Which one to build on?: Marco's page for Station Road found all five circular business models somewhere at Lena's Bakery (6.8.1). Most of them are small. Lena and Marco can afford to build one into a real part of the business this year.
The choice is not made from a list. It is made by looking hard at the business: what it makes, what it throws away, and what it owns that stands unused.
Each model comes with one question that tests whether it fits. Ask all five of Lena's Bakery and see where there is room to grow.
| Model | The question that tests the fit | At Lena's Bakery now | Room to grow |
|---|---|---|---|
| Circular supply | Could its inputs be renewable, bio-based or recovered instead of new? | Cups from sugar-cane fibre; renewable electricity at Mill Lane | Little: flour and butter already come from crops |
| Resource recovery | Is there waste that someone else could use as a raw material? | Valley Grain composts the crusts and scraps, about 120 kg a week | Some: a brewery would pay to brew with them |
| Product life extension | Does the product last, and can it be repaired or refurbished? | Ovenworks rebuilt the oven for $6,000 | Only for equipment: a loaf is eaten within two days |
| Sharing | Does the business own something that stands idle much of the time? | Celia's Cakes rents the oven on three weekdays | Strong: two weekdays and Saturday still stand idle |
| Product service system | Would customers rather pay to use it than to own it? | Lena is Brevo's customer for the coffee machines | Weak: nobody wants to rent a loaf |
Fit the product, or look past it: 6.8.1 showed why a loaf does not suit sharing: its first buyer eats it.
When a model does not fit the product, look at what the business owns and throws away instead: the oven, the building, the crusts. That is where a bakery's circular choices are.
Signs of a strong fit
Something is wasted or idle
An oven standing cold, crusts leaving on a lorry: value the business has paid for and is not using.
Someone would use it
Small food makers with no professional kitchen; a brewery that needs grain to brew with.
It can be done safely
For a food business, hygiene and allergen rules decide what can be shared or passed on.
The numbers work
The income or the saving is bigger than what it costs to set up and to run.
For Lena's Bakery two answers stand out: open the bakehouse to more renters, or send the crusts to be brewed. The next sections weigh what going circular gives a business and what makes it hard.
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Start with sharing. Celia's Cakes already rents the Mill Lane oven from 10 a.m. to 4 p.m. on three weekdays, at $25 an hour. On the other two weekdays and on Saturday it stands cold all day. Other small food makers in the town, a caterer, a start-up making fresh pasta, have no professional oven of their own and could rent those days on the same terms.
| The three idle days, shared | Every slot booked | Six in ten slots booked |
|---|---|---|
| Hours a year (6 a day, 3 days, 50 weeks) | 900 | 540 |
| Rent at $25 an hour | $22,500 | $13,500 |
| Extra running costs (cleaning $3,500, booking app $1,500, insurance $1,000) | $6,000 | $6,000 |
| Extra profit a year | $16,500 | $7,500 |
Setting it up, lockable shelves so each renter can keep ingredients apart, costs $2,000 once. At six in ten slots booked that is earned back in a little over three months.
Money
- New income from an asset already paid for: the oven earns in the day as well as at night
- Lower costs: less waste to pay for, fewer new materials to buy
Customers and name
- A true story that customers can see and pass on
- It sets the business apart from rivals such as Goldcrust plc, which sells in plastic
Stakeholders
- Small food makers get a kitchen they could not afford alone
- Staff, suppliers and the town see social responsibility in action
The future
- Ready for tougher waste rules before they arrive
- Less exposed to rising prices for new materials
Circular, and responsible: Going circular is one of the clearest ways to act on corporate social responsibility (1.3): it cuts harm to the environment and can help the community at the same time.
For the business, a benefit needs a chain of cause and effect: rent from an idle oven, a smaller waste bill, customers who choose Lena's over Goldcrust because of it.
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Priti thinks about 2 a.m.: Priti is happy with Celia, whom she knows. Four renters she does not know worry her. "If one leaves flour on the floor, or a tray of nut brittle in my oven, the bake starts late and so do the vans at five."
Every circular model has costs and risks as well as benefits. For a food business the biggest of them are about safety.
What makes sharing Mill Lane hard
Food safety and allergens
Mill Lane keeps nuts under tight control: the walnut loaves are baked last and bagged at a separate table. A renter who brings in nuts or sesame at any hour could leave traces in the next night's bread, so every renter must follow Priti's allergen rules, and some will not want to.
Wear and tear
The oven Ovenworks rebuilt works many more hours a week, so repairs come sooner and the day it must be replaced comes closer.
