Every month we’re going to be hearing from a social enterprise leader to find out more about their experiences running a social enterprise. First up is Karen Lynch, former Chief Executive at Belu Water – a pioneering social enterprise water company which donates all it’s profits to Water Aid and which is one of the most successful and well-known consumer facing social enterprises. Karen spoke to SEUK’s Content Manager, Shehan Perera.
Tell us a bit about yourself?
I was born in the North East, which not many people know unless they get my Geordie accent coming through at a time when it wasn’t that easy to get jobs and aspirations weren’t particularly high. My first career, the first half of my career, was very much in the what we call the traditional capitalist space, but it didn’t feel like that for me, because for 13 years, I worked in specialist magazines. So people who are working on Trout Fishermen or Bird Watching or Today’s Golf are all living their passion. So my first 11 jobs and 13 years were spent helping people who were really passionate about what they do, engaging other people who want to indulge in their passion which was an amazing space in which to grow. It was there where I learnt to run P and L’s of businesses. I then moved from the magazine world to Barclays, which I didn’t like quite so much. But it was a very big job and everything from marketing perspective was my responsibility. Whilst there I uncovered this huge obsession with waste, whether it was time, resources, materials, and I knew I wanted to do something more purposeful.
I then discovered the opportunity with Belu which I found intriguing. At that point, I’d never heard the words social enterprise and from that point for the next 10 and a bit years, it just became an absolute obsession. Which I guess you know, explains me and my personality. I’m absolutely addicted to progress to solving problems. I get very excited, I have this belief that all problems can be solved. And the bit I love about the social enterprise space is when we’re social entrepreneurs in the room we’re being collaborators, not competitors. Or being the social entrepreneur in the room talking to a for-profit business, finding ways to engage that they can be supportive and collaborative and it is good for their business. That’s my happy space – making something happen, that wouldn’t happen normally.
What attracted you to Belu?
I wouldn’t say it was an attraction. It was a bit of an accident in real terms. So when I started my first draft of investigation, Belu had approached me as a brand expert, at the time I was working at Audi motorcars. And, you know, the story Belu was an idea about making change in the world but it didn’t have a viable sustainable business model. It had a lot of debt and not a lot of revenue. I didn’t just do the job I was briefed to do, I didn’t just say, “actually, no, if you try and sell this brand to get some money back, you’re not going to get anything. That’s not gonna work. But actually, I’ve looked at what you do and I’ve looked at what happened. And actually, I’ve got an idea of what we can do with it, what and how we go forward.” And actually, the driver for me was, again, this waste connection. If there’s 1.9 million pounds worth of debt, and they all pack up and go home and minimize that debt, then that might be some learning but what good has come out of that? Well, there might have been some, but versus using the debt as the motivator to build a successful business and to therefore make sure that money wasn’t wasted, so something good happened because of that investment?
Was Belu set up as a social enterprise then when you joined? Did it have that relationship with Water Aid and the profit distribution element of the business?
No, no. So it was a purpose-led business. It was set up by a guy called Reed Padgett, who basically was way before his time and he was developing bioplastics because he thought plastics were bad. I mean, we now know obviously, that bioplastics can’t be mainstream recycled and so it’s a whole other problem. But he wanted to make a good change in the world. So he’s absolutely a social entrepreneur or a social idealist because obviously a social entrepreneur has to be able to make that into a business model that works. So yes, the intent was always about positive social impact but as was widely documented at the time regarding what the business was making, you can’t give away what you haven’t got.
So I wrote to both Water Aid and Oxfam to say we we’re going to grow this social enterprise water business and we want to give all of our profits to end water poverty, can we talk about being a partner? Oxfam didn’t reply, but Water Aid did and the rest is history. But obviously, what I was pitching at that point, was a startup but I committed right from day one that we would give Water Aid £100,000 at the first year’s profit because the bit that you’ll learn very quickly in the world of branding and marketing is you can’t have a brand promise that doesn’t actually deliver. And for me, I’d far rather have spent £100,000 pounds transforming lives and turn that into a marketing message, an activity which you can just about, do for free than trying to spend the hundred thousand pounds buying shelf space. And so, there was that kind of trust and belief in us.
