YOUR BUSINESS BRIGADE

Transcription

1 YOUR BUSINESS BRIGADE

2 YOUR BUSINESS BRIGADE Welcome to Your Business Brigade in Panama. This document will introduce you to the Business Brigades methodology and is intended to provide an overview of the various aspects of a Business Brigade, including all educational curriculums and materials. Though your Brigade may not encompass all of the topics discussed in this document it will help to prepare you for your coming Brigade. As you read through this you will gain a better understanding of not only your Business Brigade, but rural economic development in Panama. Business Brigades seeks to create sustainable economic development solutions to improve the overall socio-economic level of under-resourced communities in Panama. We advance this goal by utilizing university students and young professional volunteers to implement community economic development projects through assisting community based credit and savings cooperatives by promoting micro-enterprise development, counseling and financial literacy. Your Business Brigade is organized into four sections: Section 1: Introduction and Development Methodology Within this section you will be introduced to an average community in which Business Brigades operates, learn about the three pillars of Business Brigades development strategy, and understand how the credit and savings cooperative operates. The section closes with a look at the development process of the cooperatives. Section 2: Financial Literacy In section two the importance of financial literacy education will be explained. Followed by a brief explanation of the material is an overview of the curriculum. Within this section you find assessments, and teaching the teacher guides which will help you prepare financial literacy workshops. Section 3: Business Education and Counseling An overview of micro-enterprise development is presented discussing business counseling in section three. Followed by this overview are a series of workshop materials as laid out by the applicable guide to business counseling within this section. Section 4: Supplemental Materials With the privilege of choice comes the burden of responsibility -anonymous Your Business Brigade 2

3 SECTION 1: Introduction & Development Methodology 3

4 PANAMANIAN COMMUNITY Welcome to Panama! Within this section you will learn more about the communities of Eastern Panama where Business Brigades works and develop a sense of their daily life within these communities. As your particular project community may not fit all these characteristics this will at least provide you with a background on the general situation of the region. The average community lies about thirty minutes away from your accommodations travelling down the Pan- American highway. Most communities are fairly centralized in a town-like fashion with fairly decent roads providing year-round access to the communities. All communities are surrounded by tropical lush landscape. Homes vary depending on the community and the primary ethnic identity of the community. Within the indigenous Embera communities you are likely to find wooden structures built on stilts with palm frawn roofs. Indigenous Kuna communities are similar in design, but build their wooden homes on the ground level. In contrast to the traditional indigenous architecture the Campesinos (Latino/ Mestizo) build their homes of concrete blocks with either tin roofing or palm frawns. In many cases, the campesinos will construct hybrid homes consisting of portion constructed out of concrete blocks and a portion constructed out of wood and palm frawns. The typical home has an average of 5 inhabitants. On average, children have access to education within the community up to 6 th grade. After 6 th grade, if children want to continue their education they have to travel between 30 minutes to an hour or more. The average source of income is agriculture with a small variety of alternative economic activities. All agricultural fields are located outside the communities at an average of 1 hour away by foot. Men and teenagers tend to work in the fields while the women tend to the children and the homes. Even within these small communities with limited resources economic disparity is prevalent. This disparity is often a result of factors including education, job type, family outside the community, and access to resources. Within the region there is a credit and savings cooperative located in the town of Torti as well as a formal bank, but with the strict regulations of the bank and limited staffing of the cooperative a large majority of the population within this region do not feel that they have access to these institutions nor do they understand the processes. Limited access to financial resources coupled with limited education and little to no outside support has resulted in a world apart from the booming economic hub of Panama City. It is this lack of access to resources that perpetuates a cycle of poverty. Your Business Brigade 4

5 DEVELOPMENT METHODOLOGY In an effort to increase access to financial resources, business knowledge, and direct support Business Brigades provide business counseling, family financial planning assistance and strategic investment to support under-resourced communities in Panama, which ultimately equips the communities with the tools necessary to drive their own development. Volunteers collaborate with community-based credit and savings cooperatives to provide technical and administrative assistance to local micro-enterprises, entrepreneurs, and whole families. The Business Brigades methodology consists of three primary support pillars: providing access to financial resources via the creation of a community based credit & savings cooperative, financial literacy education, and micro-enterprise development & counseling Financial Literacy Education Credit & Savings Coops Business Development & Counseling To ensure maximum sustainability, Global Business Brigades works extensively in a select number of communities in order to provide continued support and project evaluation. Each Brigade builds upon the last in a continuum providing assistance tailored to the needs of the community. In between Brigades, the incountry team provides follow-up assistance and continued encouragement. GB staff frequently travels out to the community to conduct interviews, hold and attend meetings, and provide technical assistance. The level of interaction between Business Brigades and the various levels society is depicted below. This diagram should help explain how the brigades function on a macro-level to provide sustainable development solutions. National and Federal Government Level Regional Level Responsible for oversight, regulation, and registration. Primary agency: IPACOOP Support of community institutions strengthens the region. Consists of regional government and banking institutions. Community Level Supports families, individuals, businesses and other local organizations. Consists of businesses, committees, and local institutions (School, Cooperative, etc.) Individual and Family Level Families and Individuals. Your Business Brigade 5

