Saturday, June 16, 2012

BEING THE CHANGE: Beyond the Bottom Line

 Maryland Man Starts Fair Trade
Business For Nepali Women...

Making the rounds during the Internet start-up craze in the '90s, Potomac, Maryland, resident Ed Edmondson worked to help develop the product marketing and business development strategies of convergence communication companies such as Eatel and Geocities.

Now, Edmondson is one man in a growing trend of entrepreneurs working make the world a better place through the business of fair trade. But Edmondson takes that trend one step further — he hasn't pocketed a dime in eight years.

After the dot-com bubble burst in the mid-1990s, Edmondson wanted to start a business on his own terms. Ten years after his self-imposed exile from the corporate world, Edmondson now spends his days designing handbags while sipping coffee and overseeing stock orders from his phone, before picking up his daughter from school.

"I was just burned out," Edmondson said. "I was exhausted — I wanted to do my own thing and I wanted to stay in the Internet space, and I needed something that was portable." His answer was Earth Divas, a fair trade business that imports handmade, natural fiber accessories "made by women for women" mostly from Nepal.

The purpose of fair trade businesses are to foster better working conditions and promote job sustainability for workers in developing countries. The movement aims to pay workers real wages for the back-breaking labor they often do.

From a purchaser's perspective this often means higher prices for goods, but a balance is found in knowing that the money paid goes back to feed families in developing countries rather than into the pockets of a corporate giant.

Edmondson purchased the business, originally named Hemp Sisters, in 2004 and grew it from a family hobby business to a website dedicated to wholesale fair trade. Earth Divas was certified by the Fair Trade Federation in December 2011.

Ed Edmondson, founder of the fair trade wholesaler Earth Divas,
displays one of the many colorful bags made by artisans in Nepal.

Edmondson works directly with his artisans to collaborate on his product and pays them as much as possible on an hourly wage. On top of paying out typical wages, Edmondson doesn't take a salary and returns 100 percent of the business's profits to the workers, taking what he does beyond the realm of typical fair trade practices.

"Once I started doing this, it was like this is not going to be anything that's ever going to make me rich, and I can't take money, I don't want the money," he said. "I don't want to be 65-70 years old and be ready to call it a day and look back a say that I didn't do anything worth while in my life."

Earth Divas products are carried everywhere from local mom-and-pop health food stores to national chains like college bookstores and even Whole Foods Market. You might see the brightly colored, handmade bags on the shoulder of a college student or on the arm of a soccer mom on a grocery run.

Taking what he sees in the streets and magazines, Edmundson designs and sends ideas back to Nepal to recreate trends in natural and recycled fibers, such as cotton, wool, hemp and recycled silk. Though Edmundson’s background includes no mention of an eye for design, having graduated from Louisiana State University in 1988 with a degree in history and from Tulane business school in 1990 with an MBA, he’s developed into a something of a fair trade Michael Kors.

His passion for his business makes the effort a success, but for at least five years Edmondson said he's been losing money. To get buyers interested, Edmonsdon had to price products well below what they cost to produce.

"I've had to kind of buy my way in," Edmondson said. "They just weren't ready for this product. They weren't used to it." His slow build to profitability started to pay off in 2008 when the company made a profit for the first time.

He then sent all of that money back to Nepal as a holiday gift to his workers. According to Edmondson, about $7,000 was paid back to his artisans as a holiday bonus and as regular bonuses throughout the year. He also hosted a holiday party that year for the workers to celebrate their success.

But then everything went south. Fuel charges went up, the dollar went down and material costs for hemp, cotton and wool doubled. Backed partially by his wife, who works to support the family, Edmondson says Earth Divas has only made a profit one year since he began the business in 2004.

"I've said that if it doesn't happen this year I'm done. And I've been saying that every year for the past five years. For some reason I keep doing it," Edmondson said.

"I know that when this business reaches $1 million a year it will be self-sustaining and that's my goal in life — to get it to the point where I don't have to put money into it, that it will be able to function on its own without me doing everything. And we're getting there."

With just a laptop and a cell phone, Ed Edmundson, can conduct all affairs of his business, from design to accounting. Edmundson spent four years building the back end system of his business, incorporating business concepts from larger corporations into his ultra fair trade model.

From a business perspective these losses may be because Edmondson was early to the start-up fair trade game. From Walmart to, fair trade is just beginning to hit major online retailers everywhere.

"The whole concept of fair trade products is moving into the main-stream and eventually it will be carried by the mainstream retailers," Edmondson said.

"I look at handbags now all the time," Edmundson said.
"I get my wife's fashion magazines and I'm looking at the handbags."

It's not just the concept of fair trade that's making a movement into mainstream acceptance and support, according to Melissa Carrier, director of Venture Investments and Social Entrepreneurship at the University of Maryland business school. The do-gooder theme of social entrepreneurship and nonprofit ventures is increasingly visible in the for-profit realm.

Known as social enterprises, these businesses continue to have defined social objectives like environmental protection or reducing poverty, but operate as a for-profit business. Common methods of incorporating the social objective into a business model include the give-back strategy like TOMS Shoes, which donates a pair of shoes for each pair sold, and workforce development.

Patrick FitzGerald, MBA Lecturer for the Wharton School of the University of Pennsylvania and Huffington Post blogger, recently suggested that all potential social entrepreneurs look at the questions of profitability and business sustainability.

Multiple recently-launched and socially-conscious businesses have proven that a non-profit mission running under a for-profit model have excited investors and consumers alike, FitzGerald wrote. "The world needs many more social entrepreneurs for sure," FitzGerald said. "After all, it is actually possible to serve two masters: the mission and the bottom line."

On January 25, 2012, Ed Edmondson was chosen as Huffington Post's Greatest Person of the Day.


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