Analyzing a Businass Plan - RUMA

On our lecture on business planning we had an assignment of analyzing a business plan, and for this post I'm going to analyze the Indonesian based Social Business RUMA.

Having won the first prize of the Harvard Social Enterprise “Pitch for Change” competition, the acronym that gives name to this social business literally to Your Micro Business Partner. Through their business model they pretend to empower poor women by supplying them with a kit that enables them to start their own micro franchises hence becoming micro-entrepreneurs.

Using the strucutre seen during the lecture I'll try to make the analysis:

What?

Most of the time when poor people ask for a loan, they fall into a vicious cycle of debt. This is often caused by the way the money is spent after the loan is granted. No money is generated back so, in order to repay another loan has to be made. The RUMA business addresses this problem through the lending of Microfranchises, in their own words, they lend businesses to generate money.

Literally called a Business in a Box this micro-franchises provide all the tools and training required for selling electronic airtime minutes through mobile phones.

Who?

Knowing that the mobile phone industry has a high penentration on Indonesia, RUMA partnered with the Grameen Foundation as well as with Qualcomm to put this business into work. The Grameen Foundation provided the initial investment funds through its Pioneer Fund, as well as technical assistance that helped RUMA to build its initial operational framework (which includes technology systems and human capital). Qualcomm supplied the technological expertise on mobile phones through its Wireless Reach initiative.

How?

In order for RUMA to be a successful business they stipulated that the revenues will come from selling franchise kits that will be leased to the borrower by the financial institution, as well as for a margin obtained for each airtime sale. In that sense, the borrower of the microfranchise will use the revenue obtained to repay their loans. The estimated profit for the borrower is approximately $1/day. This business defines the poor as people as those living with less $2,5 a day (World Bank poverty line), so a steady $1/day supposes a 50% overall increase.

For measuring their results, RUMA chose the Grameen Foundation's Progress out of Poverty Index (PPI) since t's country specific and it's based on a ten-question survey of readily identifiable indicators.

As for their fanantial sustainability, RUMA plans to break even within its first 2.5 years. In order to reach that goal they need to empower 5,000 of the poor and poorest by August 2011, having as a target to reach a 70% of people below the poverty line.

RUMA in numbers (current situation).

At this point, Ruma has:

• Created more than 600 new micro-business.
• 100% profitability for the micro-business owners.
• 97% of owners are women.
• 68% of business owners are below the poverty line ($2,5/day)

They also pretend to develop and deploy new business kits that deal with medical products and services, education and training, trade and distribution, and agriculture and fisheries.

For more information I leave a link were you can download a through presentation

Ruma Business Model Presentation

Stanford University Social Entrepreneurship Start-up

I found the example from the lecture and thought it would make sense to read it and share it with you guys (the business plan for LED technology implementation in developing countries) – Standfort University Social Entrepreneurship Start-up Report.

http://ses-1.stanford.edu/reports/global.pdf

The business plan is, in my opinion, only the structure of a real business plan that can support all this social impact of bringing more efficient lighting solutions to the developing world with numbers, measurable goals and timing. Standfort University is actually saying in this report that 3 individual, stand alone business plans for China, India and Mexico were developed (found China which is much more complete and detailed). The main concern in this report is the social impact of such a product but it lacks all the economic part, some detailed paths in order to achieve the goals and the time issue is totally ignored. Everything is explained in general, some parts built just on common sense and with too little probability of success (3 employees with too daring objectives worldwide). I didn’t get their enthusiasm for franchising, a step in my opinion too early to be taken into consideration, as well as the whole fundraising issue which seems too positive and without a concrete sustainable part. In the part where partners should be taken into consideration, there is no criterion of selection (to be in line with the values or to have proven success??).

For a more detailed business plan, take a look at China pilot case:
http://ses-1.stanford.edu/reports/china.pdf

Numbers

Tiago has done most of the job by showing how different elements can enhance the visibility and tracking of the blog, so I thought to just stick with…numbers and why we need measuring methods in improving our blog?

I will talk briefly about Google Analytics and how it can give precious insights to us. The best part is that it gives very basic reports that anybody can understand, as well as more sofisticated ones. Analyzing all traffic data means looking at graphs and charts that will show how many visitors the blog has, their evolution as a function, average of pages, time, content, ecc. Just by looking attentively one can understand the strengths and weaknesses of a blog or site, because like in everything we do, we need solid ground and numbers to understand quality and preference. This will generate the need of rethinking maybe the content, the design part or maybe just focus on the details. In my opinion the content has top level importance together with the “blog personality”, generating readers that hopefully will continue to return and spend more time with “us”. It doesn’t take rocket science to figure that one out.

For us it’s so useful to understand the specific tools that can generate high volume traffic and how we can meet the expectation of the reader in order to build a successful story. In my opinion, one step at the time will do the trick, because learning by doing is the best way.