Yeah. Yes, there is a great film actually with Barbara Frost and I, done by Reuters, where we talk about how it actually happened. So if your readers want to click through and go right back to how it all started and get the charity perspective to there’s a really nice chat.
So we noticed that there’s been a start-up explosion, least there was pre-COVID, hopefully there’ll be a post- COVID boom of new social enterprises setting up to address the big challenges that we face?
You know we’re expecting a baby boom, but I think there will be a whole social enterprise business boom, but they might not even realize that’s what they’re doing. I think people would have really questioned their direction. They will have thought more about purpose, maybe they’ve not used those words, but they’ll be starting already to shape how they can use what they’re good at and do something good with it.
Have you got a few top tips for people setting up a social enterprise?
I mentor officially a lot of people that come to me through Expert Impact or sometimes referred to me by SEUK. And so I kind of have to answer this question a lot in the end. But basically, I think the biggest piece for me is there is no limit to the amount of problems that need solving. You know, don’t focus on the first problem that you think you might want to solve. It’s really important that you’ve got something you’re passionate about, but actually, if you’ve got no knowledge or competency in that particular space, then you’re going to have to find somebody else to partner and lead with to actually solve that problem. For me, this bit about finding out what you’re really good at, and then doing something good with it is that connection of your place in the world. So let’s just say, I’m a tech whiz, the chances are I should be focusing on solving some of the problems in the world by utilizing my technology skills. Find a connection through you, rather than just the thing that makes you cry most now.
For me, it was very easy. Nothing else matters unless you have clean water. You never get to worry about having an education. You don’t even worry about what the next meal is if you haven’t got enough clean water, you’re just too sick. So, for me, it was all about starting at the beginning.
And Water Aid will always be the most important and impactful part of my life. Often when people have got problems they want to look for a quick fix, but you have to work back to the beginning because unless there are strong foundations, then that quick fix is not a long term fix.
So in a nutshell – find out what you’re good at and do something good with it. And I guess my next bit of advice is – spend 10 times more figuring out what you’re going to do to invest and get the right return on investment of any money you spend than you do pitching for investment because I often find that people get obsessed with pitching. And those who don’t do it the other way are the ones with the strongest stories, the strongest business models, and most likely to successfully secure investment.
What were the biggest challenges you faced running a social enterprise? Do you think there’s any kind of particular social enterprise focused challenges that you encountered at Belu?
Yeah, I would say I think there are two kinds of challenges. There’s the personal challenge and there’s the business challenge. Now, the personal one, I think depends on the makeup of the beast and I’m not unique, but I don’t represent all social entrepreneurs so I can only talk about me. So, if you imagine you’ve got a seesaw with the fulcrum in the middle, and the piece across the top and, and it’s about, one end being me and my ego and my purpose and the other is about the beneficiary or the impact. If all of your weight is focused around you, it’s not a good thing. If it’s all around purpose, it’s not a good thing because you lose balance and you lose sight of the other bit. So trying to balance in the middle so you don’t do stupid things because at what point do you stop? You can get addicted to the purpose. What you need to get addicted to is making this sustainable to continue to address the purpose and that comes back to pace and then collaboration to make good progress.
If you’re addressing a big issue, the problem isn’t going to go away overnight. If your vision is imagining a world where everyone has access to clean water, for example, that’s a long marathon to slog and to stay energized for. So making sure you retain being motivated and that you’re the right person for the job, but also maintaining the right energy levels because you see a lot of burnout. And I guess the way a lot of social entrepreneurs avoid that is other things give you know, so they might neglect their families a little bit.
So I guess the advice I’m giving is, be clear, honest and transparent with yourself, your team and your board. You know about who you are, how you work best, what you want to do, and where you want their help to help you draw lines if you’re not good at those.
And I guess we should talk about COVID. It’s had such a massive human impact and economic and we know that a lot of our members are struggling to deal with the fallout of it. I know you did a great blog for us back in March about the impact it had on Belu and how trading just dried up almost overnight.
If I can talk a little bit around the time, so the COVID period for me had a very quick beginning. That’s the bit I was still at Belu. So early March, because I stepped down officially at the end of March.
