Small-scale enterprise development is not for everyone, whether disabled or not, and needs a high level of discipline, dedication, persistence and creativity as well as a lot of work. The micro-entrepreneur must be capable of decision-making and have the ability to manage employees (if any) and accounts. Furthermore, small-scale enterprise development for persons with disabilities involves a multitude of additional challenges, which require specific attention and strategies. Before setting up a small-scale enterprise, it is necessary to:
1. Deal with specific challenges
In any business venture, specific challenges need to be addressed. These include:
maintenance of equipment, machinery and premises.
In the case of persons with disabilities, their physical and mental capabilities have to be reviewed for suitability to the enterprise.
Ask these questions:
1. What are my strengths?
2. What are my weaknesses?
3. How can I compensate for my weaknesses?
4. What are my current personal needs?
5. Who will be working with me?
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2. Choose the right business
The right business certainly varies from one person to another. Personal preferences, along with physical and mental capabilities are the main deciding factors. Nevertheless, the focus should be on market demand and its limitations to determine if the business can be successful.
A planned small-scale enterprise should be able to produce sufficient income to justify the time and energy invested in the venture. Family support also plays a major role in the selection of the business since a disabled person needs help in accomplishing certain tasks, especially during the start-up of the enterprise.
1. Make a list of what you would like to do.
2. Also make a list of what you are good at doing.
Go through the following steps to guide the choice of business:
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· Start with what you like |
® Remain realistic |
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· Investigate the market and its needs |
® Try to be objective |
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· Review the competition |
® Competition means a market |
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· Avoid saturated markets |
® Look for opportunity |
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· Make sure you can do it yourself |
® Hiring means spending money |
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· Consult with others |
® Discretely, not to divulge ideas |
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· Discuss with your family |
® Check impact on family |
Keep in mind that if there is competition, it means there is a market. Discreet investigation is therefore advisable.
Write down your ideas so you will not forget
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Case study: Deaf and mute villager with no schooling becomes a successful farmer Deaf and mute and with no education, Somboon Oysin was turned down by employers. Yet, the 25-year-old villager of Kampaengsaeng District in Thailand's Nakhom Pathom province, is now a successfully self-employed farmer with a regular annual income of 40 000 baht. His strong determination to break out of his world of silence and reach out to others enabled him to make full use of all his human faculties to radically transform his life. As a child, he could not attend school because of his disability. He never learnt sign language. For his living, he could only find irregular work. He dreamt every day about having his own enterprise which would let him stay close to his family. Looking for business opportunities, he decided to follow his neighbour's successful example in cultivating corn and galingale (locally known as kachai). He obtained hands-on experience at his neighbour's farm and learned a lot by himself. When he felt he had enough experience, he requested a loan from the Disability Fund of the Department of Public Welfare to set up his own enterprise for which he was given an interest-free credit of 20 000 baht. Within one year, he was earning enough to expand his farm enterprise. After just two years, he began earning a regular annual income which is more than twice his previous yearly earnings as daily worker of no more than 18 000 baht. He has been able to repay the family's debt of 40 000 baht. Today, Mr. Somboon is free of all debt, has ample income, owns a motorcycle and is a self-employed entrepreneur. He is able to take care of himself and his family, which makes him very proud. He is widely accepted within the community as a successful farmer and entrepreneur. |
Examples of activities appropriate for rural areas
The right business also means what is readily available and required in terms of raw materials and local demand.
Activities found in rural areas can be divided into three broad categories.
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ON THE FARM |
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HANDICRAFT |
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SERVICES |
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3. Review market demand and the competition
Review of the competition is necessary. Competition means there is a market, but how big is the market?
It is important not to saturate the market and to supply the right type of product or service; something that is in demand.
