Siem Reap, Cambodia holds a very special place in our heart as Michael spent 20 months working and volunteering there. He will never forget the huge smiles of the locals, the connection to nature, the rainy and the dry season and the friends he has there. Siem Reap is quite a hub when it comes to social enterprise, with a few examples dotted in and around the town.
One of these is New Leaf, a restaurant in Siem Reap that was established to provide financial support to charities engaged in education in Siem Reap province. It was set up solely for this reason as Ian & Georgina (the founders) had no other reason to establish a business here. We caught up with Ian to find out more:
Cambodia is a developing country, what’s the legal situation for social enterprise and how do you work?
As no legal framework exists for social enterprises in Cambodia, New Leaf was established as a sole proprietorship. As such New Leaf incurs tax as a normal business would. Setting up as an NGO was not an option as the primary activity of New Leaf is food & beverages, with only occasional direct engagement with those in need.
So what makes New Leaf a social enterprise?
New Leaf donated 100% of its profits to local charities until end 2016. Now New Leaf donates 30% to charity and 20% is shared by New Leaf’s Khmer staff. To date New Leaf has donated around US$40,000 to 15 charities.
What were the initial steps in starting the business and how does it run now?
Georgina and I worked on a business plan to assess the financial viability and subsequently the restaurant was fully financed by myself, Georgina and Eugene (a friend of mine). The idea was to create a business that was run by Khmer (Cambodians) to help Khmer. Neither myself nor Georgina planned to stay in Cambodia though – so we planned to manage it from overseas with periodic visits.
What challenges have you faced since setting up?
As a social enterprise, New Leaf operates as a responsible employer (fair wages, staff training etc) and champions environmental responsibility. Finding the optimal balance between these responsibilities and maximising its impact through profits adds to the challenge of being successful as a restaurant.
For example, the minimum compensation levels at several charities are significantly higher than a standard waitress wage. Therefore the decision to pay 20% of profits to our staff was (in part) driven by this.
What advice would you offer social entrepreneurs?
My advice to social entrepreneurs would be to focus on the business side first. If you are successful as an entrepreneur, then your ability to deliver social benefits is significantly improved. Before we opened I would say “if New Leaf loses money then we are just a loss-making business with no social impact.”
Another example that no matter what your business is, it can be a social enterprise with the right planning and goals. As Ian said, making sure your idea is financially viable is so important, and we can work with you to test your idea. Lots of people have big hearts, but we need to make sure the business head is there too.