10. Training module on PRA tools

The selection and use of training tools must match the training needs and type of training.

The major challenges are:

(i) sensitization to bring about attitudinal and behavioural change;
(ii) using participatory techniques to build rapport, elicit support, information and participation of the people in their own development.

Importance of participatory techniques

• Participatory techniques aim to 'break the silence' of the poor and disadvantaged sections, recognize the value of popular collective knowledge and wisdom and legitimize the production of knowledge by the people themselves.

• Participatory approaches seek to be catalysts enabling and empowering the people.

• These have internalized some key techniques in adult training for learning such as

  i) linking learning to problems,
  ii) linking learning to people’s goals and visions, and
  iii) giving trainees control over decisions on training.

• The participatory approach emphasizes flexible learning, is adaptable to the pace set by the learners/trainers and tailored to needs expressed by participants themselves.

Participatory rural appraisal

Participatory rural appraisal (PRA) is a methodology to enhance

(i) the development agent’s understanding of the rural reality for the planning and development of projects; and

(ii) the feeling of a greater degree of ownership and responsibility in the rural poor for better results and social acceptance of the programme.

The effectiveness of participatory approaches has led donors, government organizations and NGOs to use PRA in their programmes. Participatory training is based on the belief that

- learners with their life experiences are themselves a rich source of learning;
- learning cannot be imposed; the learner can only be encouraged to learn;
- learners learn best by doing or practising an activity; and
- learning is facilitated by a positive/successful activity/experience resulting in further achievement, thereby building up a ‘virtuous circle’.

Aims of participatory methods

Different participatory methods are used for different ends. Sometimes participatory approaches are the means and ends as well.

In the case of decentralized development, the ends are:

• people’s active participation in prioritizing needs/micro-planning;

• activating the key Panchayati Raj institution - the Gram Sabha; and

• attitudinal and behavioural change in the bureaucracy.

Since village panchayats have to play an active role in initiating the micro-planning exercise, they need a locally relevant database that is validated by the local people. This will form the basis for setting local priorities. This should help, in turn, in the formulation of local action plans in the form of development activities/projects/programmes.

Scope of PRA

PRA is used

• To ascertain needs

• To establish priorities for development activities

• Within the scope of feasibility studies

• During the implementation phase of projects

• Within the scope of monitoring and evaluation of projects

• For studies of specific topics

• For focusing formal surveys on essential aspects, and identifying conflicting group interests.

Areas of application

• Natural resource management

• Agriculture

• Poverty alleviation/women in development programmes

• Health and nutrition

• Preliminary and primary education

• Village and district-level planning

• Institutional and policy analysis.

Participatory rural appraisal

Tools of PRA

For details of PRA tools, please see Annex VII, page 141.

11. Training module on local small-scale enterprise development by poor rural women

Panchayti Raj as catalyst of enterprise development by rural women

One-third of the seats in Panchayati Raj institutions are reserved for women and there are nearly one million women panchayat members. Women panchayat leaders can motivate other rural women to start home or village-based enterprises and also help them to obtain start-up credit from banks or government schemes.

Panchayati Raj institutions can use external experts for entrepreneurship development training, but it is better to develop this expertise within the panchayats. This module is training local government officials on capacity building for gender-sensitive participatory planning for poverty reduction through at the Gram Sabha (village) level of the Panchayati Raj system in India. The aim is to enable Panchayati Raj institutions to establish programmes and systems for promotion of village-level entrepreneurship, especially by women.

This involves:

- attitudinal change
- entrepreneurial skill development
- planning rural enterprise support systems for women through Panchayati Raj.

Underlying principles for developing entrepreneurial capacities in rural women

The most important principle of enterprise promotion is that the investment is made in the entrepreneur and not in the enterprise. Thus, any effort at enterprise promotion for rural women must be women-centred, visualising them as the key actors.

The four essential components of a business strategy can be depicted by the MAIR (motivation; ability and experience; idea with market; and resources) model. (Richardson and Howarth 2002)

The following external factors also affect any business start-up strategy:

1. The enterprise support sector in general, particularly enterprise promotion strategies of the government and other stakeholders in the economy.

2. The broader enabling environment for enterprises (regulation, policies).

3. The economic/market environment.

4. The socio-cultural context.

The first prerequisite: entrepreneurial attitude

In general, government agencies are oriented towards providing assistance in the form of hand-holding support rather than capacity building. Trainers working within such a system are sceptical about using an enterprise promotion approach.

There is thus a need for attitudinal change at the level of policy makers, field staff and rural women themselves, towards promoting entrepreneurial capacities among the rural poor. Government resources should be deployed to create entrepreneurs rather than start up enterprises per se. An integrated strategy for rural enterprise promotion, based on skill development, market assessment and credit linkages is far better than schemes with sectoral, one time grants.

