This month’s edition of “Failing Fearlessly” is inspired by a question posed by our Development and Communications Intern. Upon further discussions with Markey, our team learned that this question is not a one-off question, it is in fact a question that comes up often in conversation with people learning about The Women’s Bakery for the first time as well as those who have supported us for years: “Do the women bakers own the bakeries?”
The short answer is: No.
The long answer is not a failure per say, however, it is a puzzle and involves an extensive journey of ups and downs that led The Women’s Bakery to affirm that “no” is the best decision for the sustainability of our model right now.
The first piece of this puzzle was actually dictated by the way in which businesses are registered in Rwanda. Namely, that social enterprise incorporations and/or structures do not exist in Rwanda. (Social enterprise-status is still relatively new in the US.) In fact, The Women’s Bakery has undergone several iterations of incorporations to bring us to where we are today, with a model that actually works. We began as an L3C incorporation in the US, then transitioned into a 501(c)(3) public charity incorporation in the US that wholly owns and operates a Limited company in Rwanda. We transitioned from an L3C because this incorporation assumed profit-making business activities. While our bakeries are on the path to profitability, TWB as a whole is not. Bakeries are not burdened with any costs outside of operational costs.
Our incorporation structure is like a social venture capital firm - we inject capital from our public charity (501c3) into our bakeries (LTD) until the bakeries are self-sustaining (profitable). When a bakery is profitable, it gives us flexibility to invest capital into training a new group of women bakers and building a new bakery.
Since not all of our bakeries are profitable (but getting closer!) ownership of a bakery actually becomes a liability for shareholders. Here’s the important part. By TWB owning the bakeries - not the women bakers themselves (yet) - TWB is absorbing the risk of volatilities. Things like, oh, Covid-19 for example. When markets suddenly dry up, schools are closed for months, and raw material costs sky rocket. Who is liable to all of those disruptions and costs, from both a human resource and financial perspective? TWB. Not the women bakers. And very intentionally so, primarily for job security and model longevity. Our financial literacy trainings emphasize the importance of having savings and what it means to accumulate assets. As such it would be unethical to jeopardize their assets that our strong woman bakers have worked so hard to earn.
While the original vision actually involved women bakers owning the bakeries, we learned that this was not actually a sustainable decision for our model as it currently stands. Additionally, and perhaps most importantly, we asked the women bakers. And in listening to them, we learned that job security - a steady and reliable paycheck - was more important than bakery ownership. That alone was enough of a reason for TWB to own and operate bakeries.
While the trend of social enterprises and co-ops giving their employees a share of the business has become more and more prevalent in recent years, at TWB we are confident that our choice to own bakeries is the correct one for now. As our bakeries get closer to and sustain profitability, however, we do see a world of new possibilities, things like equity options and micro-franchising. Stay tuned to see how we are reenvisioning what a TWB might look like in the future.
