Developing Micro Businesses for the Market_ Myths and Realities

8/9/2019 Developing Micro Businesses for the Market_ Myths and Realities

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Workshop onBusiness Development Services (BDS)for Microenterprises

(Bacolod City May14, 2008)

DEVELOPING MICRO

BUSINESSES FOR THE

MARKET:

Myths and Realities

ROBERTO S. CLAUDIO SR.

Chairman Tobys Sports

Past President Philippine Retailers Association

2007 Finalist Entrepreneur of the Year


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Myths and Realities About Microfinance

Common Pitfalls of Project

Implementation by Banks and

Social Services Agencies*

* UNDP Microstart Initiative based on what has been

learned about the design of microenterprise projectsover the last 20 years.


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Myth: Micro entrepreneurs need to becared for because they are poor.

Reality:

Micro entrepreneurs are

knowledgeable about theeconomy. They often have

years of experience in their

trade working with dedication

and determination. Belief in the

intelligence and knowledge of

clients is critical.


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Myth: Microenterprises are redundantactivities that should be replaced by largerbusinesses employing many people.

Reality:

Microenterprises are viable.

Locally important activities that

should be upgraded. Thesesmall-scale economic activities

are valid business activities to

be taken seriously.


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Myth: Interest rates to the poor need tobe subsidized.

Reality:

Microfinance rates of interest

must reflect operating costs to

achieve sustainability.Organizations making large

numbers of small loans will

have high transaction costs and

thus need to charge rates thatare higher than commercial

rates.


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Myth: Credit alone is useless. It mustbe packaged with training, marketing,technology and other services.

Reality:

Although programs, which packaged credit

with other services, may seem ideal, they

require large subsidies and have proven to

be largely unsustainable. The minimalistapproach used by the Grameen Bank and

many others has shown that clients can

use credit in small amounts to start or

improve the profitability of

microenterprises. Providing marketing andmany other areas of services are valid, but

best managed separately.


7/20

Myth: The poor cannot be trusted with

credit. The consumption needs of the poorare so pressing that any loan will fit its wayquickly to consumption.

Reality:

The high repayment rate ofmillions of microfinance clients

is empirical proof that the poor

are creditworthy.


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Myth: The poor are unable to save.

Reality:

The high rate of savings

reported by many microfinance

clients is empirical proof that the

poor are credit-worthy.


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Myth: Poverty has a crippling effectrendering the poor unable to improvetheir condition.

Reality:

The remarkable

success of institutions lending

over 10 million clients aroundthe world, the vast majority of

whom are below the official

poverty line proves beyond

doubt the ability of the poor toimprove their lives with their

own ingenuity and drive.


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Micro entrepreneurs to Big Business:

Results from many countriesdemonstrate that very small-

scale farmers, traders and

artisans living in rural and urban

areas can put small loans togood use. Extending small

amount of credit, along with

appropriate encouragement and

orientation leads to significant

increases in income, production

and employment.


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IF MICROENTREPRENEURS HAVEMYTHS AND REALITIES ..BIGBUSINESS ALSO HAVE THEIR MYTHSAND REALITIES TO SHARE WITHMICROENTRENEURS.


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Myth: Big Business do not want todeal with microenterprises.

Reality:

Major retailers will help displaymicroenterprise products will not

purchase outright for a untested

products. They will ask you to

consign your product.


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Myth: MOST microenterprise becomebig business.

Reality:

Few of them become big

business. Most of them continueto stay as microenterprise.

(Example: Walis ting-tingmaking will forever remain a

microenterprise.)


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Myth: Big business do not want toshare their know-how tomicroenterprises.

Reality:

They will and they do, except if

you ask them to share formulas,

proprietary technology and

other trade secrets.

Microenterprises should beready to find these

opportunities.


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ABOUT TO GO INTOMICROBUSINESSMENTORING

Overcome Procastination Immediately How to Get out of Debt and Stay out

How to Choose the Right Business for

You

Are You Ready to Start Your Own

Business

No Previous Experience Required

(How to start a business if you've got noexperience, training or education in the

industry!)


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ALREADY STARTEDMICROBUSINESSMENTORING

Making Your Home Business Work Characteristics of a Successful

Entrepreneur

It Takes Credit to Build Credit Starting a New Business --

Actualizing Your Vision ( What are

you good at What do you enjoydoing.)


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MICROBUSINESS MOVING TOSMALL/MEDIUM BUSINESSMENTORING

1. Why Should You Have

a Business Plan?

2.

Networking -- How, Whyand Where

3. How to Raise Capital to

Fund your Business


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WANT TO GO BIG-TIME!

1. Understanding your

Channel of Distribution

2. How to Bar-code your

Products

3. Improving Inventory

Management Systems

4. Raising Equity


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Myth: Big-business does not care.

Big Business care, we care I

care. Thats why we are here.

SERVICE TO

HUMANITY IS THE

BEST WORK OF

LIFE.


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THANK YOU AND GOODAFTERNOON!

Workshop on

Business Development Services (BDS)

for Microenterprises(Bacolod City May14, 2008)

Developing Micro Businesses for the Market_ Myths and Realities

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Transcript of Developing Micro Businesses for the Market_ Myths and Realities