Access to capital

Access to capital is an important factor in determining the women’s ability to start a business. This may be human capital (time of family members), physical capital (land, house), natural capital (a river where they can fish), financial capital (family funds, financial support of friends or formal/informal credit) and social capital (self-help or caste groups). Social groups provide the space for women to meet, discuss and plan a business start-up and then launch the enterprise.

Strategy for rural women’s enterprise development by Panchayati Raj institutions

The most important aspect of any strategy for enterprise development by rural women is that it must be promoted on the basic principles of entrepreneurship with full support to the potential entrepreneur, but leaving the decision-making to her.

Several studies show that the Sarpanch (head of the Gram Panchayat, the lowest elected tier of Panchayati Raj institutions) plays an important role in motivating and involving the entire community in local development. The Sarpanch can also be the prime mover in the planning, design and implementation of an enterprise promotion strategy for village women. The Sarpanch may nominate a person in the team, preferably women leaders in the Panchayat, to undergo a series of Training-of-Trainers’ (TOT) programmes so that they can become enterprise promotion specialists.

A strategy involving Panchayati Raj institutions for promoting entrepreneurship by rural women has the following elements:

• Sarpanch as champion of entrepreneurship promotion.

• Selection of key panchayat leaders, preferably women, as trainers.

• TOT programmes for trainers and enterprise promotion specialists.

• Refresher training courses.

• A programme for grassroots-level training, success replication, and credit and marketing linkages.

Training key local leaders as trainers and planners for rural enterprise promotion

The first step in training is to identify key local people who will be leaders and trainers for rural women’s enterprise development. This can be done through identification of local stakeholders and involving them in the planning and identification.

Participatory planning at grassroots level

It is important that the key local trainers, i.e. the enterprise promotion specialists, make the training plan with the participation of the local people.

During the participatory planning, it is important to take stock of the local economic situation, resources available, entrepreneurial skills of the women and to evaluate businesses for potential. Business ideas must be generated with the villagers in order to augment their expertise to assess local enterprise potential. The final selection of the business to be started must be made by the entrepreneurs themselves. Trainers must limit their role to being facilitators and not take decisions for the women.

Gender-sensitive participatory planning

The planning process must take into account the needs and interests of rural women during the design and conduct of the entrepreneurship promotion programmes. This is important to ensure that plan can be implemented by the women themselves.

Key considerations:

1. The trainers for the training of trainers must also include women.

2. The place and duration of the training sessions is crucial for attendance. When conducted during the day for a few hours and within or close to a village, there is a greater chance of the poorest women attending the training. If the programme is organized far from the village, the poorest may not be able to attend due to the additional time and travel costs.

3. The training should be conducted at a time that suits rural women and should not conflict with their essential work such as household chores.

4. The duration of the training programme is important. When spread over short durations of less than a week at a time, it is easier for the women to attend. Alternatively, if the programme is organized during a lean work period, for instance when there is little or no farm work, rural women can spare at least four to five hours a day for two to three weeks at a time.

The local panchayat office must have a counselling centre for women having problems with a new business or start-up. Facilitators and trainers can keep track of the problems brought to this centre and deal with these through training programmes or business linkages.

Most women who start successful enterprises are likely to go through an upward spiral of changes that includes learning, application and internalization of the learning and practical experiences. The facilitators must provide critical inputs at each stage of the spiral to ensure that it moves upward.

Rural women’s enterprise training and support needs

These needs may be met in innovative ways, which use local expertise and cost less than a top-down training strategy.

The success replication method

A highly useful enterprise training strategy developed by FAO is to identify successful businesses and utilize their specialist knowledge to enable others to start similar ventures. The success case replication (SCR) methodology developed by FAO involves nine basic steps for enterprise promotion.

The first step requires the enterprise facilitators to identify successful businesses in the local area. The scope for replication of these businesses is then explored. If more such businesses can be started in the area without market saturation, the successful entrepreneurs are invited to be trainers for the replication. Sometimes, they may not be willing to share their expertise for fear of future competition, or may not have the time.

Once a successful local entrepreneur has agreed to train others, the facilitators can establish a practical training programme where production details or other business skills (in case of trading and services) may be taught to the potential entrepreneurs. Only those most likely to start this business must be selected for the training. The training must be closely supervised as there have been instances of poor training to ensure that the new businesses do not give competition to the entrepreneur-trainer.

Follow-up to the training is necessary during the start-up phase of the enterprise. This often requires the time of the entrepreneur, as (s)he often is more aware of potential blocks during start-up and can provide advice and linkages to remove these. After the first round of business replication, it is possible to initiate subsequent replication in other areas.

