Inclusive Entrepreneurial Communities: Facilitating access to business training, mentoring & financing in a sustainable way

Inclusive Entrepreneurial Communities: Facilitating access to business training, mentoring & financing in a sustainable way

Peru
Organization type: 
for profit
Budget: 
$1,000 - $10,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

To promote and implement inclusive communities where every person had the opportunity to obtain economic self-sufficiency by running a business successfully, providing him/her access to:

- Acquire and develop technical, managerial and entrepreneurial skills

- Financing for start-up a new business or to expand an existing business

- Information regarding markets situation and business opportunities

- Networking with potential investors, partners, clients, suppliers and other public and private institutions related to microenterprise and/or small business incubation & development

Youth, women, indigenous people, disabled people, teens at risk, will be always included in these Entrepreneurial Communities

About Project

Problem: What problem is this project trying to address?

Many poor people who can not get a job in the formal economy, create their jobs by doing what their parents and neighbors do: they roll out a blanket or set up a stand to sell fruit, sandwiches, cold drinks, or homemade goods. In doing so, they become microentrepreneurs—literally small-business owners. They enter the world of microenterprise, not because they are knowledgeable about business or plan to earn money that way long-term, but because they simply have no other choice. Almost all of them are not enough prepared to create and develop a successful business endeavor that will enable them to escape poverty. Their microenterprises lack of viable business plans as well as complete and accurate financial information. These microenterprises do not have the time or resources to develop new markets beyond the immediate location that they serve. They are not aware of how to obtain information about other markets or how to market their product to customers within other markets. They have virtually no internal bookkeeping system that can provide them with vital information for effective management. Because of their limited resources, they cannot hire accountants and other consultants who are trained to identify risk and take actions to mitigate them. Furthermore, most of these microentrepreneurs do not necessarily have an entrepreneurial spirit and may actually be better suited as employees. As a result of this lack of entrepreneurial vision, many times people who do not know what kind of business to start, simply copy other businesses, often leading to a crowded marketplace. Since most of these small businesses operate in the informal sector, they typically operate with a low-level organization on a small-scale, have low and uncertain wages, and no social welfare and security. Due to their small size and illegitimate status, these informal enterprises face a number of constraints. They are not registered and cannot benefit from many support programs initiated by the government, including financial assistance, training, tax incentives, etc. These microenterprises are also restricted from setting up shops in certain areas of town and face fines for violation. In some cases, they face harassment and extortion from local officials. Small businesses in the informal sector suffer from all of the obstacles faced by medium size and big enterprises, as well as additional operating challenges which make them particularly vulnerable. The public sector of Third World Countries does not provide the poor with cash aid, food assistance or health insurance. This lack of a safety net, the lack of a social structure to care for and support the disadvantaged members of society, arguably requires the poor to take risks with new business ventures because they have nothing to lose and everything to gain. As “necessity entrepreneurs,” these hardworking people are in business because it is their only method for survival. Without a clear vision of how to run a business, these necessity entrepreneurs learn principles in the most costly way possible—by trial and error, what is reflected in the high mortality rate among the Peruvian microenterprises: From every 10 new start-up small businesses, only three survive during the first year of operations. Only two arrive to the third year of existence, and only one of them is passing de bar of five-years-of-operation. The lucky survivors generally find that even after working long hours, seven days a week, they are barely able to take home enough money to buy food for another day. Although microfinance has helped many clients improve income and living standards through self-employment, recently many microfinance institutions have found a disconcerting trend in their clients’ businesses: self–employment businesses of nine out of every ten clients stop growing after have had several consecutive loans. The client’s business size tends to plateau when the owner reaches her maximum daily sales potential. This point is usually the total amount of sale he or she is able to make by herself in a work day without hiring an additional employee who might help her to further grow her business. As a result, the size, growth, and reach of the business levels off. This results in arrested business and job growth. Thus, while microfinance and business development services are doing much good, they are still not the complete set needed for a global successful Microenterprise development. Additional keys to improving poverty elimination efforts in developing Countries lies in new types of approaches to assist these “necessity entrepreneurs” to develop or improve a business and turn it into a successful venture that can provide significant income.

Solution: What is the proposed solution? Please be specific!

Sustainable livelihoods business is distinct from charity or philanthropy. It is strictly business, new business and new markets, business that benefits the poor and benefits the investors. It is primarily about how to develop and engage in these new business opportunities and how to “do well by doing good”, alleviating poverty and increasing prosperity and opportunity for all Since the entrepreneurial process is emergent, non-linear, dynamic, and fluid, we will apply a mix of the following methodologies: Micro-Venture Capital, Micro-Private Equity, Micro-Franchising, Network Marketing, and Employee Stock Ownership Program (ESOP) in order to accelerate the process so that an ordinary person become an extraordinary entrepreneur in a sustainable way We plan assist people who want to start a small business (Microenterprise Incubation Program)and people who want to expand their existing small business (Microenterprise Development Program) We will assist them to establish liaisons with “Angel Investors” who after of a deep analysis and due-diligence of the participants and their business plans, will decide if they are willing to associate with them –through a Micro Venture Capital or Micro Private Equity intervention (Investments between US$ 2,000 and US$ 10,000)- in order to: - Start a new original small business, or a microfranchise business developed by other existing successful enterprise - Strength an existing small business or expand it trough the creation of a Microfranchise format to offer to potential franchisees
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