Ask these questions:
1. Who are my competitors?
2. Who are my customers?
3. How much can the market absorb before saturation?
4. Is there a shortage or surplus?
Location of the market is also important for micro-entrepreneurs with physical disabilities. Agricultural produce, for example, has to be sold at the fresh market, which must be accessible to the disabled person micro-entrepreneur. If it is too far, proper transportation arrangements will be necessary or else the product will have to be sent by a hired delivery person or sold to a middle person. Hiring people increases production costs. Marketing is easier for a farm-based enterprise located within a small community where the production can be sold directly to the villagers.
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Case study: Overcoming his disability to become a leading mushroom entrepreneur
Over a decade ago, Suban Inthanam was unable to get a bank loan to start mushroom farming to support his wife and two children. A resident of northeast Thailand's Yasothon province, he suffers from a disability which has made his right leg shorter than his left by 15 cm. Banks were unwilling to lend to a disabled person and the family was supported by community members. Today, in his forties, Mr Suban is a well-known and prosperous mushroom entrepreneur with annual profits of about half a million baht, helps the poor and readily shares his business expertise with others. Borrowing a small amount of money from friends he was able to set up a small mushroom farm in 1990. He succeeded in producing as much as the big farmers due to very high yields. With his wife, he gave special attention to the farm, paid back the loan from his earnings as a successful entrepreneur, bought land and built his own house made of concrete. His wife harvests the ripe mushrooms four to five times a day. The plants are not watered by an automated device on fixed days and times but manually to ensure the exact amount needed at the exact time. Mr. Suban buys the spores in Bangkok, prepares and inoculates substrate bags and supplies these to other mushroom cultivators in his village.
In 1994, he started training people in the community who were keen to follow his outstanding example. He has so far trained more than 25 persons in mushroom cultivation. The training he gives is free because he believes in mushroom cultivation as a good and honourable way of earning a living. Now more than 25 rai (about four hectares) of land within the village is used for mushroom farming. Mr. Suban goes around the village on his motorized tricycle. He helps others with advice on mushroom cultivation, despite risk of increased local competition and reduced profitability of his own production. Instead, he diversified into the production and sale of inoculated substrate bags which largely compensates for any income loss from increased competition. He now makes monthly profits between 40 000 and 50 000 baht. He is one of the most highly appreciated disabled guest trainers at the mushroom cultivation training centre in Ubon Ratchathani, more than 100 km from his home in Yasothon. |
4. Check seasonability
Agriculture and farming produce are often seasonal. The following questions must be considered:
1. Is the crop or product available only during certain seasons?
2. Are raw materials available all year round?
3. Can the product be kept in storage?
4. Is the service or product only required during certain periods of the year?
5. Can there be off-season production?
Some products can be grown off-season generating substantial profits since there are few competitors during that period. Such products, although requiring more time and attention, can offer a niche market opportunity for micro-entrepreneurs with disabilities.
5. Decide on business size
Care must be taken in deciding the size of the business.
If too small, the business may not be feasible.
If too big, it becomes too difficult to manage properly and may require extra help, which adds to costs.
If too big, the market may not be capable of absorbing the produce.
It is usually better to start small and expand the business slowly once the market has been tested and income starts coming in. Initially, self-sufficiency and the capability of handling the business by oneself is the best indicator of the right size of the enterprise.
Several questions need to be answered before determining the size of the enterprise:
Write down your ideas so you will not forget1. Who are the clients?
2. Where are the clients?
3. How many clients are there?
4. How much produce or services can each client use?
5. Are there seasons or days of the week when the produce or service is more in demand?
6. Who else is offering the same service or produce?
7. What percentage of the business share can I expect to take?
8. How much money do I have to start the business?
9. How much can I manage by myself?
10. How can I ensure quality?
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6. Identify the location
Location plays a crucial role in starting a small-scale enterprise. While a farming or farm-related enterprise need not be accessible to the buyers, the micro-entrepreneur will have to travel to the market to sell the produce. When the business involves fresh produce, timely sale is crucial. For example, fruits, vegetables and flowers are highly perishable and have to be sold quickly. Easy access to markets is important. It is necessary for a micro-entrepreneur with a disability to be able to reach the market or to have easy contact with potential buyers. In some cases, it may be necessary to hire someone to help in the delivery of the produce.
