costs are especially low, “even for a startup,” Ms. Gagnon says, coming to about $70 a month. “This is the beauty of being an entrepreneur in the age of the Internet.”
They created their logo through the help of a crowdsourcing website. They developed branded items such as T-shirts, leggings and caps with a local clothing supplier and printer and created an e-commerce website on the Shopify platform.
Mr. Corbett, the company’s chief executive officer, says that every time a customer buys an item, he or she directs the Hunger Republic to make a donation to help the charity in one of four categories: buying school supplies, sporting equipment or meals for the after-school program or supporting “community development,” for example paying to plant crops on the farm.
“Social responsibility is becoming increasingly important,” explains Ms. Gagnon, the company’s vice-president of marketing and chief creative officer.
Appealing to socially conscious consumers is a business model that’s worked well for larger retailers like TOMS Shoes and Ten Tree Apparel, says Antony Karabus, chief executive officer of HRC Advisory, a retail consulting firm based in Toronto and Chicago.
“It’s incredibly laudable; I love what they’re doing,” he says, although it’s “not yet really a company,” with its small scale, low volume and minimal overhead. The two friends must continue to sustain and enhance the company in order to make an ever-greater impact as well as profits, he notes.
Michael Mulvey, an assistant professor of marketing in the Telfer School of Management at the University of Ottawa who is an expert in consumer behaviour, retailing and branding, says that the Hunger Republic’s business is low-risk and “very scalable.” While its product offerings are modest, they have a unified “minimalist black” look, which is “always in style” and presents a simple, consistent brand. “It’s taking a page out of Apple.”
The other side of the business, the cause and the “ideological affinity” of its customers, is also an advantage, Dr. Mulvey says. “The best customer to have is the one that’s fully engaged,” which is especially possible through the Internet, but only if the company can reach people outside of its local market.
While sales so far have been modest, the aid provided by the Hunger Republic is already apparent in Gatina, says Mr. Corbett.
In the first three months of operation, the company was able to donate a little over 42,200 Kenyan shillings (roughly $550 Canadian) to the charity. “While this may seem like a modest amount, it allowed them to accomplish a lot of things they wouldn’t have otherwise been able to do,” Ms. Gagnon says, such as begin the construction of a well, expand the farm, start a new soccer team, provide school supplies and meals for the children, as well as take the teams on road trips to participate in tournaments outside of the slums.
The biggest challenge is “to get our name out there,” Ms. Gagnon says.
They depend on social media to get the word out, for example linked to special events like the annual International Day of Sport for Development and Peace, but they have no budget to run ads on social media.
Mr. Karabus says that Mr. Corbett and Ms. Gagnon have the choice of continuing to run the Hunger Republic “in a small way” and growing incrementally, or “broadening the base,” running the company full-time and raising some capital, which he says is likely to come from an investor they know at first.
“To make it into a real business it’s going to cost money,” he comments, starting with paying for marketing efforts on social media and then increasing its inventory, distribution infrastructure and control systems.
Mr. Karabus notes that to raise money and increase sales, Mr. Corbett and Ms. Gagnon also need to show that there is governance and accountability in the business, for example ensuring that donations get to the intended recipients.
Dr. Mulvey agrees that transparency is the Achilles heel of many companies that espouse charities. Mr. Corbett and Ms. Gagnon should develop “metrics of success” and talk about them through anecdotes, such as the number of smiles created, soccer games played and tummies settled by their efforts.
Also on the marketing side, Dr. Mulvey says the Hunger Republic needs to be “buzz-worthy,” so that “strangers can discover it.” That means they should get the product and cause talked about by bloggers, worn by celebrities and promoted by opinion leaders, for instance, by telling their story in a way that engages people.
“The brand message becomes a blueprint for achieving sustainable change in communities.”
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