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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.
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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)
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