In the case of services, micro-enterprise location should encourage people from the village to come to the entrepreneur's workplace, which must be easily accessible to clients, and be somewhat attractive. Low-cost decorations can be used to attract clients while good service will ensure their return.
Land and premises
Land and premises are needed for the establishment of any enterprise. In case these have to be acquired, the start-up costs will increase. If the new micro-entrepreneur already owns these, he or she may have to spend on renovation. The following questions should serve as guidelines:
1. How much space do I need?
2. Do I have a piece of land or building I can use?
3. What will be the cost of the land?
4. Do I need to rent the premises?
5. Does a new building need to be built?
6. Can the existing building (s) be renovated?
7. Do I need decoration? (Decoration may be needed to attract customers.)
Write down your project ideas so you will not forget
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7. Check availability of raw material
Raw material for making the produce should be readily available. Import of the material should be avoided because this will make it difficult to ensure a steady supply.
A number of suppliers should be identified.
It is important to avoid reliance on a single supplier as this will give the supplier a monopoly and is most likely to lead to an increase in prices over time. Because the profit margin in a micro-enterprise is generally small, it is necessary to keep production costs under close control. It is important to ensure constant quality.
Alternative sources of raw material may also be considered such as forest products that are readily available and free of charge. Recycling and re-use is another way of reducing costs.
The steady availability of water is another important consideration while selecting the enterprise and identifying the raw material. This is especially important for farming activities.
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Case study: Farmers with physical disabilities find income and confidence with silk yarn spinning An FAO Technical Cooperation Project (TCP) to train small farmers in southern Thailand to produce silk yarn has demonstrated how rural persons with disabilities can earn an income and confidence in their ability to be economically active. There are many silkworm farms in southern Thailand where the raw material is readily available. The income from silk yarn depends on the amount of time spent in spinning the yarn and its quality. It takes 7 kg of silkworm cocoons to produce 1 kg of yarn. As cocoons can only be kept for a period of three to four days, intensive work has to be done during these few days. The trainees for the FAO TCP included a group of eight farmers with physical disabilities from the province of Chumporn. Some were in wheelchairs and one of them had only one hand. The group received five days of intensive training. The training programme was the same for all trainees. The trainees with disabilities learned that they could do just about everything required to make silk yarn - how to select and buy cocoons from local farmers and how to spin and sell yarn in the market. The silkworm cocoons then cost an average of 80 baht per kg, while the yarn was sold for between 800 and 1 000 baht per kg depending on the quality. Some of the trainees with disabilities were able to buy 20 to 30 kg of silkworm cocoons, which could be spun to yield between 3 to 5 kg of silk yarn. It was estimated that each silkworm crop generated a gross income ranging from 3 000 to 5 000 baht and a profit of 1 400 to 2 600 baht. The training saw the modification of techniques to meet the special needs of persons with disabilities. For e.g., the trainee with just one hand would not have been able to use the conventional method to spin yarn, which requires holding the thread with one hand and using the other to turn the reel. A motorized reel was provided to solve this problem. But this was not a feasible solution since most trainees are not in a position to buy a motorized reel or pay the additional production cost for electricity. A practical alternative was to train the disabled person to use both his feet with the thread twisted around the toes. Another problem was ensuring the easy supply of silkworm cocoons. Since these are available only three to six times a year, trainees must have other sources of income when cocoons are not available. One trainee was compelled to give up silkworm production as he lived too far to be able to buy the silkworm cocoons in time. In both cases, the issue was tackled by assisting the trainees to make a living from selling processed food to earn an average income of 200 to 300 baht per day. The FAO project has been relatively successful with four of the eight trainees with disabilities still active in producing silk yarn. |
8. Identify funding
A disabled person wanting to start a micro-enterprise may obtain a loan for this from family or community members. However, the start-up funds often have to be sought externally. It must be kept in mind that loans have to be repaid and, therefore, one must borrow the minimum amount needed for start-up and running expenses until the venture starts generating income.
