Regenerative business

This chapter is part of the element Taking action. To learn more about this element read the 4 Returns publication, the 1000 Landscape’s Practical Guide to ILM and the accompanying Tools guide.

Regenerative business is part of the 4 Returns’ DNA. A successful regenerative business can contribute to all 4 Returns: inspiration, social, natural, and financial.

Business activities can make a landscape restoration initiative more self-sustained and less financially dependent. They can also be an accelerator of transitions in the landscape. Regenerative businesses can be found in a variety of sectors: regenerative agriculture, agroforestry, real estate, tourism, carbon, and water services, to name a few. Read this story, for example, to learn more about the role of entrepreneurs in the agricultural transition.

On a wider scale, regenerative business transforms economic activity, so the economy itself turns from degrading land to restoring it.

Regenerative business as part of the Regenerative Economy

Our current economic system does not serve the regeneration so desperately needed for our landscapes, our communities, and our planet to thrive. As a regenerative business, you are part of a movement that is building a new system that we call the Regenerative Economy. To learn more about what this means, and how you can contribute to this new system as a regenerative business, read this report from Circle Economy.

Financial revenue is both an incentive and an enabler

We all need income. If there is no financial revenue derived from restoration or a restored landscape, it is very difficult to sustain the effort. If we want to create a truly sustainable impact, therefore, we need to find ways in which people can make money through restoration. The financial value generated is both an incentive and an enabler.

Choose the right strategy

Many strategies can release revenue from landscape restoration. The following are examples currently used in 4 Returns landscapes across the world.

Farm business model Work with farmers to analyse the farm as a business. Regenerative agriculture can save costs, increase productivity, and diversify income – ie, improve the business model of the farm.
Collective bargaining Individual farmers often have little bargaining power compared to the buyer of their products. Support farmers to organise to arrange better terms so they can invest in rehabilitation.
Vertical value chain integration In most agricultural value chains, only a small fraction of the price a consumer pays ends up with the farmer. By shortening the route to the consumer, additional revenue can be generated for the farmer. This is known as vertical value chain integration. It cuts out middle actors.
Value addition Another strategy is to add value to raw materials through processing, curing or packaging them. More of the ultimate retail value is then captured for the farmer/producer.
Creating markets Smart ways of packaging and selling products – such as teas or botanical extracts from agroforestry can create demand for regenerative products. There currently is no market for a lot of regeneratively produced products. If consumers can be convinced to pay a premium price for regenerative products over conventional products this can also create financial incentives to regenerate the landscape. Read more about how regenerative businesses get higher prices here.

When setting out to generate revenue, many of the principles of good practice in regular business apply. What sets our mission apart is landscape restoration and the purpose-driven heart of the 4 Returns. Refresh your knowledge of the 4 Returns in the Module on the 4 Returns Framework .

Setting up a 4 Returns business

Map businesses and value chains

Look at the business activities taking place across your landscape. Map them by sector and activity. Are there natural allies for landscape restoration?

Find a need that is not being fulfilled by the market or find an existing business that can be altered to fulfil the 4 Returns. Value chains connected to farms are worth looking into – especially to detect business challenges that can be overcome.

Other sectors to explore include tourism, logging, and payment for ecosystem services schemes such as water provision or carbon credits.

A further approach we recommend is to investigate the history of how the economy in the landscape developed over time, this can deliver very valuable insights into what markets and drivers have influenced the landscape.

Develop a business idea

Address one or more of the challenges that have been mapped, reducing the negative impact and increasing the positive impact. Simpler is better: generally, the less you must change, the greater the chance of success. Useful design and workshop tools for this step could be the innovation test and prototype toolkit or the business model innovation grid.

Validate your assumptions

Look closely at the idea you have developed. What assumptions have you made that are critical to its success? In this step, you’ll research the real-world situation underpinning these assumptions. Validate your assumptions underlying your assessment of:

• the problem
• the product
• the market
• the willingness to pay

Find more information on these steps in the Lean Validation Playbook. When your idea involves regenerative agriculture or landscape restoration, this article in SER (Society for Ecological Restoration) News can be a useful resource to show the validity of investing in ecosystem restoration.

Start building the business model

A business model canvas can help you develop your business idea to a business model. The 4 Returns Landscape Business Model Canvas helps you develop your business model in the context of a landscape vision. It has two layers:

• a landscape layer helps you to zoom out and see the needs and opportunities of the landscape
• a business layer helps you to zoom into your business to focus on your core business, with the landscape vision in mind.

You don’t need to fill in all boxes of the canvas layers at once but seeing these together may help ‘putting the puzzle together’.

From your business model canvas, identify the skills and resources you need, and which are still missing in your business (see skills section below). Think about a strategy to fill these gaps. One way to add skills and resources is to find key partners to work with. Map and stay aware of the business cases of your partners (farmers, processors, investors). How can you be of value to them?

Get started and make it work

Start small and create good quality. Make the business work, before scaling it up. After establishment, making the business work is often the most difficult phase. 90% of start-ups fail. Steer away from high capital investments and lease existing capital where necessary (e.g. processing machinery). Grow organically with your supply and demand. Read more about focusing on making the business work here.

