Business Plan Summary
- Product: Standard paper cups for drinking tea, water etc.
- Differentiation: None
- Customers: Nearby canteens and offices
- Competitors: China
- Competitive advantage: None
- Disadvantages Small scale production using hand-operated machines
- Business objective: Income for 5-8 women who own/run the business
Clearly anyone with business experience is not going to look at this plan for more than half a second.
But this is a real business that was initiated and funded by an NGO. And it is not the only one in this product category.
Sadly, this is not a unique situation.
Prompted and funded by NGOs, the rural poor are being enticed to start businesses producing garments, herbal products, handicrafts, and food products.
Earlier I visited a business that made paper bags mostly by hand. The only use of machinery was to get crisp folds on the paper. Afterwards the logo of a shop or retailer was screen printed on the bags, by hand.
The biggest issues facing these businesses are those of product viability (as in the example above), sub-scale production and inadequate market linkages.
Early last year, a few friends and I started developing and delivering a condensed business management course called ‘CREAM’ for managers of rural or semi-urban businesses.
While it teaches entrepreneurs and business managers business skills, including how to tell if a business/product is unviable, it doesn’t solve the problem of unviable businesses getting established in the first place. Most decisions about which type of business to initiate such enterprises are made either by the local NGO or panchayats under the auspices of government initiatives (e.g. no-plastic) or an ideology (ayurvedic products are better) without a proper understanding of the market or production economics.
As is to be expected, most such businesses close down due to losses and insufficient working capital within the first few months or a year of operation.
More on this in my next blog