In some countries, government loans or institutional micro-credit are offered to small-scale entrepreneurs - whether disabled or not - who have a viable business proposal. Rural persons with disabilities often lack the education and skills needed for preparing a formal proposal and may need the help of family or community members.
Several countries also have disability funds offering loans at low or no interest rates to individuals with disabilities who are registered with the responsible government authority. The loan can be repaid over a period of several years. The loan sometimes requires endorsement by a family or community member in case of non-repayment.
Disabled persons seeking a loan must contact either local government authorities or government ministries that are most likely to offer loans, such as the Ministries of Labour, Social Welfare, Health or Invalids; the ministry may differ from one country to another. Disabled persons may also obtain loans from cooperatives, agricultural organizations, women's groups or farmers' organizations, although such loan facilities are not specifically available for persons with disabilities.
9. Review the market
Marketing is very important since competition can be fierce. The following factors must be taken into consideration:
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1. Packaging: |
Packaging may or may not be required depending on the product. For the sale of fresh fruits, vegetables or other agricultural produce, there is generally no need for packaging. A simple plastic or paper bag is sufficient. |
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2. Presentation: |
Presentation can play a role even in the sale of fresh food products. Neatness, cleanliness and organization make the sales outlet attractive and appealing to customers. |
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3. Market test: |
It is sometimes interesting to test different types of presentation or packaging to find the one that appeals most to customers. |
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4. Competition: |
Competitors offering the same or similar product must never be ignored as they already have clients and may be more experienced. Check their presentation, price and sales technique. As a new micro-entrepreneur, you can learn from the experience of others and adapt it to your personality. |
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A lot can be learned by looking at the competition. The following are some of the things that need to be checked against. |
9.1 The competition
1. Who are my customers?
2. Is there growing demand for my product?
3. Who are my competitors?
4. How are other businesses doing: are they growing? Steady? Decreasing?
5. What are their strengths? Their weaknesses?
6. How does their product differ from mine?
7. If it is the same, why do I think I can take a share of the market?
9.2 What is the right sales price for the product or service?
Sales price, quality and service ensure that new customers become regular clients.
1. What are the current sales prices?
2. What is the quality of the product sold by the competition?
3. How does the quality of my product compare to that of others?
4. What is my estimated cost price?
If the sales price is too high, customers will go to the competition even if the entrepreneur is a person with disabilities. Clients may buy once to encourage the micro-entrepreneur who is a disabled person but will buy the lower priced product if it is of equal quality. If the price is too low, customers will think that the product quality is also low and continue buying from their regular supplier. The right price should be similar to that of the competition while offering better service and same or better quality.
10. Check feasibility before starting the enterprise
Too many people start a new small-scale business, blinded by the attractiveness of the product or by what seems to be an attractive market. However, many micro-enterprises close down after a few months or years of operation, shattering the small-scale entrepreneur's dreams of what appeared to be the perfect way of making a decent living. In order to avoid this, a pre-feasibility study should be conducted. Although this may be based on estimates, it helps to prepare for the future and, in some cases, shows that another activity may be better.