It is important to establish cost-effective monitoring processes so that if the new businesses face problems, the facilitators can arrange networking between trainers and new entrepreneurs to solve these. The key aspect of business monitoring is to identify success indicators and to devise a process and system to keep track of these. This would allow a SWOT (strengths, weaknesses, opportunities and threats) analysis of the groups, enabling facilitators to replicate strengths and help in rectifying weaknesses. Finally, it is important to keep track of the impact of the replicated businesses, not only on individual households, but on the entire local economy.

Understanding small enterprises

The first important step is to gain understanding of the different types of businesses likely to be started. Typically, a small rural business involves a small financial investment and employment of one or two people.

Definition of business

When an investment is made or an activity undertaken (such as manufacturing and/or selling a product or providing a service) with the intention of earning a profit, it is called a business.

A business may be small or big. Some businesses may not even need much investment of money but only the time of the individuals who start and carry out the business.

Types of business

Based on the activity, businesses are classified into three types.

- Manufacturing. This involves production activities, such as basket making, woodcarving or textile weaving.

- Trading. Trading businesses are only involved in sales. Examples could be trading in clothes or provisions.

- Service. These businesses are concerned with providing services, such as running a public telephone booth in the village.

An enterprise involving more than one type of activity, such as manufacturing as well as trading or services, or any combination of these, is a composite business.

Businesses may be started by individuals or groups and are accordingly known as individual or group businesses.

Women’s individual/group enterprises in India

Two kinds of women’s groups have been developed by government programmes in India. The first are groups promoted by the programme for Development of Women and Children in Rural Areas (DWCRA). The second category is self help-groups promoted by the Women and Child Development Department and also supported by the Integrated Rural Development Programme of the Ministry of Rural Development with subsidized loans for income-generating activities.

Activities of the groups include:

- Thrift
- Credit
- Bulk purchase of raw material and sale to group members
- Production
- Marketing.

However, several of these groups were established to take advantage of government schemes and the benefit was entirely appropriated by the leader or promoter of the group. For instance, some groups are formed by rural landowners in the name of their landless women workers who are mostly illiterate and easily duped. In other cases, the women are given jobs by the group leader or promoter who utilizes the loan for her or his personal use. Some groups use the loan for personal needs without starting a business activity. Moreover, there is little external motivation other than the financial support to encourage the groups to start an enterprise. As such, the revolving loan funds given to the DWCRA groups and self-help groups have rarely been put to productive use.

Many groups want to but do not know how to start a rural enterprise. It is often best to let the women themselves decide whether they wish to start an individual or group enterprise. In some cases, women take loans for individual income-generating activities, which may be in the farm or non-farm sector. They may invest the money in agriculture or animal husbandry. In such cases, they prefer activities they are familiar with and can manage without much additional training.

It is when they want to start a new or larger scale group business that external support becomes important. Women need to be motivated and trained to take the risk to start a new business that can provide them with a significantly enhanced income and a more productive utilization of their time.

Preparing to start a business

There are three essential preliminary steps in starting a business which every entrepreneur goes through whether this is done formally or informally.

Selecting a business idea

In some cases, women know what business they want to start and this is based on their experience, knowledge of the area and their ability to finance the business. In other cases, they may look for suggestions. It is critical to the success of a business that the choice is made by the entrepreneur herself.

A visit to the local market can help generate business ideas. These may also be based on the entrepreneurial abilities of the women and the resources available to them. The ideas generated should be evaluated using the MAIR model.

An idea is a business possibility only if there is a market for it. But it can succeed only if the entrepreneur is highly motivated to make the business succeed and has some ability and experience. The next two sections explain the steps in assessing the feasibility of an enterprise and preparing a plan and strategy for the business.

Assessing feasibility and making a business strategy

Once an idea for an enterprise has been selected, it is important to assess the possibility of the business being technically, financially and managerially sound. It is also good to assess the different risks a business may face. These assessments form the basis of a good business plan and strategy.

MARKETING

Marketing is the most critical factor in determining the success of a business. In a competitive market environment, a business needs to know and understand the market. It is also important to understand how this market is changing and what challenges lie ahead.

The market for a product or service refers to the existing demand for it. If there are no customers, there is no possibility of a business. A market for a specific product may be limited to a particular village or district. Rural women also need to be aware of external market forces that can affect the present and future market for products and services they hope to sell. For example, traditional village weavers have been driven out of business by urban factories mass producing synthetic yarn.

Entrepreneurs must keep their eyes and minds open and remain alert to the needs of their customers. Marketing is a dynamic process. It is needed not only at the time of starting up the business but also during business diversification. Panchayat offices must make up-to-date market information available to villagers.

Components of a marketing strategy

A small rural enterprise is usually located within the village and women entrepreneurs are able to make good marketing decisions because of their familiarity with the market. However, it is good to know how to develop a marketing strategy and to keep assessing this strategy in the light of prevailing market conditions.

