How to help a poor fellow start a micro-business?

The following is a step-by-step process to help a poor fellow start a small business. This is based on my experience since 2009 at GEAR and execution of Social Advocacy projects for two universities.

1. Finding a needy:

• This shouldn’t be too difficult keeping in view the amount of poverty we have in Pakistan, but the challenge is to identify a person who is genuine, honest and willing to work hard for financial stability.
• If you do not know such a person, ask your maids, security guards or similar people to connect you with some.
• I would not recommend randomly picking up a guy on the street, and if you do then you need to thoroughly check his background.
• Background check is done by visiting the residence and asking about his particulars from a nearby shop, neighbors, imam of masjid etc.
• Imagine how a background check of a person is done in case of a marriage proposal. Interview the person two or three times, its better that multiple people take the interview to eliminate bias of a single person, also all of them should later develop a consensus if the person is to be helped or not.
• Honesty, determination, commitment level, clarity of mind, sense of responsibility, ability to work hard, are some of the things that needs to be evaluated through cross questioning.
• Interview should be conducted in a way that the needy person's self-respect is not hurt!
• At least one of the interviewers should be someone with experience in public dealings who have a strong sense of judgement.
• Listen to your intuition in the process.
• Once you have the confidence that you and your associates has identified a needy person, its time to determine what kind of self-employment opportunity needs to be created.

2. What kind of a business:

• The needy person is going to tell you the kind of business he or she can do. ASK HIM/HER!
• It totally depends on the background experience, temperament, skills of the needy person.
• Like if a person understands how a French fries stall works, he or she cannot be asked to have a tailoring setup.
• Assuming if the person is too young and do not have any experience in any area, then its better to get him or her some training, like in a vocational training center, or an internship in some micro business.
• For example, if a needy person wants to setup a vegetable cart, then help him spend some time with an established vendor who would training him or her for a month.
• Such a vendor needs to be located using personal reference, it is possible that some close or distant relative of the needy fellow might already be running a setup.
• Wish of the needy fellow on what kind of business he wants to do should be considered supreme in this context.

3. Setting up:

• Once the type of business is identified, for example, a french fries stall, you need to make a list of items that needs to be purchased, and a location where the stall needs to be setup.
• Visit a few French fries stall (for example) to make a list of items are needed.
• Ask the owner of the stall, and tell him your purpose, typically they are willing to provide you all the details of the items needed, and from where you can purchase them, and even what kind of challenges are faced in the process setting up the business.
• Interviewing a couple of vendors can be beneficial. For location, one has to be very careful as KMC people often picks up the stalls from the streets.
• It's better that the stall is on a movable cart, thela, so that it can be relocated as and when necessary.

4. Make a budget:

• After interviewing a few vendors, one becomes aware of the markets from where the items identified can be purchased.
• Visit the markets to get an estimate of the cost and quality of the items needed.
• Make a list of items with their cost to know how much money is now required to be collected for the stall.

5. Donation, investment or loan:

• First ask yourself, do I want to gift the whole thing, or I want to be a partner and share the profits.
• Usually, the total profit from such businesses is hardly enough to sustain one family, so taking a share from it is not advisable.
• Renting out the whole setup is also possible, but you will need to establish dozens of small such businesses to make a reasonable sum.
• REMEMBER, IF YOU WANT TO MAKE MONEY FROM EITHER FROM RENT OR PROFIT SHARING THEN YOU MUST, REPEAT MUST, INVEST YOUR OWN MONEY! YOU CANNOT TAKE DONATIONS FROM SOMEONE AND INVEST TO EARN MONEY VIA RENT etc.
• If you do not want to make money rather help the poor person, then it is advisable that you ask him or her to return you the principal amount invested (without charging interest) in easy monthly installments.
• The purpose is to ensure seriousness in the poor fellow who otherwise might take the entire thing for granted; lack of seriousness can sometime be fatal.
• Also, this will give you a reason to meet the person every month to keep a check on him and to know if he or she is facing some trouble and if some intervention is required.
• If you intend to help by collecting donation, then you can only ask for the money to be returned with an intention to be used again to help someone!
• This is great because you can help another person once the money is returned, so on and so forth.
• If you are using your own money to help, then of course it is up to you how you use it once the money is returned.
• Usually if you have identified the right person then it's quite likely the money is returned.
• Globally micro finance organizations have found poor people to be more honest and committed then the rich. Globally the return rate of most micro finance initiatives is 99%.

