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Business

Borderless Japan turns a profit while doing good

Collection of small businesses aims to make a big social impact

Post & Post, a secondhand shop in Fukuoka, tries to attract shoppers with its modern, comfortable atmosphere.

FUKUOKA, Japan Post & Post, a used-clothing shop that opened in the Japanese city of Fukuoka late last year, is a lot more than meets the eye.

The 600-sq.-meter shop has 16,000 items, mostly children's clothes, but also maternity wear, cribs and strollers. Unlike most secondhand shops, where racks overflow with haphazardly arranged items, Post & Post goes for a more orderly and relaxed atmosphere. Garments are neatly arranged on attractive wooden racks spaced well apart from one another.

The store is operated by Borderless Japan, a startup that brings together ambitious, social-minded entrepreneurs to create small businesses that address a particular social problem.

The issue Post & Post is tackling is waste, specifically the large amount of children's clothing that gets thrown away every year. The idea, according to Borderless Japan CEO Kazunari Taguchi, was to create a secondhand shop with the sort of ambiance that would appeal to new parents.

"That's why we made the shop interior clean and orderly," Taguchi said.

Although a growing number of people are looking to bring business solutions to bear on social problems, not all of them have the funds or skills to turn their ideas into reality. Borderless Japan gathers such people together, brainstorms ideas and then puts some of them into action.

In other words, it is a collection of small businesses that aims to make a big impact.

SHARED SPIRIT Borderless Japan was founded in 2007.

"At first, I tried to run all the businesses myself," Taguchi said, "but lots of problems kept coming up that needed to be solved. To speed things up, I started to gather some like-minded people."

Borderless Japan currently has 10 projects going. Among them are a share-house for foreign residents in Japan, who often face difficulties renting places on their own, and a leather shop that sells items exclusively made in Bangladesh to help increase income levels in the developing nation.

Each project has its own leader and addresses a unique problem, so synergy is not a buzzword at Borderless Japan. But the entrepreneurs are united by similar motives and mindsets.

When the company decides to start a new project, it gathers ideas both internally and externally. Plans are discussed and only adopted when all the leaders of the existing business units agree on them. Taguchi said these discussions are taken very seriously, because the capital for a new business comes from the profits of the existing ones.

Borderless Japan CEO Kazunari Taguchi

The company is not concerned with how fresh a business model might be. Instead, Taguchi said, "we very much look at the social impact a project is likely to make."

If, for example, Borderless Japan wanted to address poverty in a certain area of a developing country, it would set a target, such as raising monthly household income from $20 to $200, Taguchi explained.

That would be the social goal. The new business, meanwhile, would aim for an operating profit margin of 15%.

Borderless Japan has grown year by year. In the 12 months through February, total revenue reached 3.3 billion yen ($30 million). Taguchi said the company has also made steady profits, though it does not publish its financial results.

Ideas are constantly popping up. One of the latest ones that the company went ahead with is a plan to reduce the amount of abandoned farmland in Japan by creating a business that hires retirees to grow small organic vegetables that are then made into pickles.

"Small vegetables require less manpower and take less time to grow," Taguchi said. "This means less risk for inexperienced farmers. Plus, processing the vegetables into pickles will allow for a good profit margin."

Taguchi said Borderless Japan will expand but only by adding small businesses. "If you want to focus on one social problem, a business size of 1 billion yen would be good," he said. If a business exceeds this size, he said, it will become more difficult to manage -- and require more sophisticated leadership.

That is not to say the group lacks ambition.

"We want to be a company with total revenue of 1 trillion yen," Taguchi said.

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