A marketing strategy has four primary elements - the four ‘Ps’.

1. PRODUCT

It is important for an entrepreneur to clearly define the product for sale, assess the demand for it and to see what customers like or dislike about the product. The product needs to be compared with similar products to know why customers would buy it rather than those provided by competitors.

Other aspects to be considered are the availability and prices of raw materials. Production processes and time have to be clearly determined in order to plan work and delivery schedules.

2. PRICE

The price of the product must be fixed after taking into account manufacturing costs and also the prices of competitors. For instance, if your neighbouring tea shop sells tea for two rupees per cup, it will not be easy to price your cup of tea at 2.50 rupees. This could be done if you offer a larger cup or special tea with spices or ginger. In most rural businesses, customers often buy on credit and the price may then be a little higher.

3. PLACE

This refers to the place where the product is sold, which may also be the place of production. Someone else other than the producer may also sell the product. If you trade in chilies or vegetables or food grain and have to take it to the wholesale market, then the place changes but you are selling the product yourself. If you give the produce to another trader who sells it in the wholesale market, then not only the place but the seller also changes. Transportation and storage costs and time need to be considered when planning the place for marketing. These may have to be fixed not only according to the costs and what is convenient for you, but also according to the preferences of the buyer and the practice in the market.

4. PROMOTION

This is the strategy by which you inform customers about the existence and availability of the product or service that you offer. This may be by word-of-mouth within a village. Village provision shops are used by large companies to sell their products such as soap and toothpaste. These companies promote their products by offering special gifts or hiring a vehicle with a public address system to go around the village telling people about the special qualities of the product.

Two additional components are important, especially when the business is a group enterprise. PEOPLE and their PARTICIPATION then take on an important role. It is important to ensure that the management, decision-making and sharing of benefits of a group business are equitably shared by the members.

Marketing visit

A highly instructive way rural women planning to start a business can learn about new product ideas is to visit markets and other entrepreneurs selling the same or similar products. Such a visit must be planned carefully, the task explained and all care must be taken so that the women learn beneficially from the market visit.

Local markets or external markets

A key decision in a rural business is whether the product should be made for the local market or for an external market. The further away the market is, the more the need for marketing intermediaries and the lesser the control of the women entrepreneurs on the product or price.

Typically, the further away the market is, the lower the percentage of the price that the women are able to keep as profit because larger amounts have to be spent on marketing. However, the volume of sales can be increased with the use of intermediaries and the difference in margins may be made up by additional sales, thus creating more local employment. Intermediaries can also provide credit and storage services which women may not be able to obtain on their own.

MARKETING CHART

The woman entrepreneur may market her product herself or through the group. The group may then market directly or through a local non-governmental organization (NGO), which, in turn, may sell either directly or through a city-based dealer. There may be dealers for the domestic or export market. The woman entrepreneur may herself have direct contacts with the last links in this chain, the final dealer or even the customer.

In general, the closer the market is, the better the women entrepreneurs’ knowledge of market conditions, making it easier for them to adapt to market changes. The further the market is with more links in the chain, the slower the women’s access to information, making it more difficult for them to adapt to changing market conditions.

It is important to recognize not only the drawbacks, but also the benefits of going through middlemen and traders. The marketing strategy must include a good analysis of marketing channels so that the women entrepreneurs can use a mix of approaches that bring profits and also keep them in control of their business.

Technical and financial feasibility and planning

Assessing the technical feasibility means assessing whether the technology and tools needed for production are available to the producer.

The next step is to calculate the funds needed for a business. This should be done on the basis of the place, equipment and raw materials needed for the business (See business plan format). It is then possible to assess whether a woman entrepreneur or group would be able to fund the business from own resources or need credit from a bank, NGO or government. It is necessary to check whether the business will earn enough to repay the loan and interest and leave some profit for the entrepreneur/s’ personal use as well as to invest further in the business.

ASSESSING BUSINESS RISKS

Risk is any factor that may cause loss to the business. An entrepreneur must think of all the things that can go wrong and be prepared to reduce the damage caused to the business if this happens.

The risk may be external, arising from outside the group such as a change in market preferences. There are several risks that are internal such as management risks, which the woman entrepreneur or group may be able to reduce through management systems and planning.

The risks may be financial - not enough money to buy tools and equipment or raw materials to produce the quantities needed for the business. Production or technical risks involve the breakdown of equipment or damage to products. There are risks related to the market as customer preferences may change, sale of some products may be restricted by law, or increasing competition may lead to a loss of market share or fall in prices to a point where the business becomes uneconomical. Finally, there are risks in the management of the business such as a high degree of dependence on a single person in a small enterprise.