Start-up expenses generally include:
Utilities
11. Check profit and loss (feasibility checklist)
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DESCRIPTION |
TOTAL COST |
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A. ONE TIME INVESTMENT (divide by number of months to know approximate cost per month) |
Total |
Per month |
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1. Legal and professional fees |
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2. Operating licenses / permits (12 months) |
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3. Building (36 months)* |
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4. Land use (36 months)* |
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5. Equipment / tools (36 months)* |
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6. Transportation / delivery equipment (if required) (60 months) |
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7. Assistive devices: Hearing aid, visual aid, tricycle, wheelchair, prosthesis, orthotics... (36 months)* |
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8. Salaries / wages for start-up |
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9. Utilities (elect., water for start-up) |
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A. TOTAL COSTS |
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B. OPERATING EXPENSES |
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1. Raw Material |
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2. Utilities |
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1. Water |
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2. Electricity |
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3. Telephone |
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4. Others |
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3. Labour costs (if any) |
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1. Micro-entrepreneur |
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2. Family members |
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3. Hired workers |
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4. Delivery expenses |
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5. Rent payment |
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6. Loan repayment |
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7. Taxes |
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8. Repairs and maintenance |
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9. Other costs (not above) |
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B. TOTAL OPERATING EXPENSES |
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TOTAL MONTHLY COSTS: A + B = |
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* Calculating depreciation costs of tools and equipment: Purchased tools and equipment can be used for a period of several months or years. Their cost must be divided over the period of expected life (use of such tools and equipment is further divided into the number of items produced or services rendered).
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EXAMPLE OF CALCULATION |
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Purchase of tools |
6 000 baht |
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Number of usage years |
3 years or 36 months |
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Cost per month |
6 000 baht/ 36 months = 167 baht per month |
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Quantity of items produced per month |
200 units |
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Cost of tools per unit |
167 baht / 200 units = 0.84 baht per unit |
CALCULATING SALES PRICE:
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Total monthly cost |
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Divided by |
÷ |
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Quantity of items produced |
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Plus |
+ |
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20% Profit margin |
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Equals |
= |
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SALES PRICE PER UNIT |
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CALCULATING MONTHLY INCOME:
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Estimated sales price of product |
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Multiplied by |
x |
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Estimated quantity sold per month |
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Equals |
= |
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TOTAL MONTHLY INCOME |
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CALCULATE THE MONTHLY GROSS PROFIT
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Total income |
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Minus |
- |
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Total costs |
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Equals |
= |
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GROSS PROFIT |
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If the estimated profit margin appears good, then it is time to go ahead with the investment.
If the profit margin is low, all numbers should be reviewed carefully before investing.
If the profit margin is negative, the micro-entrepreneur should consider another activity.
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Case study: Disabled farmer recovers physical and economic strength with mushroom enterprise Several years ago, Suphol Noiwong, 34, left his family and country to go and work in a refrigeration factory in Taiwan where he was sent by a labour recruitment agency. But his dreams of a good income were shattered when he became severely injured in a work accident. He lost all strength in both his legs after what appeared to be a gas leak in the factory. Sent back to Thailand as a disabled, unemployed worker without compensation and burdened with a 50 000 baht debt with a 2 percent monthly interest, he could find work only as a daily farm hand. His income was far too short to support his family, his wife and seven year-old son, and to repay his debt.
Looking for additional income he came to know about the innovative FAO pilot project on mushroom enterprise development for farmers with disabilities. He was chosen for the training after satisfying most selection criteria. The only exception was that he had such a big debt. Yet, Mr. Suphol's impressive courage and determination led to his selection. Through his strong determination he recovered some of the strength in his legs, while he worked hard to learn everything about mushroom cultivation. Within a year after completing the 60-day intensive training, he was able to build his second mushroom house. He now earns an average of 500 baht per day and is paying off his debt, making mushroom cultivation his main livelihood. The training programme restored his self-confidence and enabled him to realize his entrepreneurial ambition. He also trained his family members in mushroom cultivation and they help him in developing his enterprise. As a successful micro-entrepreneur, he has gained economic self-reliance along with physical, mental and emotional strength. |
12. Avoid common mistakes
Numerous factors may jeopardize the success of an enterprise.
