How to start a social enterprise start-up with… LUX?LUZ

Who: Sophie and Anna

Brand launched:?2017

Product: Eco-soy scented candles, diffusers, candle-making workshops

Impact: 100% of profits go to projects supporting survivors of domestic violence, such as emergency accommodation in refuges and longer term recovery activities, such as art therapy workshops, or are reinvested in the business.

The Interview:

SSM: How did you come together in the first instance to start the brand? Was it product-led or impact-led initially?

Anna: We’ve been friends for years — we met at university. At the time, Sophie was at the?School for Social Entrepreneurs?and I’d been thinking about different ways to do business and social impact.

We were having dinner one night at a friend’s. We were discussing the challenges of working in the charity sector. We were really frustrated with how donors give money for a project and then when they don’t feel like funding that project anymore, they just pull funds.

We were eating some ice cream when we realised that the person that made the ice cream was a friend of a friend. And we thought — if he can start something up, so can we. How can we combine this frustration with getting funding for projects and our desire to create a project for social good. So we put it all together.

Sophie: We actually started exploring the ice cream model and then we realised there’s actually quite a lot of expense associated with a food product.?

At that point it was coming up to Christmas and I’d actually asked my brother for a candle-making kit for Christmas, and it arrived and I thought — Oh, actually, there’s not a market out there for a social candle, and having worked at SSE, I’d seen that the best ideas often come from something simple.?

So, we weren’t trying to create something completely new. We knew the candle market was quite saturated. But our differentiator was to think about the social side. And then it all just kind of flowed from there because we thought — who loves candles, who’s the key audience and then making sure that there’s something for women that supports women. (Though men can support women as well!)

Anna: Then we started researching the situation in the UK. We found out that one in three women are impacted by domestic violence in their lifetime. We immediately connected with that.?

We also found out that there’s quite a lot of provision in the immediate moment — when someone’s trying to leave a situation of domestic violence. It’s still underfunded, but there’s more provisions. Whereas rebuilding your life and restarting again — there’s not actually that much out there providing support for the longer term recovery journey.

SSM: How did you find your charity partner? And to what extent do you work collaboratively?

Sophie: We were both living in Wandsworth, so we looked at what was on our doorstep.?

There’s an organisation there called?S.T.O.R.M. We liked that they weren’t too big, not too small — but someone who can actually be a part of that journey with us.?

The centre doesn’t just support women affected by domestic violence. It’s a family centre that focuses on care for children’s education, getting women to work. It supports people coming to the UK from different countries and helps them to build their confidence and a sense of community.

Anna: We’ve worked with them since literally the first meeting. They really liked the idea and were almost immediately saying — when can we have you in to make candles with the women? They told us where the funding needs were.?

One need was for their art therapy classes, which seemed like a really good programme. Being able to do the candle-making workshop is like a supplement to that therapy.

SSM: Coming back to the product – you mentioned that candles are a saturated market. How did you know that it was going to work? Did you do market research before you launched?

Sophie: We did, to the extent of searching for social candles online. I think right at the beginning we didn’t find anything and then a bit later on we did find one, and then now, four years later, there are quite a few different variations, partly because some brands have now added into their existing offering. So it’s grown a bit since then.

Anna: We did a focus group and got together our friends mainly to help choose the price and the jar and even the name.

And then in 2017 we did some Christmas markets as a test. That was fantastic because we got live feedback from customers. We met the public, rather than just our family and friends who were encouraging of the idea, because they are about everything we put our hands to.

Sophie: They were really popular and sold really well at the markets. And it was in our first year as well that we got picked up by Know The Origin.?

SSM: Did you have any start-up capital at that time??

Anna: We both invested ￡200. And then we raised funds through pre-sale by people pre-ordering their Christmas presents. Cash flow is the biggest challenge for a small business — being able to buy all the materials you need to then make the products to sell the product… So that really helped. We got hundreds of pre-orders in and then that gave us basically our start-up funding to do the Christmas markets as well.?

Sophie: It was around September time we put a shout-out on our social media using a GoFundMe page. So it’s all organically grown. We haven’t received any funding from anywhere.

SSM: So, you decided against applying for grants or looking at other funding sources?

Anna: We’ve considered applying for funding but we’ve been keen to try and make it self-sustaining, to not need to rely on funding. But we would consider it to get to the next level because we have grown to capacity, where we are now. And now we think — okay how do we scale this up? Because there is the demand, amazingly.?

Sophie: We’d like a grant for a space to make our candles. Rental space in London is quite a lot, and particularly as we’re seasonal to some extent, it would be way more effective to have space from September through to Christmas time. But because of that, it’s a lot more expensive for just a three-month period, rather than a full year lease.?

The other problem with grants is we may need to change our legal structure.

SSM: Tell us about that, what’s your current legal structure?

Sophie: So, we’re a partnership. Which is basically a sole trader, but there’s two of us. So many entrepreneurs start up as a sole trader and with the social angle some decide to go down the route of having charity status, others sometimes decide to do both. But now I think we are at a point where we need to move to probably a company.

Anna: It’s worked well so far. We just have in our partnership agreement that says we are a social enterprise, that our profits are going to go to the charity. And we’re registered with?SEUK?(Social Enterprise UK). But it’s exciting looking to make the switch.

SSM: How will you decide which changes to make? Whether to be CIC or Ltd company, for example?

