This story is part of a series on business-driven landscape restoration. If you’re just joining, go back to the intro story to learn more.
A clear business plan is always important. But if you want to become a business that creates multiple values with a wider landscape impact, a holistic ‘4 Returns lens’ is constantly required – otherwise you are simply doing ‘business as usual’. Your business plan becomes a tool to keep the bigger goal of landscape restoration in mind while starting small and learning fast. More importantly, we have seen that it is also important to ‘simply’ spot opportunities, pursue them, try stuff out and have fun (and a bit of luck) in the process.
In our network, there are essentially three pathways in business development:
- Improving the business case for the farmer (see AlVelAl’s video)
- Value creation on the product chain (4 Returns products)
- Finding new business or financial models or instruments, such as payment for ecosystem services or a landbank instrument (see Aardpeer)
Resolving landscape pain
Traditional businesses often aim at resolving a consumer ‘pain’ or ‘problem’ by developing a service or product that relieves that pain. In the landscapes, regenerative entrepreneurs tend to take another perspective. They look at a pain in the landscape and find a way to resolve this. Often the product or service is not the actual pain reliever, but the vehicle to make it happen.
If you are setting up a regenerative business, it is important to iteratively examine the factors in the socio-ecological system that cause land to degrade (and opportunities to change that). You can also conduct a stakeholder analysis and investigate tensions between stakeholder interests. You’ll need a deep understanding of the causes of landscape pain, the context and the existing industry/sector. This takes time and is a step often neglected in favor for ‘progress’.
“We are setting up traditional business models in a different way to support a certain transition in how we farm and use our land”
Gijs Boers, Co-founder Grounded
Making the business work
Something we easily forget: the most important insight in creating a business is to first make it work (i.e. by building proof of concept). This differs somewhat from the ‘traditional’ way of looking at developing a business: Idea –> establish business –> make business work –> grow business. In this model, you try to make the business work after it has been established. And that is where a lot of businesses fail and where, frankly, all the work is.
“Making a business actually work is often the hardest and most forgotten part of building a business. You need to make it work before you make it grow”
Landscape participant at Commonland’s Learning Fest 2018
In landscape restoration, the business needs to work. That creates the revenue to power landscape restoration. You do not have to worry about growing it, you need to worry about getting it to work. Because when it works, your business will grow automatically.
“The other lesson we learnt is that we are dealing with stakeholders that don’t necessarily buy in to the ‘act fast, fail fast and move onto the next thing’ mentality. We have seen that you lose trust with every failed business development attempt, but you need it to build and maintain a good and healthy relationship to effective change on a landscape. We need to look at a model that prefers to start small, test more, and if it fails, start all over without losing faith and trust from stakeholders.” Pieter Erasmus, Living Lands
However, it is important not to rush into a business. Do proper research and development in order to really “land” your business in the landscape. Start small to prototype and be ready to fail fast. Find out if your business is going to work before you talk about scaling or growing. This is challenging because failed business ideas can dampen hope. Yet successful landscape restoration is based on long-term thinking. So, do not look at business development for something that creates revenues in the short term. Check out this Q&A with Wilder Land co-founder Daan van Diepen to learn more about making a business work.
Funding, governance and ownership models
From a funding perspective, you need to have an open dialogue with funders or investors which allows the space to fail. You need financial supporters that buy in to that first crunch period, so the dialogue with them needs to truly reflect that start-up journey. This includes moving from focus on short financial gains (growing sales, profits and market shares) toward long-term holistic funding (expanding benefits, reinvesting, thriving long-term).
There are various routes you can take on setting up your governance or ownership model. In governance it is often about moving from quarterly accountability to shareholders /owners to multi-stakeholder representation in the board (with diverse people impacted by your business). Different ownership models can be anything from maximizing returns to diverse forms of ensuring that the relationship between the owners and the business can be embedded in the business itself, such as farmer or employer ownership models or steward-owned companies.
As a landscape organization involved in co-creating business activities, you are not a funder, rather you are a partner that is sometimes able to bring a small amount of financial capital to the table. This contribution is not overvalued or undervalued. Cash is needed but it is not the only thing that is needed: time, commitment, and land are all valued and recognised. In a lot of cases, farmers have also brought land, time, expertise into the business. In the Baviaanskloof DevCo – a South African essential oil production company – farmers retain 67% shareholding in Devco. What you try to focus on is shared accountability towards the long-term transformation that is taking place.
The 21 farmer-shareholders of La Almendrehesa – a company selling agroecological products in Southern Spain – are committed to regenerative practices (to make a step beyond organic), while pledging a certain quantity and putting in social capital. Allowing for La Almendrehesa to make the market for regenerative almonds from scratch, later developing its own brand Pepita de Oro and other products such as almond oil and almond milk. By supplying La Almendrehesa the farmer receives a higher price for their produce, enabling the farmer to re-invest in their farm and thereby creating a financial driver behind restoring both natural and productive farmlands. The farmer shareholders are also members of AlVelAl and some have become real regenerative frontrunners.
Good questions to keep in your back pocket:
- Do you have a team that understands and “owns” that market?
- Is a landscape competitive with other landscapes for that business model? Can it generate carbon rights as efficiently or better than other landscapes? Can you grow olives / peanuts / chilies etc. as cheap and to the same (or higher) standard as your core competitors?
- You need to pilot, trial, and test. Even though a business plan might look feasible and actionable on paper, how do you make it work?
Want to know more?
Want to dive deeper into business model innovation in the context of landscape restoration? Check out this course, this 4 Returns Business Model canvas or these blogs from business developer ‘Grounded’ in South Africa.
And of course, continue learning with Lesson 2: Connect with the landscape and build on what already exists