The following are some common mistakes:
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The micro-entrepreneur does not sufficiently understand the process and therefore cannot easily find alternatives or solutions to problems encountered (e.g. Pest control, disease, mechanical problems...) |
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Competition may be healthy but too much competition may destroy the market unless creative marketing strategies are developed. Although a person with a disability may receive special consideration, it is necessary to compete with sometimes powerful and wealthy groups. The issue of disability is not a marketing strategy. |
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Cash flow is often what destroys most companies. Careful forecasting of start-up and running expenses is necessary. |
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It is always better to start small with a minimum investment and to grow slowly with the market. |
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Income, profits and losses need to be closely monitored. This helps decide whether the market is good, whether the new small-scale enterprise should be expanded, reduced or halted because of losses. |
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Generosity needs to be controlled. A certain amount of gratuities should be established but it is always dangerous in a personal business to give small amounts of the product or free service to members of the family and neighbours. This could equal or surpass the profit margin. |
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Management of the business is, and will always be the key to success. Not all people are good managers and therefore management skills may need to be developed or acquired through training. |
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Maintaining the equipment and the keeping the business premises clean and in good running condition certainly contributes to reducing operating expenses. |
Basic and unavoidable steps
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· There are ELEVEN basic and unavoidable steps in preparing to start a business. |
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1. Secure funding 2. Open bank account 3. Identify precise location for the enterprise 4. Build or renovate the structure or building required 5. Arrange necessary infrastructure (water, electricity, communication and others) 6. Request permits (if necessary) 7. Purchase and adapt necessary tools, equipment and assistive devices (when required) 8. Identify suppliers of raw materials and consumables 9. Start production 10. Control quality 11. Devise marketing and sales strategies |
1. Secure funding
Various sources of funding may be considered when starting a small-scale enterprise for a person with disabilities. The major source, obviously, is the family. However, many countries have special programmes to help micro-entrepreneurs with disabilities. For example, a Disability Fund set up by the Government of Thailand offers interest-free loans to persons with disabilities who can make a feasible business proposal. Some international organizations and NGOs also provide financing facilities for different projects and target groups. Documents to confirm the loan or grant must be processed at this stage.
2. Open bank account
Once funding has been identified and confirmed, the money must be deposited in a bank account. To ensure clear accounting, a special bank account should be opened for the business. The loan money can then be deposited in that bank account and withdrawn for the purchase of equipment and raw material. The income from sales is also deposited in this bank account. All transactions should be done through the bank and not directly in cash. This ensures clear understanding and follow-up of money movement for both income and expenses.
3. Identify precise location for the enterprise
It is then time to choose the precise location for the construction of the facilities. If using an existing building, renovation or modification may be necessary. It may also be necessary to arrange for landfill, excavation, irrigation or other modification. This can often be done manually with the help of family and friends.
4. Build or renovate the needed structure or building
Renovation and building may require substantial investments. Nevertheless, these can be greatly reduced by using readily available forest produce, grass, tree leaves and rice straw or used construction material. For example, tree branches can be used as poles; roofing can be made of corrugated steel, rice straw or grass; and walls can be made of dried leaves. The weather is also decisive for the type of material to be used. Decoration should be kept to a minimum, at least in the beginning. However, if the structure is also to serve as a retail outlet, it may be necessary to be creative and use simple yet attractive decorations.
5. Arrange necessary infrastructure
A steady supply of water is vital for an agriculture-based enterprise and a well may be dug or water may have to be transported or channelled to the site. In some cases, electricity may also be needed. Roads must be accessible for smooth delivery of raw material and transport of the produce to the market.
6. Request permits (if necessary)
It is very important to confirm if a permit is needed to operate the business. It is costly to set up a business and then learn that it will take a few months to get the required operating permit. Verification should be done at the very beginning so that permits can be processed during preparation for starting the enterprise.
7. Purchase and adapt necessary tools, equipment and assistive devices
Purchase of equipment should be kept to the absolute minimum. Instruments that are not needed regularly may be borrowed or rented. It is important to verify if a person with a disability can use the equipment. Certain adaptations or modifications may be necessary. The use of prosthesis and orthotics by physically disabled persons would surely help in any type of enterprise. The manual Adaptive tools for persons with disabilities, published by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) offers some ideas and suggestions on what is readily available. Although electrical equipment may facilitate certain tasks for persons with disabilities, electricity charges add to production costs and consequently, the sales price. Any equipment or machinery should be purchased after careful consideration.