So for me, that was about going, I can see how bad this is, this could be it was about making sure that there was a plan to buy the business time to make sure that the business was effectively underwritten. And, you know, at the point when that happens, and you know you might be owed a million pounds, but the chances are you owe nearly a million pounds out. How do you manage cash flow and credit in a way that means you still have good solid relationships when you get through this is really, really important. So it was crazy. I knew exactly what we needed to do to buy that business a year so it could get through and actually the financial modelling we did actually said it’s gonna be six months of 95% of revenue gone. And then end of March comes and it was like right okay, so the plans I did have of going to go to Spain and spend some time with mum and take a bit of time off. One it can’t happen – what do I do? And the second thing was, is you know, the sector that I know and love really well really needs help right now, what can I do? So that’s when I picked up the phone to Peter (SEUK Chief Exec) and went look just we can triage people. We can, you know, we can triage incoming calls that people need help, but also we can start calling on members. The bit that I realised is there was a huge and brilliant raft of COVID resources building on the SEUK websites. But when you’re out there with your business and you’re being bombarded with information, because everyone’s trying to help, but you’re in really tough times and your people are struggling with their kids off school. And that’s the point when sometimes you may just need a bit of hand-holding and a bit of pointing in the right direction.
So, you know, and it was the first few weeks were really tough, because, everybody I was speaking to was either in the thick of having the most difficult time or they hadn’t realised yet. And then we went into the practical mode furloughing being confirmed and actually, I find a lot of our social entrepreneurs were keen to try not to do that just because they wanted to be the nice people and get through rather than thinking about the longer game. And then it moved in as we got into, I guess late May time, we started to hear some good news stories of some great pivots. Made in Hackney who’ve now launched a juice business, Josh from Stand for Socks, who I spoke to when I said you need to do something within the NHS space and he launched overnight and Toast Ale switching to their direct model.
I would say the big the resounding piece that is clear is and I think I put this in my blog is how social enterprises move at pace. Think just how much more innovative they are, how they genuinely, you know, think impact and then how do we make that work financially, they’re not going “oh, there’s a crisis, what’s the opportunity to make money”. The one bit I’m absolutely clear on was that purpose of those individuals and organisations won’t have disappeared because of this. They will all have done what they can to get through and then I think the focus now is building strategies to what do we do to get ready for the world beyond because in some ways everything has changed and in other ways nothing at all.
Out of everything that Belu achieved what do you reckon has been your proudest moment?
So I think that there are so many, there are so many, I can’t just do one. So I want to do few.
Getting to the point at year nine where I could kind of plan my exit. My goal was about building a business model that’s sustainable so whether I got run over by a bus or was out of action for a year – it’s not dependent on any one person. So, this, for me was the final stage of this part of my career, showing that the model was sustainable. I didn’t expect it to have to survive COVID but actually, it can survive the change of any one person or member of personnel, including a chief executive. This for me was about the business model.
But of course, being on the same footing as all businesses and excelling. So getting not one but two Queens Awards, one for innovation and one for sustainable development. Because that’s not just social enterprise awards, amazing as social enterprise awards are, this award looks at all businesses, it’s the toughest thing to win. So both of those were incredibly proud moments. But of course, the first time we got to that £1 million net profit, and there were less than 10 of us in the business. So I’m really proud that we’ve demonstrated that you don’t have to be big to make a really significant impact. Because then I think all businesses, you know, will kind of look at our KPI of our profit per employee and go, “wow, social enterprise is a force to be reckoned with” and charities will look at how efficiently we’re able to generate funds to have our impact on water poverty. It’s kind of that point that makes you not just a lovely story, but it’s the impressive data, that means you have to be taken seriously.
And then probably the third bit going back to right where we started, you know, when you can get a business to the point where we can build huge collaborations to do something that’s truly brilliant for a sector such as developing the lightest weight glass bottles you can get made right here in the UK, with the biggest UK glass manufacturer. You know, to get them on board, we’re by no means their biggest customer we’re tiny compared to some, but when you get them to buy into the purpose and the impact that you’re having. This is a brilliant business called Enserc, and I’ll be ever grateful for their support. It’s when you can convince businesses like that to collaborate and to start telling your story you go: Social Enterprise is not just going to change the world through what we do through our own businesses, and our direct impact, we are going to change the world for the better by inspiring others to work with us and through that, they’ll be inspired to make their business models better in terms of minimizing their planetary negative impact and maximizing their social impact.
This is part of a longer interview with Karen which we will be sharing later so watch this space!