How do you build a business that sustains itself economically while it contributes to society? For Noble Brands, it meant mixing inexpensive online tools with old-fashioned, person-to-person connection.
Andrew Clark, now 31, is passionate about philanthropy. He's on the boards of four non-profits organizations and active in his church and community. Four years ago, he partnered with another person to open a coffee business in San Diego using the cause marketing model: Every sale benefits a cause.
The pair shopped the product to supermarkets and found good acceptance. But it didn't work as a business. Overhead, including storing the coffee and distributing it to stores, ate up most of the profit. Meanwhile, the company had to slash prices and accept the notoriously low margins common in the grocery trade.
"In grocery stores, we might be able to make three percent profit," Clark says. By going to online sales, "I saw that we could operate leaner and maintain a good product while giving people the opportunity to participate by choosing what cause the sale benefits."
Clark knew of a group in Zimbabwe that provided meals to thousands of kids each day. He wanted to be able to tell coffee buyers that they could buy one and feed one. "I could feed more kids and do it better online than I could through selling through the grocery store," he says.
He folded that partnership and in 2010 started Noble Brands, an online store for coffee and tea that gives 30 percent of profits to charitable causes. Noble's sales model includes products that can be purchased one-time or delivered on a regular basis, as well as custom orders. Online shoppers can choose which cause their purchase will benefit from a list that changes periodically.
While Clark knew coffee, he had plenty to learn about making the charitable model work. To maximize donations, he had to slash overhead at every stage of the process. First, he began roasting beans to order, buying them from a wholesaler as needed. Without a lot of inventory, he doesn't need a warehouse.
At every stage, he asked himself, "This is what the industry does. Can we do this differently?"
Instead of hiring an accountant and an assistant, he learned to use free Web-based services. He developed his website himself using WordPress and decorated it with publicly available images from the Library of Congress. He takes product shots with his smartphone. He relies on interns, both paid and volunteer, to help with everything from designing bags and labels, printing them, packing product and shipping.
Paradoxically, as the business moved online, personal relationships in the real world became more important.
For example, he needed to find coffee roaster who could be flexible enough to accommodate Noble Brands' just-in-time model while maintaining quality."We have standards for coffee and how it's made. I trust their expertise in how they craft their coffee and tea," Clark says.
That kind of trust needs to be built over time. Noble Brands aims to deliver products that he calls "better than Fair Trade." While he doesn't go the Fair Trade certification route, Clark pays specialty-grade prices, and he counts on his suppliers to source from sustainable farms and pay the farmers fairly.
He had to work one-on-one to gain credibility and forge relationships with the non-profits, as well. The organizations he reached out to needed to know that he was on the level before they lent their names. Some non-profits couldn't understand that Noble Brands needed to take some profit in order to survive, while traditional businesses thought a company that gave up so much profit was doomed to fail.
Explaining the model and convincing people that it would work took plenty of face time—and copious amounts of free coffee.
Clark says, "I always tell people that we are not the end, we are a means to your end. Causes that have been most engaged with me are the ones that benefitted the most."
For example, Noble Brands created custom products for one organizations's donors and helped it to use the products to create better relationships with donors. One of Clark's goals is to encourage more charities to market the products to their followers, which will increase the company's sales—and allow it to give back even more.
Noble Brands hopes to attain six figures of revenue this year, while donating roughly 15 percent of sales or 30 percent of profits to the causes it supports.
Photo credit: Andrew Clark