8. Identify suppliers of raw material and consumables
The quality of raw material and reliability of suppliers are crucial, especially in the case of consumer products. Delivery must be punctual to ensure continuous production. Suppliers should be carefully selected by requesting quotations and terms of delivery from several parties. It is better to select a supplier situated close to the enterprise even if the price is slightly higher because it is easier to keep check on a nearby supplier. Prices should always be negotiated and in case of regular purchase, better prices, terms and conditions should be sought.
9. Start production
It is time to verify the actual costs of production. Some things may have been forgotten or put aside under the impression that these are not important. The micro-entrepreneur with a disability must start the production and apply his or her know-how to the best of his or her ability. However, some problems may need to be solved such as pests, diseases, breakdown of machinery and shortage of clients. A resource person should be available to support and guide the new disabled person micro-entrepreneur in solving these problems. The total amount of production must be closely monitored. Provincial and district offices sometimes have specialists in various agricultural sectors who can be useful as resource persons. Cooperatives also offer advice to their members.
10. Control quality
Quality and reliability of supply are crucial for ensuring steady sales and a good price. Raw material quality must be controlled for good product quality and must be done on a continuous basis to reduce loss and damage. The new micro-entrepreneur's clients will find him or her reliable if the quality is maintained constantly.
11. Devise marketing and sales strategies
Although competition may make market penetration more difficult, it also proves that there is a market. A new micro-entrepreneur, whether disabled or not, needs creativity and sales strategies to establish his or her product or service in the market. Politeness, friendliness and a neat personal appearance help in selling a product. Developing a relationship with the buyers by providing a regular supply of quality products will convert clients into regular customers. This will also establish a good reputation for his or her product or service and bring more customers
A successful micro-entrepreneur must also be flexible and capable of reducing or increasing prices according to demand and shortages. For products or services sold from his or her home, an accessible location will encourage villagers to go to the micro-entrepreneur. In the case of agricultural produce, the disabled person micro-entrepreneur can sell from home or may send someone to the market with the produce.
The entrepreneur must always check and review the market for the following:
1. Who are the buyers?
2. What quantity of production can the market absorb?
3. Where are the selling points?
4. What is the distance that needs to be travelled to sell the product?
5. What means of transportation are available?
6. How much time is needed to sell the product, including travel?
Packaging may be needed for some products. This adds to the cost and must be carefully selected since it may increase the price of the product to a level that is no longer competitive. Same or similar products must be carefully reviewed for how and whether they should be packaged. Innovative packaging or presentation, however, may allow a new micro-entrepreneur to corner part of a market.
A profit-making business
Running a small-scale business is not only buying, producing and selling. It also means:
Expanding the business wisely
Although setting up the micro-enterprise may have its difficulties, making it a profitable venture is the biggest challenge. It is therefore necessary to closely monitor each investment and purchase cost to know the exact profit.
1. Keep clear records
Small-scale entrepreneurs should always keep clear records of their purchase and sales. The records must be simple.
· Make a list of all items bought every week.
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Purchased item |
Quantity |
Price per unit |
Total price |
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· Make a similar chart of all items sold
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Sold item |
Quantity |
Price per unit |
Total price |
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2. Verify profit and loss
Finding out whether the enterprise is making money or not is crucial for the venture. Sometimes it seems that there is a lot of money coming in but when compared to the costs, there is little profit left. This is called feasibility.
It is necessary to review the feasibility by asking the following questions:
1. Am I making money?
2. Is it worth continuing?
3. What can be changed to increase profit?
It is especially important to verify the profit margin. More production does not necessarily generate more income. It depends on the profit margin, which is calculated by subtracting the production cost from the income as follows:
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Income - (Minus) Production costs = (Equals) Profit margin |
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Case study: Down's syndrome did not keep her from gaining economic independence with a poultry enterprise Although afflicted with Down's syndrome, Yupin Kerdam no longer feels she is a burden for her family. She is proud to be able to contribute to the family income. For the first time in her life, the 30-year-old woman living in a province near Bangkok has a regular income, which she manages carefully, keeping the records herself.