6 DEVELOPMENT METHODOLOGY Business Brigades (volunteers) provide educational resources at the community and individual/family levels. Global Brigades staff work to develop the community-based cooperatives on the community level and directly work with IPACOOP on the national level to register and regulate the cooperatives. Although Global Brigades does not directly work on the regional level the support of the community level institutions strengthens the region. Understanding the Credit & Savings Cooperative Credit & savings cooperatives are based on the principal of cooperativism which values collective support to achieve mutual benefits. A primary issue perpetuating the cycle of poverty within Panama is a lack of easily accessible financial resources. With this in mind, Business Brigades aims to break this cycle by providing access to basic deposit and lending services through a village banking model (community based credit and savings cooperatives). Key elements that constitute these credit & savings coops include: Groups of at least 20 people formed by rural men and women pooling their limited funds together to create a financial base for their community. Provides deposit and lending services Drives production and meets daily needs. 100% owned and managed by its members. The concept of this model is simple; rural men and women pool their limited financial resources together to create a base of funds to begin distributing business investment loans. When these loans are repaid with interest more loans are then distributed. The accrued interest of these loans grows the fund of the group allowing them to pay small interest out to the group on their initial investment while growing the general fund simultaneously. Numerous advantages are attained through this model such as the identification of new business initiatives, a greater understanding of collective development on behalf of the community, and a mutually beneficial organization where all the profits remain in the community to be reinvested. These credit and savings cooperatives are completely managed and operated by its members through at least four primary committees: board of directors, credit, vigilance, and education. Opens savings accounts and uses the funds to distribute loans Takes business investment loan and the interest paid back on this loan covers the interest on the savings accounts Your Business Brigade 6

7 DEVELOPMENT METHODOLOGY First Business Brigades Coop in Torti Abajo (under construction) The board of directors is responsible for executive oversight of the cooperative and manages the daily operations, meetings, and various activities of the cooperative. Responsibilities of the credit committee include processing loan applications and assessing applicants on their eligibility. Duties of the vigilance committee consist of loan follow-up, collateral collection, and ensures that all committees of the cooperative are abiding by their rules and regulations as established in their constitution. Lastly, the education committee is responsible for communicating the benefits of the cooperative to the community and providing educational workshops on the various elements of the cooperative. Various lending and deposit products are available through these coops, but for each coop they differ depending on the needs of the community as determined by the members of the coops. This is also the case with interest rate setting. Though there are general interest rate standards in the industry of micro-finance each cooperative must set their own rates. During the orientation portion of your Brigade the particular interest rates of your community will be discussed. Development Process of Cooperatives First Phase Growth Phase Sustainable Growth Phase Promotion of the concept Select those interested Training modules Organization (by-laws, rules, and government) Elect board of directors Pool funds (shares and savings) Strengthening of the institution Managing savings and loans Grow the capital fund External Re-enforcements (seed capital & educational assistance) Accounting and auditing Relationships with outside financial institutions Community development projects Creation of new microenterprises. Global Brigades Involvement: First Phase- Global Brigades in-country staff assist in capacity building of the cooperative. GB staff promote the concept, organize those interested, and reach out to IPACOOP to begin the registration process. Global Brigades provide administrative assistance and initial technical workshops. Growth Phase- During the growth phase Brigades provide external re-enforcement through the use of grant funds to the credit co-op (CIF) and through the execution of educational workshops. Sustainable Growth Phase- Global Brigades acts primarily as a monitoring organization of the coop providing oversight and administrative/technical assistance when needed. Your Business Brigade 7

