Small Business Development Program

Sorry for the lack of posts last week. I wanted to post about our new and improved Small Business Development program but was waiting around for some pictures that never came. So here's a nice boring looking post about a very interesting new look at an old program. I'll let Sarah do the talking:

Hey everyone! Here in Ecuador we've been spending the last couple months turning our Small Business Development program from a consulting service for individual business owners into a full-fledge microfinance program. The road has been both rocky and exciting and we've been learning a lot. Our aim from the start was to run a first loan cycle as a test of our model and see how successful we could be at providing this service to the community (are we giving the loans to people who truly want to invest in their businesses? are they able to pay us back within the set timeframe? is this access to affordable capital actually making a difference to the revenue they make in their businesses and thus improving their standard of living?). We spent our first couple weeks meeting with community members who could guide us in the process, making visits to the director of a small savings and loans cooperative, to the manager of the local government offices of the Patronato for Social Progress, to the credit officer at a microfinance NGO - and luckily they were all eager to give us a hand and help us navigate the new world of microfinance (new to us, at least).  

As of now, our first microcredit project looks like this: Working with the Patronato, we are first providing a four-week course in agro-business planning and management to eight farming women from the semi-rural community of Jatumpungo. At the end of this course, the women interested in receiving a loan will submit a business plan and we will select a group of 4 women to give a loan to. They will be given a maximum of $400 per person, to be paid back over 4 months (corresponding with the growth cycles of their greenhouse crops) at an annual interest rate of 9% (which adds up to a total of $12). Our hope is that they will invest these loans in new and simple technologies for their greenhouses (irrigation, fertilizer, better tarps, etc) so that they can produce and sell more and start earning a significant income from their land. If this first loan cycle goes well, we will be seeking to reinvest in a new cycle, and hopefully our experience gained from this one will help us scale the project to reach more beneficiaries. 

That's all from Small Business for now. We are presenting our project to the president of the Patronato tomorrow morning - wish us luck!

Side note: We presented to the president and she loved the idea so we're moving forward with our plans .

Later this week - Children's Nutrition by Peter Wagner

Best,

Jefferson 

Small Business' New Microfinance Program

The Small Business Development Program is launching an ambitious small loans initiative beginning in October. In just under two months, we have revamped SBD from a small financial consulting program into a micro loan program. Teaming up with the local Patranato, or the local government social service, we have found a number of potential clients involved in agribusiness. Along with the Patranato and a local financial cooperative as our partner, we will be giving business classes throughout the month of October. At the end of the month, the clients will submit business plans laying out how they would utilize and then repay their loan. From this group, we will select the four most promising candidates to give loans of $400. Through this initiative, we are able to offer interest rates that are significantly lower than national banks and local financial cooperatives. Our program has already raised $1000 through a generous donation to get our initiative off the ground. We have set a goal of matching that through public fundraising so please click the link below to learn more about the program and to donate.

 http://www.razoo.com/story/Mpi-Ecuador-S-New-Microfinance-Program

Best,
Jefferson

MPI connects with local entrepreneurs in Small Business Development

MPI Ecuador's business program has undergone significant changes under the 2010-2011 PD team.  Here to outline its current goings-on is Jack.  To check up on the work our summer volunteers are doing, please visit the Summer Session 1 tab at the top of the blog!


Since January, the Small Business Development program has been offering free consulting services to various businesses in the communities of Rumiloma and Sangolquí. Over the past several months, we have streamlined our approach to heavily target the finances and accounting of the businesses we encounter. When appropriate, we also advise businesses on any possible opportunities we find, ranging from moving locations to carrying different products.

An important part of this program has been Carlos Rodriguez, a finance student from Quito. Carlos makes a one and a half hour journey out to Rumiloma every Saturday to attend one of our English classes and help us work with local businesses. With his help, we have turned the small business program into a structured operation that we are excited to expand.

About a month ago, we finished working with Rosita, a woman who was operating a two-in-one business: half small food store, half sewing business. Rosita did not practice any accounting, and how no idea how much money she was making. First, we taught her to keep a balance sheet. Next, we helped her figure out the wholesale costs of her store’s products; many of her products were bought in bulk, and only some products included a sales tax. We walked Rosita through the mathematical functions she needed to operate on her calculator. Soon enough, she was calculating her gross income for the first time. We eventually added up her monthly income and compared it against her costs of rent, electricity, phone, and water. Unfortunately, we discovered that Rosita was barely making any money. Rosita had been working 15 hours a day, and only made about $60 a month. That’s 15 hours of work to earn $2. Among other things, the biggest problem was a high monthly rent that devoured her income. Although Rosita was disappointed when she saw the numbers, she was glad that she discovered her business’ financial standing sooner rather than later; she might have gone months or years without having realized that her husband’s income was the only reason her business was staying afloat. Rosita is currently in the process of selling her space (there have already been several interested enquirers) and will continue to offer sewing services from her house. She will also continue to sell her products at the local Thursday Sangolquí market as well as at local popular events, such as soccer games. By shedding the disability of a costly location, she will be able to keep a much higher percentage of her income and have a higher profit.

Since completing our work with Rosita, the small business program has been working on organizing a book-keeping system for the owner of a small bakery and has recently given a consultation to a local fruit and vegetable stand. With only a few months of experience under our belts as pro-bono financial consultants, we are more excited than ever to keep this program improving and gaining popularity in the area. 

Jack and Brock with Rosita in front of her store

Pablo and a friend, frequent recipients of MPI's business consulting services, in their store

Microfinance takes to the streets

With an update on continuing developments in Microfinance, here's Jack!

Just before Christmas break, we wrapped up MPI Ecuador’s first small business course. Our final class will stand out as one of my favorite moments of the past 7 months. Each of the students shared their feelings as entrepreneurs and how intimately proud they have been of their work of running their own businesses. Even better, our students discussed in detail how our course motivated them to make some concrete improvements to their businesses. The final moments of this class gave me a convicting reaffirmation of the MPI’s capacity to truly empower others.

Several weeks ago, we brought on a fantastic new addition to the MPI team: Carlos Rodriguez, a finance student from Quito, is now helping out at our centro and is helping us start an exciting new element of our Business Development program. Together, Carlos and I are now providing consulting services to several businesses in our area. This past Saturday we worked with our first two clients.

We started in Sangolquí working with a small business that sells feed and other supplies for livestock and pets. This family-owned business demonstrated to us that they have had no shortage of clientele, but they have been struggling to make income cover their costs. Carlos and I are currently in the process of helping them re-organize their inventory system so they can get a better grasp of their daily and monthly finances.

After some time in Sangolquí we went back to Rumiloma to work with a small group of women who manage their own street-food stand. Every Saturday, these women sell plates of barbeque chicken and roasted potatoes. We made a brief summary of their finances, and discovered that despite their hard work, their chicken dishes have been too costly to turn a profit. After comparing their expenses from cooking up barbeque chicken with what they would be earning if they switched to salchipapas (french fries and hot dogs, an extremely common street-food option), they would be making significantly more money. These women were excited, albeit flabbergasted, about the prospect of finally making some money on their Saturday afternoons.

With a stimulating and successful day behind us, Carlos and I are thrilled with the potential impact we can have by personally working with businesses in the area. It’s amazing what a calculator and some common sense can do to completely jump-start someone’s livelihood.