About a week after the first visit to Nayana Devi - the local entrepreneur focusing on various kinds of foods packaging, handicrafts production, and marketing for local self-help groups (click here to read) - two women came to our office. The two of them are in the foreground of the first picture (top, clockwise) above, shown during our second visit to Nayana Devi's house and production facilities, this time for a focused business meeting.
The two women represented a larger group (about 12-15 women) from the same neighbourhood cluster in Kargil basti, and all of them had decided to work collectively at the production, packaging and selling of spices, flour and other such kitchen staples. Their inspiration had been Nayana Devi's small-scale food processing & packaging facilities that they had visited a week earlier. We decided to have this group meet Nayana Devi a second time.
Business meeting with local business mentor
The goal of our second trip to Nayana Devi was to figure out details about how to structure a group business, how to get started with an initial range of products, and to have interested community members have a face-to-face Q&A session with someone that they regarded as both a peer and a business mentor.
To a large extent, the meeting was hijacked by a single community member, one of the community leaders, and a man who was convinced that he wanted to buy a couple of machines and get into packaging & supply of spices and flour. For nearly an hour, he discussed how he wanted to work with other community members to start up a business and was even ready to pay for the machines himself. His conviction was amazing, but by the end it was clear that he didn't really want to participate in any kind of business planning beyond buying the machines. It also became clear that he didn't really want to work with the other women who had come along for the meeting, which started rubbing everyone else the wrong way.
But we did manage to moderate the meeting finally, and bring the conversation round to the women that had come with the purpose of starting a business together. The women were all from the same neighbourhood cluster in Kargil basti; the 3-4 women that were from a different neighbourhood spontaneously formed a separate group and were far more interested in tailoring.
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Business Advice vs. Motivation
A problem from my perspective was that Nayana Devi primarily offered motivation to the women, not business advice. I tried steering the conversation round to business models, to figuring out the ideal group size for a bunch of first-timers, and other such matters, but I wasn't very successful. Nayana kept bringing the conversation back to "Yes you can. I could and so can you". Etc. Etc. This was inspiring, but I was hoping for more concrete guidance given that this was her third interaction with the same group of people.
What this means is that especially in the case of grassroots entrepreneurs that have made it on the basis of an intuitive feel for business, I may have to ask a long series of probing questions before I can facilitate a tangible discussion about viable business strategies. Since it is exactly information of this sort that would be invaluable for micro-enterprise owners who want to scale up, I need to figure out a strategy.
- Possibly having individual Q&A sessions with these entrepreneurs, guided by a set of specific questions.
- Ideally, video recording these structured sessions so that they can be used as teaching material for future micro business development programs.
- Priming the entrepreneur / mentor for a business meeting with the aspiring entrepreneurs from my target community, and making sure that the group meeting is semi-formal and answers a set of basic queries.
My team and I met with this group of women couple of days after the above business meeting. The women filled out general application forms for our business centre, and sat together to talk about business organisation, financial assistance with procurement of machines, and concrete next steps toward getting started.
The addition to this meeting was the turmeric supplier who lived in the same community (but in a different neighbourhood) and whom I briefly mentioned in a previous blog post. Since this person had already created a turmeric supply chain and the women were interested in processing & packaging turmeric, I thought this might be a mutually beneficial community linkage.
Organisational Structure of the Group Business
While discussing business models, I presented the women with a few different options. First, options with the supplier:
- Supplier is part of the group: The turmeric supplier would officially be part of the group, bring over the turmeric and supply to this group and no one else, and then they would all participate in its processing and marketing.
- Supplier is linked to the group: The person could buy in larger quantities than he could afford before, supply to this group most of what he brought from Phulbani, and then sell the rest to local households as he presently did.
Next, options regarding group structure:
- Everyone had the same responsibilities, got a share of profits in proportion according to hours worked, and shared duties such as taking care of bank accounts, machine maintenance, monitoring of payments etc.
- Everyone participated in the basic duties of processing and packaging, but 2-3 individuals took responsibility for managing the business, managing finances, and managing any group conflicts. We said we could help them make (and enforce) a group contract whereby these managers would not be allowed to oust anyone (or hire anyone) without group consensus.
- The two lead women said that there might be some conflicts at a later time when deciding who had worked how much. We offered to maintain a tracking system (paper and pen to begin with, but we're planning to invest in an electronic system in a couple of months because it makes things so much more transparent) such that individuals could sign in and out, and work hours could be easily determined at the end of the month.
Finally, my team and I left the room and allowed the women to finalize business structure among themselves. About a half hour later (during which we all overhead loud, heated debates), the women called me into the room. Here is what they had decided, and what they finalized after a joint discussion with me:
- The two women who had taken the lead so far would be the two managers, and would undertake all managerial responsibilities and hence earn a somewhat higher share of the profits (not fully decided).
- The group also had questions about payments in case of sick leave, so I briefly explained the concepts of paid and unpaid leave and how they could fix a set number of days per month that each person could take off work and still get paid.
- I offered the deal that the marketing done by my team would earn us a commission, but that we would link them to multiple marketing channels and also allow them to fully participate in the marketing process and identify new opportunities. This way we offered them exit options, eventually reduced their dependency on us, and enabled them to explore alternative marketing channels in case our commission proved too expensive for them.
- Our business centre would offer handholding services for about 10 months from the start of the business. The combination of handholding, business advisory services, business training, and extensive marketing would earn us a small percentage of their profits.
- We would take a share of the profits only about 4-6 months after start of the business, allowing them plenty of time to make mistakes, learn from these mistakes, and recover any costs.
- The machines were to be selected and bought by us.
As for the turmeric supplier:
- He chose to not be part of the group, but supply turmeric as needed.
- I couldn't pinpoint the reason, but he was not quite willing to be part of the operations and neither was he excited about the chance to procure and sell raw turmeric in bulk and thus scale up his village-to-city supply business.