8 SECTION 2: Financial Literacy 8

9 FINANCIAL LITERACY In our focus region of Eastern Panama, research has shown that a predominantly large portion of the economically active poor do not formally save. Savings mobilization is crucial in order to form sustainable economic development solutions. A culture of savings demonstrates the value of longer time horizons, goal setting, provides for a safety net, and ensures capital funds available for entrepreneurs to take loans or create micro-enterprises. Savings mobilization is directly linked to the success or failure of the credit and savings cooperatives and thus without a financially literate community the longevity of economic development projects ultimately fails. In light of which, Business Brigades, with research assistance from MBA students from University of San Francisco, has created a financial literacy curriculum to be implemented on the household level to directly improve the savings culture of rural Panama which will indirectly benefit the credit and savings cooperatives with which Business Brigades work. Discussion of personal financial topics can be a sensitive issue. Because financial literacy is not a set state of being, but a continuum the following curriculum is meant to equip individuals with the skills and knowledge necessary to make informed financial decisions. As each individual s financial situation is different, and in constant flux due to changing circumstances, the following material should be utilized solely as a framework in which to develop workshops to assist individuals in reaching their financial goals. This material is intended for Business Brigades to utilize as a road map for implementing, tracking, and evaluating financial literacy workshops. The Business Brigades financial literacy curriculum was adapted from the national standards in personal financial education developed by Jump tart Coalition with assistance from the U.S. Federal Reserve Board and consists of 5 sections: 1. Financial Responsibility and Decision Making 2. Income and Careers 3. Planning and Money Management 4. Credit and Debt 5. Saving and Investing Within each section there are various standards/sub-topics which compliment the main topic. Evaluation of the curriculum should be done by assessing an individual s overall competency of each main topic. Benchmarks for evaluating each section are described for each. Following the curriculum overview are a series of teaching the teacher style guides to assist you and your group in developing workshops tailored to the community members developed from this curriculum. Your Business Brigade 9

10 FINANCIAL LITERACY Depicted in the flow chart below are the stages of implementation for the financial literacy curriculum for both Global Brigades staff and brigade volunteers formatted into three stages (prebrigade, during brigade, and post-brigade). Pre: Global Brigades Staff Initial Competency Tests and Assessments are Administered Brigade Volunteer Volunteer Education and Workshop Template Development on Campus During: Implementation of Workshops and Curriculum Material Implementation of Workshops and Curriculum Material Post: Follow-up and Overall Competency Assessment Benchmarks are Administered Share Materials and Experience with other Volunteers and other Schools Contents of Financial Literacy Materials Financial Literacy Topics and Standards Overview Financial Responsibility and Decision Making Income and Careers Planning and Money Management Credit and Debt Saving and Investing Competency Tests Overall Competency Assessment Workshop Templates Teaching the Teacher style guide workshops Your Business Brigade 10

11 FINANCIAL LITERACY Financial Responsibility and Decision Making Overall Competency Benchmark: Ability to apply reliable information and systematic decision making to personal financial decisions. Standard 1: Take responsibility for personal financial decisions 1. List examples of financial decisions and their possible consequences 2. Identify ways to be a financially responsible individual 3. Give examples of the benefits of financial responsibility and the costs of financial irresponsibility 4. Define financial responsibility Standard 2: Make financial decisions by systematically considering alternatives and consequences 1. Rank personal wants/ needs in order of importance 2. Set measurable short-term, medium-term, and long-term financial goals 3. Outline the steps in systematically evaluating alternatives and making a decision 4. Apply systematic decision making to a goal 5. Prioritize personal financial goals 6. Evaluate the results of a financial decision 7. Demonstrate ability to determine the cost of achieving goals 8. Give examples of how decisions made today can affect future opportunities Standard 3: Develop intercommunication strategies for discussing financial issues 1. Explain how discussing important financial matters with household members can help reduce conflict 2. Identify differences among peers values and attitudes about money 3. Discuss pros and cons of sharing financial goals and financial information between partners of a household Standard 4: Control personal information 1. List types of personal information that should not be disclosed to others and the possible consequences of doing so 2. Determine what information should be shared, either within the household, or outside the home Your Business Brigade 11

12 FINANCIAL LITERACY Income and Careers Overall Competency Benchmark: Use a career and/or education plan to develop personal income potential. Standard 1: Explore career options 1. Give examples of entrepreneurs in the community 2. Give an example of how education and/or training can affect lifetime income 3. Compare personal skills and interests to various career options (if applicable) 4. Identify a career goal and develop a plan and timetable for achieving it, including educational/ training requirements, costs, and possible debt (if applicable) 5. Assess the cost-benefit of your career decisions as it relates to your community; whether staying in the community or leaving the community to pursue your goal. Standard 2: Identify sources of personal income 1. Describe all sources of income 2. Define earned income vs. unearned income Your Business Brigade 12