6. Collect funds from your network:

• If you decide to collect money from others to donate or loan the poor fellow, then you need to have your homework done about what kind of stall or business you intend to setup.
• Step 4 explained above needs to be performed before you ask donations from your friends and family.
• We are a very generous nation, and usually if people trust you then it requires a single Facebook status or a WhatsApp message to friends and family members/relatives to generate all the funds needed.
• But you have to be crisp, short and to the point. For example: "Salaam, me and my friends are raising funds to setup a vegetable cart for a deserving poor fellow, which will take Rs. 25,000, please let me know if you want to contribute, zakat is applicable (or not applicable)".
• Zakat money cannot be loaned and should be gifted to the needy.
• People in 99% cases contribute, if they trust you.
• If a group of friends are working on this project, then it would be much easier to raise funds.

7. Purchasing the items:

• Its better that you and your associates purchase and hand over the items to the needy or keep a strong check on the needy if handing over money, like ask for receipts, double check the cost of stuff he tells you after purchasing.
• Once all the items are purchased it is very important that the needy person understands the cost of each consumable or replenish-able item (variable cost) used in the product like plate of biryani, per box of French fries, or per plate of chat, or per ban kabab etc.
• The needy person MUST KNOW the actual cost is fundamentally necessary to calculate profit from the revenue or sale.
• This include raw material, packaging material, cost of electricity or gas, cost of items which are wasted (vegetables or fruits which gets rotten), salary of a helper, and hidden costs like different kinds of extortions/bribes which a vendor is forced to pay on the streets of Karachi.
• You might need to teach the person some accounting to make sure he doesn't eat up his inventory and save sufficient money to repurchase the consumable items in equal or more quantity to expand the business.
• The person must also be taught about from exactly where the items need to be purchased at the best price and quality.

8. Installing the setup:

• Once all the items are purchased, the stall must be deployed to a location which is crowdy enough to attract customers sales.
• Find a place where there is very less competition.
• For example, there is a need of a tandoor near gulshan chorangi, as people have to walk all the way toward rim jhim hall and beyond to purchase roti when needed, so a mobile tandoor can be setup at the entrance of KDA market with an investment of around 50k in a movable cart or a suzuki van (cost not included), which would employ like 3 people.
• Similarly, a location needs to be identified of a veg or fruit cart, French fries stall, popcorn cart, ban kabab stall, fruit juice stall, general items stall, tailoring setup (usually can run from home), samosa-roll-pakora stall, dry fruits stall, chat stall, makaee stall, gardening setup etc. etc.
• If the cart if movable, then it is easier to experiment on a different location before finalizing one.

9. Train the person:

• The person might already have learnt the necessary technical stuff to make and sell the product, but there is something extra that needs to be taught!

A) Never compromise on the product quality!

B) Understand what the customer wants,

C) Try level best to make the customer return with a smile,

D) and of course, financial management which I mentioned earlier as well

10. Marketing:

• The best marketing tool is word of mouth! but for that some customer's needs to be entertained first!
• Invite all your friends and family members to visit the stall and avail the services or purchase the product.
• Banners and pamphlets may help but there is too much clutter already, so I am not sure!
• Crowd attracts crowd, so think how a crowd not too large though, like 4 - 5 new customers standing at the stall all the time will eventually attract more ...
• Think of how you can make your friends and family members to frequently visit the stall.
• To build credibility, in case of a stall of a food item, try to get a certificate from HEJ or PCSIR etc.

11. Follow-up:

• Remember the biggest cause of a poor person to discontinue his business is selling it because he needs money for some emergency medical need.
• Often, they sell the business to save a sick family member.
• Watch out for such moments and help the person either by connecting him to Indus hospital or a similar welfare hospital or help raise money to finance the treatment of the sick family member.
• This is important for the continuation of his micro business and keeping him financially stable.
• Find someone with strong connections in police and KMC so that any crisis situation is handled accordingly