The ‘hamburger’ of micro is a force to be reckoned with. What does it take to make the least the most? What are the elements? What are the pros and cons? Fresh from Asia, here are some info bites for your digestion.
The Pros
We’re definitely seeing a shift in awareness in the credibility of micro opportunities beyond micro loans and micro credit. This is evidenced by increasing mainstream support and understanding.
Micro Entrepreneurs
Since at least 2006 CITI Foundation have been holding Micro Entrepreneur Awards. While in Manila 2011 awards were held. I pawed over these uplifting words in Entrepreneur Magazine.
Indeed, the multiplier effect of micro-enterprises is undeniable… ten years ago micro finance was synonymous only to credit for small business… the lessons learned from micro finance give us reason to intensify our programs for financial, inclusion, by means of education and responsible finance to improve the lives of Filipino’s
Amando Tetangeo Jr.
Bangko Sentral Ng
Philipinas Governor during the CITI micro
entrepreneur of the year awards 2011 event.
The stories of entrepreneurship are inspiring and these awards are held in numerous locations around the world. Promoting entrepreneurship through the use of micro credit and micro loans assisting the entrepreneur to thrive. What is also impressive and encouraging is the specific micro niches and micro language being used more often by banks and governments.
Government & Bank Support
Kuala Lumpur in July 2011, Deputy Prime Minister Tan Sri Muhyiddin Mohd Yassin announced that the Malaysian government had allocations for a soft-loan scheme aimed at encouraging the lower income group to engage small and micro franchises as franchisees.
Speaking at a Franchise Association Event, he said “I hope the lower income group will take this opportunity to enter into the micro franchise businesses to supplement their income”. The scheme offers loans with an interest rate of only three percent.
In Australia, the banking sector has recently embraced the specific language of Micro Enterprise. This is relatively new. The ATO (Australian Tax Office) have also recently published on their website, specific references to micro enterprises. The language is becoming more main stream.
The emerging trend is that depending on your motive to be involved in Micro Franchising, there is choice. While I’m always enthused at profitable sustainable business, through the sheer number of applications it has, I am super enthused at the potential of Micro Franchising to lift the economy. Let’s look at some types of Micro Franchises.
Indoor Micro Franchise Food Carts Dominate
In Robinsons Mall in Manila, micro food carts dominate. Juicing, waffle making, noodles, burgers, eggs cooked any which way, corn, potatos, sugar cane drinks, mango juice, pizza. What’s astonishing is the larger retail franchise brands (McDonalds, Jollibee, KFC, Pizza Hut, Yellow Cab Pizza) exist side by side the food carts. In some cases, you have a Pizza Hut full retail store and close by is a food cart selling smaller items of the same product. If you can put it between your lips and swallow it, you can franchise it and better still with little bites, micro franchise it.
Outside Micro Franchises, Services Provision Dominate
Photo copy ‘shops’ dominate the cbd. A photo copier and some paper, you have a business. People line up to pay for individual copies to keep their papers in order, and someone is making money from that. Ink Cartridge refill is big business, with collection points for empties also prominent.
Russian Doll Model Inside the inside, Juice Micro Franchise
This is the food cart or juice stand, that sits within the confines of a convenience store. Icy Fruit Delights is a start up micro franchise I visited. Clearly the owner has a particular formula with the combo of ice, mango and coconut water. This particular franchise stand is the first one of its kind with a big “open for franchising” sign on the front. An entrepreneur has set this juice stand up. Started with the end in mind. It has everything ready for replication. In the planning, they’ve settled on a ‘russian doll’ strategy, where the micro franchise sits within a convenience store and is now waiting for the first investor to buy the concept and replicate it elsewhere using the same formula.
Financial Investment
Micro franchising is on the rise because the barrier to entry is quite low. It seems the ongoing commitments and quotas are a different model to mainstream franchising. For instance, there are often no penalties on quotas. The fees are on the sale of the concept, and a small % of takings leaving more profit for the micro franchisee. This presents a couple of opportunities. For someone, looking to create passive income for themselves, a food cart for instance, is accessible enough to purchase. This purchase could be made while studying or the purchase could be made as an investment. The investor places someone in to run the cart generating income for all parties day to day.
Choose how to use the model
It seems with the Asian work ethic, where there is a will there is a way. According to an article in Entrepreneur Magazine, Angeli Valenzuela owns a number of Potato Corner food carts. An Architect by profession, he built up his wealth nest egg and has reinvested this into apartments. How? By investing while still in his 9-5 job. No reason others can’t do the same. Potato Corner is in Malaysia, Indonesia, Philippines, Panama and the USA.
Impact Ideas Investment
Micro franchising, combined with micro enterprise, micro loan and micro mentoring is a powerful model for social change. While relatively new and complex for people to get their heads around, it presents fascinating possibilities.
World Vision now has micro programs where they provide low interest loans to micro entrepreneurs. Once the business is making money, the loan is repaid and profits reinvested or more money loaned. If these loans were to be used to fund and grow replicable systems, no matter what the product or service, more people will be impacted sooner.
Micro Franchising as a solution to poverty is being blogged about more often with every passing day. In countries such as South Africa, Peru, Philippines, its potential is endless. All it needs is problem solving business thinking people to come up with ideas to apply the model, some investment and education.
Micro Enterprise Conversion to Micro Franchises
Many micro enterprises are underway successfully. They are ripe to be replicated and converted. Step 1. Create the micro enterprise. Concept is proven. Growth can come from expanding from one site or growth could come from Step 2. Develop the micro-enterprise into a multisite operation. There are two ways to grow an enterprise. Expand the capacity from the original nucleus or, break off into smaller business units in relevant markets, grow them in size and number.