1. To elaborate a Social Business Plan. In this way, we will have a clear “Route Map” to follow in such way that the social business can operate successfully, be profitable and can growth in a sustainable way. 2. To elaborate the Operations Manual for this new social business. This managerial tool will allow us to ensure that all the workers know how to do every part or step of every process in the right way 3. To obtain start-up funding for this new social business venture, both for operating expenses and for Micro-Venture Capital & Micro-Private Equity investments 4. To elaborate a Skills Development Program for this social business, to ensure that both all the members of the board and the staff have the skills required to implement the Social Business Plan as well as run successfully all the processes described in the Operations Manual 5. To implement the Social Business Plan, the Operations Manual, and the Skill Development Program in this new social business venture 6. To prepare to obtain a Quality Certification so this social business can be better prepared to compete both in the Venture Capital and Private Equity markets.
About You
Organization:
North Peru Investment Corporation S.A.
About You
First Name

Oswaldo

Last Name

Tello

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About Your Organization
Organization Name

North Peru Investment Corporation S.A.

Organization Country

, LY

Country where this project is creating social impact

, LY

How long has your organization been operating?

Less than a year

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Innovation
What stage is your project in?

Idea phase

Share the story of the founder and what inspired the founder to start this project

Having worked more than 27 years in Banking, Microfinance, Business Development Services, and Rural Development Projects, I have had the opportunity to know of first hand a lot of micro and small enterprises, and to practice, improve and perfect several micro-lending, training and technical assistance approaches.

Here in Peru the rate of “death” of Micro and Small enterprises is very high. From every 10 new start-up small businesses, only three will survive during the first year of operations. Only two will arrive to the third year of existence, and only one of them will pass de bar of five-years-of-operation.

There are many reasons for this very small rate of survival. I found that
no more than 5% of the "death" cases happened due to external and unpredictable reasons such as robbery, diseases, fires, etc. But 95% of the "death" cases were attributable to the business owner’s poor management, poor leadership and low performance.

While the business was very small, its owner was able to manage it. While the business had few or any competitors, its owner was able to obtain a big share of the market. While there were only the owner and his/her relatives working in the business, all was under control, but once they hired some employees, things become out of control.

Almost in all the cases, the growth of the business exceeded its owner’s capacity to lead and manage it. So, little by little these micro and small enterprises became stragglers first, and then, out of business.

Social Impact
Please describe how your project has been successful and how that success is measured

We made some informal small investmets adressed to include "base of the pyramid" people with good results.

How many people have been impacted by your project?

How many people could be impacted by your project in the next three years?

101- 1,000

How will your project evolve over the next three years?

First year: Start-Up, become a succesful and stable business.
Second year: Make adjustements, prepare to expand and replicate this social business model.
Third Year: Expand and/or replicate the Social Business Model called "Inclusive Entrepreneurial Communities"

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

Lack of enough funding, so we will continue being alert to new funding opportunities and knocking the doors of potential partners and social investors.

Tell us about your partnerships

- Current college students affiliated to Help International, under the direction of Professor Warner Woodworth, Marriott School of Management, Brighan Young University.

- Fairbourne Consulting, a firm spcialized in Microfranchise

Explain your selections

These small donations and income from consulting services are allowing us to operate in a very small scale.

How do you plan to strengthen your project in the next three years?

Getting enough funding and partnerships

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

Lack of skills/training

SECONDARY

Lack of visibility and investment

TERTIARY

Lack of access to information and networks

Please describe how your innovation specifically tackles the barriers listed above.

We, as the investors' representatives, not only will invest their money in business ventures, but being full of the spirit of entrepreneurship, we will work side-by-side with the Microentrepreneurs to mobilize the necessary resources to confront their most serious business challenges, and to run successfully their microenterprises.

Through our daily work and very close relationship with the Microentrepreneurs, we and the investors will transfer to them expertise, knowledge and key contacts of the network we have in the business world. Also, wi will give them personalized mentoring and critical feedback and guidance on an ongoing basis.

The estimated amount to investment would be between US$ 2,000 to US$ 10,000 in every microenterprise.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

SECONDARY

Grown geographic reach: Multi-country

TERTIARY

Grown geographic reach: Global

Please describe which of your growth activities are current or planned for the immediate future.

Currently we are working in a very small scale, in an informal way. Once we got enough funding we will start-up operations in a formal way, and then, to start to growth.

Do you collaborate with any of the following: (Check all that apply)

NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

These Partners will collaborate with us with small funding, but with great knowledge capital, enthusiasm and passion.