Micro Enterprise and Micro Franchising Examples from “Ending Global Poverty”
The Case for MicroFranchising: Opportunities and Risks
“Ending Global Poverty: The Micro Franchise Solution” by Kirk Magleby is an interesting and quick read about what could very well be the next stage of micro enterprise and micro finance institutions. First it makes a case for microfranchises because they create efficient systems and networks with save money and scale well. Not all people are meant to be entrepreneurs, which is why some micro enterprises fail. Instead of creating unconnected micro-enterprises, the micro franchise model should be used to help provide sucessful, proven, and efficient models for business success. Magleby points out that many businesses such as the phone ladies are based on the micro franchise business model. Several key industries that are viable for micro enterprise and micro franchise.
Ten Areas to Consider for Viable MicroFranchising Businesses:
• Accounting services, agricultural inputs, apparel
• Bakeries, barber shops, beauty parlors, bicycles, building materials, butcher shops
• Construction, cooking oil, cosmetics, courier services.
• Electrical contracting, equipment rental (wheelbarrows, bicycles, etc.)
• Financial services, food, fuel, furniture
• Hardware, house wares and other specialty retailers.
• Movie theatres
• Plumbing contracting
• Renewable energy, repair shops.
• Transportation for commodities, transportation for people.
To me as concerned outsider, I think the starting point should be the 7 sectors discussed in “The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid” from the World Resources Institute, because it seems to focus on the base of the pyramid and then consider informal economies and less important sectors. But certainly the best market for a given and even the money earned in a non-base of the pyramid business (ie perhaps travel) can be used to fund other ventures aimed at the BOP. Given that there may be more margins in these markets and these levels of affordability, a concern should certainly be paid toward their encouragement.
Guiding Principles for MicroFranchising Businesses
If we look to the work of Paul Polack , he would suggest going to where the action is, talking to your target market directly, and focusing on simplicity and affordable pricing. Then (and perhaps only then) is pursing research in parallel markets and businesses truly viable (although its a bit chicken and egg because those issues are in some regards co-determined).
Magleby includes a great list of 69 micro franchises. I’ve included:
Twelve micro enterprises that are successful micro franchises
1) Cebicherias Chiqui, Peru, 5 lunch stands
2) Casa por Casa, Mexico, 18 advertisings agents (IF)
3) Ingles Individual, Mexico, 70 language tutors, (IF)
4) UV Water, 100 village water systems
5) UMU, Uganga, 125 microfinance agents, MFI
6) Pride Africa, Kenya, 250 microfinance agents, MFI
7) Cemex Patrimonio Hoy, Mexico, 500 local promoters serving 120,000 construction jobsites (MNC)
8} Yogurt Persa, Yougurt Tito, Ecuador, 35 restaurants, IF
9) ES Coffee, Ecuador, 2,500 coffee producers (IF)
10) Grameen Uddog, Bangladesh, 4,500 textile weavers
11) Vodacom Phone Centers, South Africa, 5,000 phone centers, MNC
12) Unilver, Vietnam, 145,000 sales agents, MNC
If you would like to learn more about micro franchise you can:
• Read a free draft publication of “Ending Global Poverty” by Kirk Magleby on the web
• Get the “Ending Global Poverty: The Micro franchise Solution” by Kirk Magleby on Amazon
• Read the microfranchise blog or the microfranchise wiki
• Consider the microfranchising toolkit or other micro franchising books.
• Check out some of the case studies and country studies from the Next Four Billion
• If you’re more serious about moving forward with an existing franchise or building out a micro franchise network of your own you may want to check out the resources at Entrepreneur and this Franchise know how checklist