The Cons
Challenge #1 Design
If micro franchising wasn’t part of the original strategic thinking at design, set backs come. Overcoming setbacks starts with having the end in mind from the outset. Planning to replicate the model. When people have only heard of micro loans or micro enterprise, they haven’t broadened to micro franchise. While it becomes harder to do the conversion it is still possible, it might just take longer.
Challenge #2 Micro Mentoring
A challenge is educating and training the potential micro franchisees in relevant business acumen. In this challenge lies an opportunity. For many people business is intuitive. Franchising is the discipline to be trained in. Discovering relevant ways to educate the micro entrepreneurs is where the most patience will be required. Given, access to resource and more importantly given encouragement, is what will make the difference. Micro Mentoring will no doubt be another trend to emerge. Knowledge transfer will sure up success. What I’ve learned from those doing this work is that educating micro franchisees takes a lot of time, patience and showing of what to do.
Here’s an idea for People Investment: Your existing franchise company could donate some time, mentoring micro franchisees to fast track their success. This could be part of your corporate social responsibility arrangements or just because you have a kind heart.
Microfranchising is not just about
investing in business concepts.
It is also about investing in peopleJason Fairbourne
People Investment
People run business. People must be educated in how to apply themselves. Jason Fairbourne wrote the Micro Franchise tool kit. He is from the micro credit industry and has seen micro franchising as the natural extension of the micro credit and loans phenomena in the 1990’s and early 2000’s. This could serve as resource for teams of entrepreneurs either wanting to create a micro franchise to solve a problem in the world or refine an existing product. It could also be used to consider whether there is linkage from your existing franchise you own to some sort of linked, sub branded on a smaller scale model for a micro market.
Solving Urban Homelessness in USA
I posted on @microtrendwatch a discovered discussion on Micro Franchising being applied to assist the homeless in the USA. These include, food cart vans owned by the homeless, and storage facilities for homeless to store their belongings in, to water bottle distribution on the street. Using micro franchising territories in city grids as an opportunity to reengage with the socially excluded and homeless is something that’s been on my radar for other cities such as Melbourne with increasing homelessness problems.
Unusual and Sweet Finds
A.n.t.s Canefusion is a way to experience a healthy refreshing sugar cane drink. It’s a drink stall providing 100% pure organic sugar cane juice. I stumbled across this cart and observed the response from the customers is very good. The health benefits are featured heavily in their marketing. I see possibilities for other markets such as Africa and Latin America where Sugar Cane is close to hand or produced locally. Short and sweet.
Bamboo bikes. Bambike is ecological technology. Bicycles made of bamboo. The distribution and repair model for this could well be micro franchising.
Replicable Ground
I recently discovered Starbucks saves coffee grinds for customers to take away for free and use in their gardens. I saw and extension of this being take the grounds, put them on a patch of dirt and cultivate some worms. Bag up the worms and sell them. Now that’s a whole new slant on growing your own business and don’t squirm but very micro franchiseable and replicable.
Early Bird Catches the Mc Cash
While Micro Franchising is still relatively new as a concept, after my recent trip to Asia, I am more convinced than ever of the opportunity. The mainstream franchise market can be educated further of this opportunity. The wealthy brands have the potential to develop sub brands. The emerging can partner and generate low entry models, and seek loans support.
With this model, your motive may be to invest for your own passive income needs or for social innovation. This model is ideal for problem solving in some of societies most challenging areas. It seems to extract creativity and innovation through necessity.
The more I trend watch and research, the dimensions of the application are unlimited. Micro Franchising can be applied in rich, poor, urban and rural contexts, anywhere in the world Tanya Lacy
Micro Trendwatching
Whatever your motive whether to own micro franchises or investing and loaning money; micro franchising has the potential to be the Mc Money Making Machine Model of all time. In my micro blog, I’ll keep an eye on this and you can follow the discoveries with me @microtrendwatch ©2012 Tanya Lacy @microtrendwatch
Information Box
Potato Corner: According to their website, Potato Corner – the Filipinos’ favourite flavoured fries has grown to 200 outlets nationwide, of which 70% is franchise operated. The company has expanded it’s global reach to Indonesia, Malaysia, Panama and 6 stores in the USA.
www.potatocorner.com
Start Up: Opportunity: Icy Fruit Delights: Contact Miss Bea Ching. Manila 09209059588
Micro Franchise Tool Kit: This Tool kit is published by BYU’s Centre for Economic Self Reliance, Ballard Centre, Brigham Young University. Located in Provo Utah USA. The aim of the Ballard centre is having students solve societal problems.
Jason Fairbourne is currently CEO at Fairbourne Consulting. Previously Fellow of Social Entrepreneurship at BYU Marriott School of Management and has been director of MicroFranchise Development Initiative and Business Solutions for Development at BYU
Bamboo Bikes. Short sweet and simple. www.bambike.com
Ant Canefusion – Find them on facebook
CITI Micro Entrepreneur Awards: According to their website, some of the awards objectives are to recognize, honour, lift from poverty, add value to society, to invest in skill and knowhow of micro entrepreneurs and create role models who can mentor and inspire. To recognize the power of community owned enterprises. www.microentawards.in
About Tanya: Tanya shares her insights into all things micro and the world of micro enterprise, micro franchising. A recent offshoot from Intercept Experience and Intercept Poverty is microtrendwatch. Follow the latest trends with her @microtrendwatch Tanya travels from Melbourne as she researches and shares what’s happening in the world with all things Micro. (She was recently called Ms. Micro by her team at the office)
