Four lessons for circular entrepreneurs
By now, almost everyone knows what a circular economy is. For business it’s about minimising the depletion of natural resources and creating a positive societal and environmental impact. Through stakeholder collaboration this allows for maximising the value of products and materials. Tomorrow, 10 October, is “Sustainability Day” (Dag van de Duurzaamheid) in the Netherlands, a day where we create more awareness about sustainability. We celebrate positive sustainability efforts, but it is also time to unpack some common hurdles and how we can overcome these.
We asked the entrepreneurial companies Swapfiets (bicycle service model), Mudjeans (circular denim), HOMIE (pay per use home appliances) and Vereijken (modular pig stables) about their perspectives. Below are four learnings that can help you.
Financial: find an optimum through data
Swapfiets: ‘Purchasing a cheaper product often means less quality, which increases your operational costs in a later stage. Finding an optimum is therefore important. At Swapfiets we structure the flow of data in easy-to-use-systems that everyone in our company can access, so that it’s easy for the entire company to gain learnings from it’.
Through the Product as a Service business model, companies stay the owner of the products they’re selling, allowing them to reuse product parts and materials. As this means that companies have to finance everything up front, before they can actually deliver the service, it might be tempting to purchase a cheaper product. According to Swapfiets the key is to start collecting data from the beginning, allowing you to find an optimum with hard stats. Through learning by doing, you can create a realistic business case that can also convince external parties, even banks.
Creating a momentum with early believers
Homie: ‘Modern business is very good at delivering products quickly and cheaply, but returning products is a totally different matter. Find a strong logistics partner that believes in the model and is willing to invest a bit more time and costs to make it work’.
Creating a circular system takes time, especially as this is not business as usual. The more you’ll grow, the easier it gets to demand design changes and a decent cost. It’s a long term-term process, where you need to build up momentum and customers before you can make real product changes.
Community building: manage expectations of customers
MUD Jeans: ‘We like the interaction with our followers, it gives us insights for new ideas. We tend to live in a circular bubble, that’s why it’s even more important to give examples of how we work, and moreover, show it’s actually possible to be circular’.
If you want to build up momentum it is important to take members along in what a circular business model actually entails. MUD Jeans is really succeeding in this. Through their newsletter and collaborations with other organizations who put the planet first, MUD Jeans regularly hosts podcasts, webinars, circular Q&A’s on how you can minimize your impact as a consumer. They share learnings on sustainable entrepreneuring and living and create interaction with their customers by answering their questions online.
Value proposition: iterate fast and focus on the customer benefit
Vereijken: ‘Barn renovations are often a life-time investment. Modularity is the perfect way to grow with the market and adapt to future legislation, even if your business is not completely ready for the transition yet. Because of the flexibility it gives you, it is a smart investment for any future plan.’
The most important learning is that circular alternatives should solve something for customers. Vereijken offers floors that are 80% reusable. Instead of being positioned as a circular floor, Vereijken focuses on the customer benefits for pig farmers. A reusable floor can prepare you for any future plan and help save costs in the future. With legislation in pig farming changing fast and high investment costs for barn renovations, choosing for this more sustainable option gives a direct business benefit.
Just do it!
The best way to find these customer benefits is to start small, proactively search for customer feedback and iterate fast. The product and business model go hand-in-hand, so make sure that you investigate both carefully and in parallel when aiming to scale up, according to Swapfiets. Homie gives us a final advice:
‘Don’t talk too much about your idea, just go and do it! Start small, and grow your idea and business based on your results.’
A big thank you: to Swapfiets @Richard Burger, MUDJeans @Danique Gunning, Homie@Colin Bom and Vereijken @Bart Hooijer for sharing their valuable lessons learned!
How are you taking steps towards a circular economy and what practical tips do you want to share?
Let us know in the comments, because we’re happy to continue the conversation.
Cheyenne Schuit, Nancy Bocken & Christiaan Kraaijenhagen