The different risks must be assessed before business start-up. Once the enterprise is running, the risks must be reviewed periodically so that strategies can be adopted in time to minimize likely damage. Establishing good business linkages and keeping them active is a good strategy for reducing business risks. It is important in a group business that women entrepreneurs assess the risks together and make risk-reduction strategies jointly as this helps to generate options that can significantly reduce the risk of failure.

COSTING AND PRICING

Most small-scale entrepreneurs do not make a formal calculation of costs but rely on shrewd cost planning and pricing. However, even if not recorded formally, costing and pricing are the basic elements of any business.

A major cost is that of raw material. The simplest way of reducing raw material costs is by making bulk purchases if the raw material is not perishable and can be stored. This enables pricing the product at a lower level and making it more competitive in the market.

Why calculation of costs is important

A women’s group enterprise was earning a profit of Rs.10 000 a month after paying all members for their labour. The group was very happy and did not calculate the cost of production. Its product was in demand and the women did not think it necessary to waste time on calculations. Is this attitude right? Is it necessary for this group to know the cost of production?

The calculation of costs is important even if the group is doing well. It is only when it knows how much each product costs that the group can fix a good price. It is also important to calculate costs because this is the only way of determining and cutting non-essential costs.

Small group businesses often ignore several elements of costs. They tend to underestimate their own labour and, therefore, are likely to overestimate the profit. It is important to recognize the value of time contributed by group members. When the women begin to analyze the costs, they also have to look into the details of the process and are able to find several ways in which work can be reorganized to reduce costs.

The calculation of costs helps in:

• determining the costs of products and services sold by the group

• controlling and reducing costs

• making decisions about pricing, volume of production and sales.

Basic concepts of cost

Costs can be classified into two broad categories:

VARIABLE COSTS

FIXED COSTS

VARIABLE COSTS, as the name suggests, vary according to the amount of goods produced by the group. Raw material and labour account for variable costs. The bananas used in the production of banana chips, the yarn used for weaving and the number of hours of paid work are examples of variable costs. So are the amount of electricity and water used in the process of production.

FIXED COSTS remain the same for a certain level of production. For example, when a hall with an area of 1 000 sq. feet and capable of accommodating 20 looms is taken on rent, the same rent must be paid even if 10 to 15 looms are being operated. Therefore, women’s group enterprise members often develop strategies to spread their fixed costs. In this case, they can try to improve their market and production so they can install the maximum capacity of 20 looms and optimize their fixed costs. The cost of tools and equipment as well as salaries are other examples of fixed costs.

BREAK-EVEN POINT

The break-even point is a core concept for small businesses as it defines the level of production or sale at which the business covers all its costs, even if it does not make a profit.

Break-even point can be defined as the level of production/sale at which all costs, including variable and fixed, are covered. A business must achieve at least this level of production or sale if it is to be sustainable.

With good planning, it is possible to reduce both variable and fixed costs. The break-even point also helps in deciding the level of production and the sales price. If fixed costs, i.e. overheads, are reduced, the break-even point will be reached faster. In other words, the business will become profitable at a lower volume of production/sale. Similarly, when the price is increased, the break-even point is realized at a lower volume.

Pricing

Pricing is one of the most important decisions in a business. It is only when the pricing strategy is right that the business will be able to make a profit, which is the primary motivation to start the enterprise.

Profit can be calculated using the formula below:

Profit = Total Revenue - Total cost

Profit Margin = Total Revenue - Total cost of article

In order to determine the right price for the product/service, group enterprise members must know the cost of the product/service. They should also know what price will attract customers. The price should be fixed such that it covers full costs, gives the women some profit and is good value for money to customers.

The following methods explain the concept of profit and the different ways to fix prices.

Method 1: “COST PLUS” PRICING

This method is followed by many women’s enterprise groups while fixing the price. The women decide the profit margin and can add this to the cost to fix the selling price. For instance, if a product costs Rs.150, they may decide to add a profit margin of 10 percent and price it at Rs.165.

Total costs + Profit margin = Selling price

Method 2: PRICING AT “WHAT THE MARKET CAN BEAR”

This involves judging or understanding what the customer is willing to pay. The rural women entrepreneurs must know current prices in the local market to use this method. For good pricing decisions, they need to know the prices in urban markets as well.

Usually, the price is fixed using a combination of both the principles.

It is necessary to emphasize that costing is important to ensure that all expenses are covered and the group has fixed a profitable price. All the costs of a business must be calculated - production, sales, administrative fees and overheads.

Pricing decisions can be made on the basis of the “cost plus” method, ensuring a minimum margin over costs. Market considerations are important in pricing and are taken into account by pricing at “what the market can bear”. The price determined lies within this range of possibilities. Therefore, it is important that groups calculate costs and have an understanding of the final market for their products.

