Saturday, March 25, 2006

A Look at Alternative Business Models

This was first published in WRENzine

Aldo Leopold spoke of ‘key logs’, likening certain concepts to the key logs in logjams on the rivers of his youth. Dynamite the key log, and the log jam is unsnarled. What Leopold was speaking about, of course, was the fact that certain issues are primary-the outcome determines all that is to follow.

One of the “key logs” in any discussion of rural life is that the farmer or producer has to be sustainable in order for there to be any talk of sustainable agriculture or sustainable rural communities, and that means that the operation has to make economic sense to survive. For example, a farmer produces food-if nobody wants it because it is difficult to buy, doesn’t taste good, doesn’t look good, or doesn’t speak to the buyer’s needs and wants in some fundamental way the farmer will fail in the employment she has chosen. In a larger sense, the survival of rural people and communities has to involve multiple cooperative constituencies working in new ways. A close look at alternative business models that break stride with conventional ideas is an important component of sustainability.

Some of the most fundamental decisions that can be taken in bringing your products to the market are determining the shape your business takes and how you plan to market and move your products. That means, for example, how the business is legally constituted, how the business acquires and distributes money, who is responsible for routine and strategic business decisions, who makes marketing decisions, who collects the money, who pays the bills, and who bears financial responsibility for capital expenditures, losses, and liability.

A new business venture offers an exciting opportunity to put social concerns into practice. Many people have discovered that there is a very profitable market for products and services that are created in a socially responsible, earth friendly and equitable way that is not well served by the lowest cost paradigm. One of the emergent trends in this type of business is the collective marketing organization and the alternative trading organization. Loosely modeled on traditional cooperative practice, sometimes funded as nonprofit enterprises, these organizations may be what they say they are. On the other hand some have the gloss of social responsibility cloaking the basest of motives-so called greenwashing. They use a veneer of social responsibility to command the buying dollars of socially conscious consumers. I know of one that calls itself a farmers’ collective but in reality is a limited liability company in which the people who think they are “member-farmers” have no voice at all and are unsecured creditors.

Ask yourself these questions when you are thinking about joining forces with one of these businesses.

First, are their relationships with you completely transparent? What role do you play? Are your rights and responsibilities spelled out in a way that a lawyer can understand? What law applies to them and are they in compliance? Do they offer you a printed contract?
Next, is the organization constituted in a way the law recognizes? Are you exposed to liability whether individual or collectively? Are you getting paid for your product or are you really letting them do business out of your wagon?
Further, is the socially responsible component a real commitment on the part of the organization or is it a gloss intended to gain market share-having the outward and visible signs but not the inward and spiritual grace, so to speak?
Lastly, if the organization is the latter, what does that say about you and your principles?

Although alternative business organizations may appeal to your right brain, when problems materialize a strict reading of your state’s business laws will be determinative of any controversy, so protect yourself with knowledge-it’s nature’s sovereign remedy.


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