Sophie: We are about to go on to a few different programmes to support us with advice and coaching. One is?eBay for Change. The other is?Hatch Enterprise.

Anna: I think that one of the challenges of being a social enterprise is you have to do everything a business does?and everything a charity does and bring it all together. So it’s quite a lot of work — alongside full-time jobs as well.?

To be a CIC, it looks to me like a lot of Companies House reporting. Plus having a charity board. We are a very small business. If we were convinced by the benefit of being a CIC then we would put in the work, but it seems that there’s not a huge amount of extra benefit. We’re at the stage where we’re open for advice and opinions and help to navigate through these challenges though.

SSM: You mentioned you’re both in full-time jobs so how do you how do you juggle the full-time job and running your own social business?

Sophie: Outside of LUX LUZ I head up Corporate Social Responsibility at an insurance group, and given there are some synergies, my business are very supportive of me doing it. They engage with it as much as they can — they’ve got LUX LUZ to deliver in candle-making workshops for employees.

Anna: I work for an international development charity. I do impact assessment and project management and so there’s lots of synergies. We’re doing a lot more work on enterprise-led development so there’s a lot of crossover as well so it’s even interesting to bring in what I’m learning from these into some of these conversations and vice versa. And they’re very supportive. My colleagues love hearing about the candle making I get up to the weekend and seeing me coming back in covered in wax.?

SSM: How did Covid affect your business and the impact you can have?

Sophie: Pre-Covid, we delivered several workshops each year with the women started experimenting at with S.T.O.R.M in the hope that some women may be interested in making candles with us more regularly. S.T.O.R.M wanted to support us with this but also advised that some of the women weren’t actually at that stage of being work-ready, and didn’t have the ability to commit to for a you a certain number of hours. So, we would have to make it flexible.

So had Covid not happened, we’d have been doing that more regularly in the centre. Instead we did manage to organise one virtual workshop during the build up to Christmas, but this wasn’t as easy for all women to attend.

Anna: Domestic violence can affect anyone, but the women that we work with will be vulnerable in other ways as well, and many are on benefits so it gets quite complex in terms of employment because once you start making a certain amount that hinders benefits — it gets quite complicated. So S.T.O.R.M advisors say that actually the thing that people need the most is that time to come together and connect, to do the workshops and use their hands and see the confidence boost from creating something rather than necessarily the income.

SSM: That’s great. So it’s meant you’ve had to find other ways to support them?

Sophie: We looked at ways to overcome some barriers that we learnt were preventing some of them from coming to the sessions — like child care. And also the times of day that we do the workshops, which is why they ended up having to be during school hours. We have done some sessions where we needed to provide nursery care stuff, which was great because then people can actually relax.?

Anna: And we found people at the end of the session saying it was like therapy. Like stirring the wax and the scents and then I think there’s something really special about seeing what you’ve created. To be able to take it home and use it to relax as well. We often talk about that — our candles help people with self-care, care for others and care for the environment at the same time.

Sophie: At some of the sessions, the women will ask us “Oh, is this something you’ve set up?” And that suddenly inspires them to think — I could actually set up a business. Maybe it wasn’t even in their mindset that it was possible.?

SSM: Which is funny because that’s exactly how you started LUX LUZ. Can we dive a little deeper into the impact? How do you track it?

Anna: Well, one of the reasons we currently are partnering with charities is because they are the real experts. We’ve learned a lot and we know bits and pieces from our other jobs, but it’s such a specialised area working with survivors of domestic violence that we partner with charity partners and they let us know where the money needs to go and then they do their own impact reporting.?

They’re gathering the stories and case studies of the women’s experience and how it has boosted confidence and getting these more intangible measures and more outcome level. And so we’re able to count more of an output level — how many art therapy workshops have we been able to fund? And we collect feedback forms and ask for stories from those, but we’re not currently tracking like the longer term impact from it.?

And then we also work with other organisations to fund more immediate needs like nights in emergency refuges, so that’s a very tangible thing we’re able to measure in terms of how much money we’re giving.?

But I do think it’s a challenge for the social enterprise sector as a whole — to go beyond the sort of output level accounting and go okay, what’s our longer term outcome, what are the changes we’re making and what’s the lasting impact of it, and to get better at measuring things that are harder to measure.

Sophie: It does depend also on what the social enterprise is itself. If you’re a product versus a service and when there’s only two of you doing something, there’s just not enough hours in the day. If you’re a service, and your services are literally working with the beneficiary day to day, then it’s very different to when you’re producing a product that then has to sell to then get the profit to then give – it’s a few more steps. We’re a step removed.

Anna: And I think that’s one of the things I’ve learned from working in the charity sector and social enterprises is there are so many charities in the UK, so don’t create another one. It is more about actually how can you collaborate and grow with what already is out there.

SSM: That’s so interesting. I think our customers find it really inspiring to hear the stats and they can understand, by buying one product I’ve impacted ‘X.’ But the longer term piece, that’s much harder to get across.

Anna: Definitely a challenge in the charity sector as a whole is helping educate the people who are buying or giving that actually there are no quick fixes to these problems. For people that are just entering this way of thinking — having some of the output statistics and quick wins really helps to get you put into thinking about understanding the issues more.?

Follow LUX LUZ at?@luxluzcandles?and on LinkedIn at?LUX LUZ | London.

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We are also now selling the LUX LUZ candle-making workshops for corporate teams (both virtual and in-person options available).?Get in touch to find out more.