If there are intermediaries, agents or traders, their costs and profits also have to be taken into account. The services they provide include working capital advances, storage, market information and linkages.

MAKING A BUSINESS PLAN

The most important part of starting a business is to have a good business plan in writing. Often, small-scale entrepreneurs believe that they have prepared the best plan and know what they will do to run the business successfully. They see no need to write this down, nor do they want someone else to see their plan.

A business plan helps to minimize risks for the entrepreneur as well for as those who may want to support the business and, therefore, need a concrete blueprint to judge the viability of the enterprise. Bankers as well as government and other lending agencies may also need a formal business plan for advancing capital to the entrepreneur.

A business plan is like a roadmap and makes it possible to know whether the enterprise is moving on the right path. The plan also helps to evaluate the strengths and weaknesses of the proposed business as well as likely opportunities and threats. This can be translated into a detailed strategy and action plan for every member of the group.

Success is very important for rural women entrepreneurs who can rarely afford the cost of failure. It would be too de-motivating and costly to try a business and not succeed. A good business plan helps in assessing the chances of the business, make corrections before start-up and hence, vastly increase the possibility of success.

COMPONENTS OF A BUSINESS PLAN

Basic information

This includes essential information about the women’s group such as the name and address of the group. It also includes the group’s vision and mission statement.

Product/service

What is the type of business that the group will carry out? Manufacturing/service/trading? What products and services will be sold?

Reasons for selecting the enterprise

Explain briefly why the entrepreneurial activity was selected. For example, a group member may be a skilled basket maker and there is both a regular market for the product and easily available raw material for making it.

Raw material

Details about the raw materials used, such as prices, sources of supply and nature of availability should be mentioned. What resources/supplies are needed and from where are they obtained? How much do they cost?

Production

Detailed information on the production requirements, process and duration should be given. What skills are needed for production and how can these be learnt?

Personnel (division of responsibilities)

This section provides names and responsibilities of group enterprise members. It also spells out the tasks and the nature of qualified personnel who must be hired for these.

Technology and equipment

This section contains information on equipment needed for the business. What tools/machines are needed, where will they be obtained and at what cost?

Marketing

Information on marketing channels available, their location, lists of bulk buyers, traders, marketing cooperatives and others, should be listed here. Who are the customers for the group’s product or service?

Financial aspects

The fixed and working capital requirements of the business must be given. What is the total cost of the business? What financial sources can be accessed? Projections of sales, costs and profitability are included so that the size and profits of the business can be estimated.

FORMAT OF A BUSINESS PLAN

1. Basic information:

Vision and Mission

- What is the objective of starting the business or forming the group/cooperative?
- What would the group like to achieve by coming together?

2. Details about business (product)

- Type of business (tick as many as applicable)

- What product/service is the business going to provide? Give details in table below:

- What are the advantages of the product? (Cheaper, better quality, unique future, life span, etc.)

- Does the product require any government approval or does it need to conform to any industry standards?

3. Reasons for selecting the activity:

- Why you have selected this product or service?

- Is it based on your skills and experience or on market demand? Is there any other special reason for selecting this product or service?

1. Raw material

Materials needed and their costs (working capital).

- Where do you obtain the above? And from whom?

5. Production

- What is the manufacturing cycle for each product? (The entire process from the initial to final stage must be described here. If the unit makes more than one product, each must be documented individually.)

- How much time is required to complete the production process and put the product(s) into the market?

6. Personnel (division of responsibilities)

- Do you need to employ people? If yes, what type of skills do you expect the employees to have?
- How will you recruit these personnel?
- How much do you expect to spend on their salaries?

Details about employees:

7. Technology and equipment

- What equipment do you need? What will it cost?

8. Marketing

Product

- Who will be your customers? Clearly define your market in terms of territory and customers.
- Why will they buy your products?
- What type of quality measures do you intend to use?
- What type of packaging will you use?

Place (Manufacturing and retail outlets)

- Where will you locate your manufacturing unit and why?
- Where will you locate your retail unit and why?
- What are the expenses you expect to incur in relation to rental/purchase of these outlets?

Price

- What is the retail and wholesale price per unit?

- Will the customers be willing to pay the price you have fixed? What do competitors charge for similar products?

- Have group members been consulted for end-price determination?

- What will be the minimum order size and credit terms offered?

Promotion

- How will you promote and distribute the product? What do you expect the promotional costs to be?

- Who are your competitors? Where are they located?

- What is their size and market potential? In which geographical areas are they successful currently?

- What are the strengths and weaknesses of your competitors?

9. Financial aspects

A. Investment needs

- What will be your financial needs? (Monthly/Yearly)
- Fixed investments
- Equipment/machinery
- Land and building
- Working capital
- Raw material
- Product/manufacturing cost
- Administrative costs

- Total investment

B. Sources of funds

- Loan
- Group investment
- Accumulated savings of the group
- Grant
- Any other

- Total

C. Sales

- What is your forecast of total sales?

