A big news story in ethical fashion has surrounded the 7.88 million dollar loss in 2012 attributed to Edun Apparel, an ethical fashion brand established by U2’s lead singer, Bono, and his wife. This being the 2nd consecutive year that the company has recorded a loss has led many to question the financial viability of a brand that is attached to such a big celebrity name.
This news seems to contradict other recent news coming out of the UK and other leading countries in social enterprise which state that shoppers are moving towards ethical shopping. In fact, a recent survey by market research firm Nielsen found that 1 in 4 people in the UK are happy to spend more money on ethical products. This number has seen an 8% increase since 2011. Read the full article here: http://blueandgreentomorrow.com/2013/08/21/one-in-four-people-happy-to-spend-more-on-ethical-products/.
So what can we understand from the financial failure of Bono’s social venture? For starters, we have to remember that social enterprise, just like any other business, has to go through growing pains. Many companies face financial instability in their launch years, and similarly this loss might be indicative of a business that is finding its feet. Secondly, the social enterprise sector is still very new and untouched. Yes, the market is growing but it is still very niche. Companies are still trying to find that sweet spot between costs and profits and all of this will impact the bottom line of for-profit social enterprises.
It is for these reasons the company has stated they “are very satisfied with progress during the year, which was in line with the (five-year) strategic business plan projections”. We must look beyond the negative byline of this social enterprise story (and many others) and realize that while social ventures establish themselves and grow – they will need time to build supply chains, retail partnerships and a brand. It might apt to quote a tweet we made earlier this month: “#Success is the sum of small efforts, repeated day in and day out #startup #ethicalfashion #motivation”.
Social entrepreneurs should remember to keep persisting in their small efforts in order to work towards the ultimate goal we all share. The growing pains will be tough but that end goal will be worth it.