Doughing the right thing
By Paul Sloan, Business 2.0 Magazine

(Business 2.0 Magazine) -- Hiring women from an impoverished township turns out to be a smart bet for a startup bakery.

Investment level: <$100K

Risk level: High

As a Wall Street investment banker, Alicia Polak was launching multimillion-dollar funds. But she couldn't stop thinking about South Africa, where she'd studied as an MBA student. She was struck by the poor townships around Cape Town, and she saw a huge opportunity to help.

The business she runs now, the Khayelitsha Cookie Co., employs 10 women from the township of the same name. The women bake cookies and brownies and sell them to cafes, hotels, and a domestic airline. Only two years old, the company is on the verge of breaking into the U.S. market.

"You might say, 'They're just cookies,'" says James Thompson, associate director of entrepreneurial programs at the Wharton School, who assists startups in developing regions.

"But she's teaching people skills in a very poor area. And there's no reason this brand can't be big in America and Europe."

There's also no reason why more like-minded "social entrepreneurs" coming out of business schools today can't have it both ways: Create social change and a real business at the same time.

For one thing, there's no lack of impoverished regions in the world, each with abundant supplies of idle but trainable talent. Figure out a way to put the talent to work on a simple product to sell or export, and you're on the right track. "You don't go in with a liberal, 'I'm going to save the world' attitude," Polak says. "You say, 'I'm going to run a business.'"

In Polak's case, she'd heard that a local food company had set up a nonprofit arm to teach township women how to bake, using donated ovens in a community center.

Polak spent about $10,000 of her own money in the first six months. She persuaded an executive at another food company to sell her special chocolate chips, and talked a five-star pastry chef in Cape Town into giving her free recipes. She then crashed hotel events with samples, eventually landing big clients.

"Every entrepreneur writes a business plan and lays everything out on paper," she says. "My advice is, throw all of that out. The opportunities are huge in areas like this, but you need to think on your feet and not be intimidated by your surroundings."  Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.