Details about sales

D. Financial statements

Profit and Loss accounts as on (date)

Net Profit = B - A

Profitability

Sales: (monthly/yearly)

Total costs (take from profit and loss accounts)

Gross profit = total sales - total costs

Balance sheet

The following are samples of the balance sheet at the beginning of the business and on the day of the final account-closing year.

Starting balance sheet

Final balance sheet

The business plan must be revised at least once a year, but it is advisable to do so once in six months for better management and growth of the business.

MANAGEMENT ASPECTS OF SMALL RURAL ENTERPRISES

1. Accounts and bookkeeping

Bookkeeping and financial statements

Rural women’s group enterprises often do not keep a written record of accounts because they do not consider this important. The women have many other demands on their time besides attending to the enterprise. If the enterprise is generating a good cash flow and there is enough income to spare for family expenditure, it is taken to mean that the business is yielding sufficient profit. This logic works well for a small-scale enterprise that does not carry stock for more than a week. Of course, many rural women in India are also illiterate and would have to depend on others to write accounts. It is also not very easy to write accounts, especially if these are to be recorded in a format needed by banks.

A written record of accounts is not necessary for every small business but serves a very important purpose, helping the woman entrepreneur remember all her transactions. It makes explicit the costs, profits and cash flow and helps in running the business more efficiently and profitably. A written record is useful when the enterprise is in need of external funds as it provides vital business information to the potential financier. A women’s group business must also keep a written record of the accounts for reasons of transparency and accountability and also to be able to allocate costs and profits in an equitable manner.

In order to do this, it is important that at least one member of the women’s enterprise group is literate or the group should be able to obtain the services of a literate person to write the accounts. Time must be allotted for this.

The person responsible for the task should have some training in writing accounts. Simple book-keeping skills will also help the women in preparing income and expenditure statements at panchayat level and give them an opportunity to participate in the financial management functions of Panchayati Raj institutions.

Basic books of account

It is advisable to maintain the following stationery for record-keeping in a group enterprise:

i) Voucher book for recording all transactions including cash advances to members, credit, sales, etc. It is good to attach original bills of all purchases and other expenses to these vouchers, wherever such bills are available.

ii) Cash bill book. It is good practice to issue bills for every sale and it is a good idea to make these in duplicate so that one copy is retained by the group.

iii) In case the business keeps stocks and credit sales are involved, it is useful to have receipt books for cheque payments and a book to record incoming and outgoing stocks. However, small-scale rural enterprises are not likely to need these.

These books are usually available in the market at low cost.

The principle of keeping good accounts is that every business transaction must be recorded. All payments must be made with vouchers, sales must be made with bills and all goods that go out or come in should be entered in the books. These bills, receipts and vouchers must be completed with full details. Since the nature of every group business differs, it is useful to get professional advice on the account books that must be maintained.

A good bookkeeping system requires that at least one or two persons are specially assigned for the task. These people should be trained and must maintain the accounts in accordance with laws and practices relating to cooperatives/women’s groups and those of donors/creditors. A daily account must be kept and the leader of the group or another group member should check that the accounts are written and must tally the cash regularly.

Some ways of maintaining an efficient system of accounts:

- Make and regularly update the record of money owed to the group and follow up on clients.

- Maintain a list of bills to be paid and prioritize payments. If a payment cannot be made in time, inform the creditor and fix another date for payment.

- Tally the balance in the cash book every day; do this every fortnight or month for the balance in the bank book.

- Make a cash flow statement at the end of every month for the following month or preferably for the next quarter.

- Make a Profit and Loss statement and Balance Sheet every month and discuss this within the group.

The benefits of good account-keeping can be very dramatic. It improves cash planning and business planning. Members can discuss group finances and performance and plan improvements.

2. Leadership and team work

Leadership is an important issue in the Panchayati Raj system as well as for rural women’s group businesses. Leaders must remain accountable to those who have chosen them and work for their collective benefit. A leader who is too dominant can influence group decisions to benefit herself or a few members and, in fact, may harm the interests of other members.

Lack of transparency can create mistrust among members of a group business and result in some members taking advantage of the ignorance of others. All members in a women’s group enterprise must have a simple awareness of business cash flows. It is only then that they can participate effectively in the management of the business. Business accounts information must be shared during group meetings to raise awareness as well as for transparency and joint decision-making.

Some women’s group business leaders can be heavily burdened with group responsibilities and may have to put aside family work for group tasks like writing accounts or visiting the bank and traders. They have to be responsible for making the business work and take blame if things go wrong. It is very important for group members to share responsibilities so that one woman is not burdened with all tasks. When group responsibilities are shared, members are more active in decision-making thereby improving its quality. Each group must articulate the vision for the group and work collectively towards this.