Scaling up

How and when to scale are critical issues we won’t explore further here. The essential point is that only where revenue streams are proven, you should consider scaling.

Storytelling and marketing

The regenerative story is powerful, and consumers connect with it. It means businesses can sometimes achieve product price premiums which provide an incentive for farmers to join and position their products in a different market.

Create your brand to set you apart from the competition. Marketing needs to address two pillars: the quality of the product itself, and the impact the product has on the consumer (making it desirable) and on the producer (showing it is a responsible product).

In many of these steps, from problem discovery to strategy to business model validation, the innovation tools by the Board of Innovation may be useful.

Key lessons to keep in mind

• It can be much easier to improve existing businesses – which already have clientele, suppliers, a skilled team, an office, licences, bank accounts, et cetera – than to set up new ones from scratch. Learn more about this here.
• Don’t overextend. Setting up a business or changing a business involves a lot of assumptions. Start by validating those assumptions at a small scale first; it is much easier to adapt based on the lessons you learn and much cheaper should things go wrong.
• Stay flexible: circumstances are changing all the time. You need to be wary of these changes and ‘pivot’ to adapt to them.
• Never forsake quality, customers will not come back even if you have a great impact story if you don’t have the quality to back it up.

Skills needed in the team

Making a business work starts with a good idea but revolves around the people who need to do the hard work. Having the right people on the team makes or breaks the business. We have tried mapping the most important skills that your 4 returns business may need:

• An entrepreneurial and strategic mindset
• Technical expertise in the product/production process
• Local knowledge/outreach/people person: understanding of the local context, connecting well with the farmers and other key partners
• Market knowledge: understanding of the market dynamics of the product
• Financial planning/management: sound business processes
• HR
• Fundraising and communications, for activities such as writing pitch decks

No one person can cover all these bases equally well, so you need to forge an effective team that brings different people with these skill sets together. In other words, you need to hire people you like who are not like you and not like each other. The Landscape Teams module offers more insights into how to build a strong team.

The EntreComp framework by the European Commission offers a comprehensive description of the knowledge, skills, and attitudes that people need to be entrepreneurial and create financial, cultural, or social value for others.

The role of business in a Landscape Partnership

Making money is not the sole purpose of a 4 Returns business, but those businesses must be viable. That’s why many 4 Returns businesses operate inside a network where partner organisations are responsible for specialising in some of the Returns, freeing up revenue streams for the business. In such ‘landscape partnerships’ (see Module Partnership Building ), each organisation works from its strength towards a common vision.

Wide Open Agriculture has realised that it cannot achieve all 4 Returns across the entire landscape by itself. They are now part of a growing network of partners in the West Australian Wheatbelt who focus on different aspects of the Returns while sharing a vision for the landscape.

The network means that businesses can focus on becoming viable while having an impact, as opposed to putting impact first. Impact first is a risky approach for 4 Returns businesses that need to be viable to have a sustainable impact. Their social and environmental impact adds value and differentiates them from the competition, but the product must also meet consumers’ fundamental needs.

In a Landscape Partnership, other organisations can absorb costs of, for example, broad stakeholder engagement or physical restoration work, with businesses left to focus on 4 Returns activities that can turn a profit. Remember – an unviable 4 Returns business makes no impact.

Co-innovation networks

Our partners in various landscapes working on landscape restoration don’t all set up 4 returns businesses themselves. Some take the strategy of creating an environment that enables and stimulates entrepreneurs to do that. Wij.land and AlVelAl, for instance, have set up self-propelling co-innovation networks of entrepreneurial partners who, in turn, set up and develop regenerative businesses. Read about the lessons learned on co-innovation networks in landscapes in this story.

Further resources

• In the report Business for Sustainable Landscapes by the Landscapes for People, Food, and Nature initiative, you’ll learn more about the status quo and opportunities for business participation in landscape partnerships.
• An open-hearted account of the challenges that Grounded faced in the Baviaanskloof can be found in this 3-part blog series.
• If you want to learn more about the steps and processes of setting up a business with a landscape approach, follow our two MOOCs ‘Sustainable Landscape Restoration with a Business Approach’ and ‘Business Model Innovation for Sustainable Landscape Restoration’.
• The WWF Landscape Sourcing Report: Sustainable Business Using the Landscape Approach. This report makes a case for the private sector to adopt landscape approaches to sustainably strengthen and increase cost effectiveness within their supply chains.
• Business for Sustainable Landscapes by EcoAgriculture Partners.
• Innovation test and prototype toolkit. This toolkit includes over 50 different methods for testing and prototyping business ideas, in easy downloadable pdfs.
• Innovation management tools. The Board of Innovation has translated a lot of leading innovation management theory into clear and easy-to-use tools which can generally be downloaded as pdfs.

This guide was based on interviews with

• Frank Ohlenschlaeger (former 4 Returns business case advisor at AlVelAl and founder & CEO at la Almendrehesa)
• Gijs Boers (founder and CEO at Grounded)
• Jan Maarten Dros (Programme coordinator ‘Sustainable Income’ at Wij.land),
• Erica ten Broeke (former landscape manager at Commonland)