She started chicken and duck breeding with a loan from the Foundation for the Welfare of the Mentally Retarded of Thailand under the Royal Patronage of Her Majesty the Queen and the Department of Public Welfare. She was trained to do this by her parents who were given initial training by the District Office Extension Officer. The Foundation actively followed up on the training every three months. Successful from the start, Ms Yupin has been enthusiastically involved in her business for several years and has increased the number of birds to 150 chickens and 20 pairs of Bavary breeding ducks. She is knowledgeable about their exact feeding and veterinary needs, injecting them with vaccine and preparing their feed according to prescribed formula. In addition, she grows vegetables and flowers, earning an average of 100 baht a day from the sale of eggs, small chick and ducklings, as well as vegetables and flowers.
The business is independent from the family enterprise although her parents monitor her business operations. As advised by the Extension Office, they tell Ms Yupin how to manage her income. A portion of the money is to be used for expanding her business, another to meet her personal needs and the rest is to be saved in her bank account. Other family members even seek loans from her and have to tell Ms Yupin why they need the money, for how long and with what interest they will repay it. Ms Yupin is happy to help her family and feels a valued member of the community. |
3. Manage cash flow
Cash flow is the money moving in and out of the enterprise. It is the total amount of money coming in and going out of the business. If all the money received is put in the bank and all expenses are paid from the money in the bank, the cash flow is the total amount of money moving in the bankbook. However, care must be taken not to spend what appears to be profit before reviewing future investment needs. These needs can include:
Replacement of tools and material.
Note: An emergency fund should be set up for the replacement of broken equipment and tools and for purchasing other necessary inputs.
4. Maintain tools, equipment and buildings
Tools and equipment
The life of tools and equipment can be extended by proper maintenance. Metal tools should be protected from rust while wooden tools have to be protected from termites and decay. Mechanical tools must be lubricated regularly.
Building(s), structure, environment
The type of structure used for the business determines the maintenance required. In Asian rural areas, many buildings are made of thatch, bamboo, rice straw, grass, dried leaves and other material. These must be checked for pests, especially in cases where production is food-related or stored inside this structure. The building or premises must be kept clean and tidy at all times, whether used as a sales outlet or not. Cleanliness not only makes the place more attractive, it also reduces the threat from rodents and other pests. It further makes the place more enjoyable to work in and thus encourages the micro-entrepreneur to spend more time on the premises.
5. Review the market regularly
A micro-entrepreneur must always review developments in the market if he or she is to remain successful.
1. Am I selling more or less than before?
2. Do I have regular customers?
3. Did I lose customers lately?
4. Are there new competitors?
5. What is the quality of the product on the market?
6. What is the cost?
7. How does my product compare with the competition in terms of quality? Price?
8. How is the competition presenting its product?
9. Should I improve my packaging? My presentation? My production?
These and other questions need to be addressed regularly since a market is constantly changing with new people, new products, new technologies and new competition.
6. Expand the business wisely
The business must be expanded at the right time
Expansion is always a sign that the business is doing well. However, this should be based not only on current sales but also on future sales.
When expansion is considered, decisions need to be made on the type of expansion:
1. Produce more of the same product in the same location?
2. Produce more of the same product in another location?
3. Join with others to open outlets or branches?
4. Produce a similar product that would be complementary and help me corner the market?
5. What are the costs involved?
6. Do I have enough money or do I need to ask for a loan?
It is recommended that expansion should only be done when the micro-entrepreneur has accumulated enough money to pay for the expansion. Borrowing money to expand a business is always dangerous and often results in failure.
Plans for expansion of a micro-enterprise should be made in the same way as for its start-up.
Insufficient
know-how