Group tasks are expected to be performed on an unpaid basis and most women’s groups do not set aside money to pay for the time spent by the leader in coordination or accounting jobs. However, time is the scarcest resource for hard working rural women. Each group must therefore decide on the best balance between unpaid work and tasks that should be paid for. For instance, it may be good to pay for accounting tasks and not for liaison work. Unpaid tasks must be equitably shared among group members instead of being thrust upon the group leader.

It is good practice to rotate roles and responsibilities among members. This enables all members to enhance their group management skills and the group becomes a more equitable social learning and advancement forum.

A related aspect is the periodic change or rotation of leaders. A good practice is to have a rule to change the group chairperson, secretary and treasurer once in two years and to change at least one of these positions every year. This makes rotation easier and enables smooth transition of work, besides enabling each member to make institutional links and do group liaison work.

3. Networking

Networking is one of most important skills needed by small-scale rural enterprises. Rural women entrepreneurs can have several types of networking arrangements. One is a business-related network of all women who are engaged in a similar business. Another is a neighbourhood network where women from the same and nearby villages come together to address common issues which may be related to business or issues such as the availability of potable water.

An important reason for networking among rural women’s groups is to meet their credit needs. Individual rural women entrepreneurs or just one or two small village women’s business groups may not be able to obtain bank loans. But if they approach a bank as a network, it is easier to get lenders interested.

Networking can also help women in gaining access to good production techniques and training, good quality raw material and in making better deals with traders. The rural women’s business groups can form a rural enterprise network with one group using inputs provided by another and one group packaging or marketing the products of another.

The importance of networking must be emphasised as it enables rural women to tide over business problems, helps them to take advantage of their collective strength rather than be isolated rural enterprises, and to make their businesses more successful. It also makes it possible for them to address non-business issues important to the women.

4. Monitoring and evaluation

When their business is successful, most small-scale entrepreneurs do not bother about monitoring and evaluation. It is useful to monitor even small-scale enterprises carefully, as this makes it possible to improve the business and adjust to new market situations. It is also useful in case others need to know about the performance of the enterprise in order to support it in times of growth or difficulty.

Ascertaining business success

If a business has a well-defined vision, its success should first be assessed against this. The original business plan is another useful base document for estimating success as it shows the objectives of the enterprise.

The success of a business may be assessed using the following indicators:

• Volume of sales

• Regularity of sales

• Profit per member

• Quality of product

• Marketability of product

• Returns of investment

It is important to see if the group business has grown over a period of three to five years. Sustained growth is an important indicator of business success. If the business has remained static and has not grown in any way, there is a chance that it is losing out in the market and needs to be examined carefully.

Other factors in the success of a rural women’s enterprise include family support and networking with other group enterprises and women’s forums in the village.

The business should also be evaluated against the four aspects of the MAIR model:

1. Motivation and determination to make a business succeed.
2. Ability and experience with a business.
3. Good market potential.
4. Resources needed are available.

If the women entrepreneurs have any training needs, these would become apparent during such a monitoring and evaluation exercise.

Levels of monitoring

Monitoring and assessment of women’s group enterprises can be done by the women themselves. Panchayati Raj institutions may also need such monitoring information on local enterprises in order to support them to grow better. Information on rural enterprises is also useful at sub-district and district levels for establishing linkages.

Format for collecting information on women’s individual and group enterprises

Information about the women’s individual and group enterprises has been organized into several categories for easy data collection.

DATA COLLECTION FORM

1. General information

Brief history

Date/year of formation of business/group

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2. Production information

Product name:

Please attach sample pictures of each product if available.

Product type

Quality guarantee or awards achieved:

Quantity produced per month/year

What is the maximum number of products you must allow for?

Raw Material

Equipment

Production process

Description of each stage of the production process for each product

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Packaging material:

Wood/glass/basket-making material
Paper/plastic
Other (please give details)

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Name of packaging designer: .............................................................

3. Marketing information

Advertising channels:

Main market place: ........................................................................

Customer response to product: ........................................................

Main customer (may have two or three main categories, traders in village/city/NGOs/government departments):

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4. Financial information

Sale

How much does the group save per month?

..................................................................................................

What is the interest rate members get from
savings: .....................................................................................

Maximum savings per month: .......................................................

Minimum savings per month: ........................................................

Accountant’s name: .....................................................................

Is she/he a qualified accountant? (Write specific qualifications of accountant)

5. Information about group members

Name and position of committee member

Problems and needs:............................................................................................

History of financial support:

History of training:

Future training programme required:

What are the other external support needs of the business?

Contributed by Smita Premchander and V. Prameela, Sampark, Bangalore, India.