Time and control
The bakehouse must be clean and empty by 1 a.m. every night. With one renter Priti checks it herself; with four, someone has to be paid to, and a late renter becomes Priti's problem.
Set-up and people
$2,000 for shelves, a booking app, insurance, and a manager's time finding, checking and billing renters.
Uncertain demand
The $7,500 assumes six in ten of the new slots are booked. The $6,000 of extra running costs needs 240 booked hours a year, about a quarter of the 900 slots, before it makes anything.
| Challenge | What it means | Where it bites hardest |
|---|---|---|
| Money up front | Equipment, systems or a redesign are paid for before any benefit arrives | Resource recovery plants, take-back schemes |
| Getting things back | The loop only closes if products, crates or waste actually come back | Product service systems, take-back schemes |
| Safety and quality | What is shared or recovered must still be safe and good enough | Food, children's products, anything many people use |
| Customers | Many say they want greener products but will not pay more or change their habits | Sharing and renting, where the customer must do something new |
| Cash flow | Renting brings in a little each month instead of the full price at once | Product service systems |
| Claims that go too far | One green step sold as a green business invites the charge of greenwashing | Any business that promotes more than it does |
A challenge needs a way round: Naming a challenge is half the job. The useful answer says whether it can be managed, and how.
Priti's allergen risk can be managed with a rule that renters bring no nuts or sesame into the bakehouse, and a deep clean checked every night before 1 a.m. That makes sharing safer, but it also shrinks the number of food makers who can rent.
Lena now has two real options.
Option A: rent the oven on the three idle days as well (a bigger sharing model).
Option B: the Old Forge Brewery, across town, would collect the crusts and scraps that now go to Valley Grain's compost, about 120 kg a week, and pay $0.40 a kilo to brew them into a bread ale (a bigger resource recovery model: the waste becomes a raw material worth more than compost). Second Helpings still gets the unsold bread first.
| A: share the bakehouse | B: leftovers to the brewery | |
|---|---|---|
| Model | Sharing | Resource recovery |
| Money a year | $7,500 extra profit at six in ten slots; $16,500 if every slot is booked | $2,496 (120 kg × $0.40 × 52 weeks) |
| Set-up | $2,000, earned back in a little over three months | $600 for food-safe bins |
| Biggest risk | Nut traces or a dirty oven delaying the 2 a.m. bake | Very little: the brewery collects |
| What customers see | Little: it happens behind the bakehouse doors | A bread ale in town that tells Lena's story |
| Who else gains | Small food makers get a professional kitchen | The brewery needs less grain; Valley Grain's compost heap gets less |
| Fit with the business | Uses its biggest idle asset | Uses its leftovers, after Second Helpings |
How to decide: Weigh the same four things for each option: what it earns or saves, what it costs to start, what could go wrong and whether that can be managed, and how well it fits what the business already does.
Then choose, and attach a condition that controls the biggest risk.
Lena chooses A. Even at six in ten slots it earns about three times as much a year as B ($7,500 against $2,496), and it puts the most valuable thing the bakery leaves idle to work. The condition is Priti's: a three-month trial with two new renters, strict allergen rules, and a deep clean checked every night before 1 a.m. If the trial shows the risk cannot be controlled, Lena switches to B, which costs almost nothing to start.
B is not a poor option. It is small, safe and visible to customers, which is why a business with no idle asset would choose it.
The pattern: Figures for each option, the biggest risk of each, a choice, and a condition.
A choice with no condition ignores the risk; a list with no choice is not a decision.
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How this comes up: Short case questions ask you to analyse one way a business is working to protect the environment and two ways it is not, for six marks, or to explain one benefit or one challenge of a model for the business in the case.
Longer questions ask you to discuss whether a business should promote the green steps it has taken or change more of what it does, or to choose between two circular options, for ten.
The six-mark pattern
- Find three different decisions in the case. One that protects the environment and two that do not. Never one decision used twice.
- Name each one. Say what the business does, in the case's own words and numbers.
- Analyse it. Say why it helps or harms the environment, and what it means for the business: its costs, its name, its customers.
- Link it to a model where it fits. Leftovers turned into a raw material are resource recovery; a working fridge scrapped instead of sold on is a product whose life was not extended.
Two traps: The same decision twice. 'Its cups go to landfill' and 'it turned down the cup library' are one decision seen from two sides, so they count once.
No case, no second mark. 'Throwaway cups create waste' is one mark. 'About 300 cups a day from the Station Road shop go to landfill' is two.
Analyse one way in which Lena's Bakery is working to protect the environment and two ways in which it is not.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.