13 FINANCIAL LITERACY Planning and Money Management Overall Competency Benchmark: Ability to organize personal finances and use a budget to manage cash flow. Standard 1: Develop a plan for spending and saving 1. Determine household expenses and sources of income 2. Prepare a personal spending diary 3. Discuss the components of a personal budget, including income, planned saving, taxes, and fixed and variable expenses 4. Given a household, calculate percentages for major expense categories 5. Identify changes in personal spending behavior that contribute to wealth building Standard 2: Develop a system for keeping and using financial records 1. Prepare a personal property inventory and estimated value 2. Set up a household system for record keeping of financial documents Standard 3: Apply consumer skills to purchase decisions 1. Compare prices for the same item at two different stores 2. Explain the relationship between spending practices and achieving financial goals Standard 4: Develop a personal financial plan 1. Determine yearly income for household 2. Determine average monthly expenses for household 3. Develop, monitor, and modify a personal financial plan, including goals, net worth, expenses, savings plan, and budget Your Business Brigade 13

14 FINANCIAL LITERACY Credit and Debt Overall Competency Benchmark: Ability to maintain creditworthiness, borrow at favorable terms, and manage debt. Standard 1: Identify the costs and benefits of credit 1. Explain how interest rate and loan length affect the cost of credit 2. Determine the cost of repaying a loan under various rates of interest and over different periods 3. Explain how debt can be used as an investment 4. Define all requirements and terms for a loan and complete a standard loan application form 5. Given a realistic and applicable scenario, apply systematic decision making to identify the most cost-effective option for purchasing a household item that may require taking a loan Your Business Brigade 14

15 FINANCIAL LITERACY Saving and Investing Overall Competency Benchmark: Ability to implement an investment strategy that is compatible with personal goals. Standard 1: Discuss how saving contributes to financial well-being 1. Describe the advantages and disadvantages of saving for a goal (short-term, medium-term, and long-term) 2. Describe ways that people can cut expenses to save more of their incomes 3. Explain the value of an emergency fund 4. Explain why saving is a prerequisite to investing 5. Identify and compare saving strategies, including paying yourself first 6. Develop a definition of wealth based on personal values, priorities, and goals Standard 2: Explain how investing builds wealth and helps meet financial goals 1. Give an example of an investment and explain how it can grow in value 2. Apply systematic decision making to determine when cash not needed for shortterm spending or emergencies 3. Define the time value of money and explain how small amounts of money invested regularly over time grow exponentially 4. Calculate and compare simple interest and compound interest 5. Explain why games of chance are not good investments for building wealth Your Business Brigade 15

16 Tiene los conocimientos básicos acerca de la responsabilidad financiera, pero es incapaz de definir el término o dar Responsibili ejemplos. dad Financiera El individuo tiene metas, pero es incapaz de definir claramente o de Desarollo de una manera coherente, que es Metas consistente con nuestro concepto de corto plazo, mediano plazo y objetivos a largo plazo. Costos de Metas Entiende la importancia de la evaluación de alternativas en las Evaluación decisiones financieras, pero de no necesariamente lo hacen y es Alternativas incapaz de proporcionar ejemplos de cómo iban a evaluar las al tomar alternativas. Decisiones Financieras? Sección 1: Responsabilidad Financiera y la Toma de Decisiones Desarrollo de Capacidades Desarrollo de Desarrollo de Capacidades Básicas Necesario o Ninguno Capacidades Avanzadas Indicadores Intermedias Necesarias Necesarias - 3 Capacidad Fuerte - 4 N/A 1ª Observación 2ª Observación El individuo es capaz de definir la responsabilidad financiera, pero es incapaz de dar ejemplos. El individuo es capaz de definir la responsabilidad financiera y es capaz de ofrecer ejemplos básicos para apoyar a su definición. Tiene un profundo conocimiento de una persona financieramente responsable, entiende el valor de la evaluación de las decisiones financieras y es capaz de dar ejemplos de responsabilidad financiera. El individuo tiene metas, pero no está claro si estos objetivos son realistas o cuáles son los pasos para lograr estos objetivos. Ha definido claramente a corto plazo, mediano plazo, y / o a largo plazo,pero no necesariamente conoce los pasos para lograr estos objetivos. Tiene objetivos claramente definidos que se pueden obtener dentro de los plazos establecidos y entiende las medidas necesarias para lograr estos objetivos. El individuo no está claro sobre los costos de la ejecución de sus objetivos y no entiende que hay costos asociados con el logro de sus objetivos. Entiende que para lograr sus objetivos hay costos asociados para realizar sus metas, pero no muestra un conocimiento de los costos básicos. Muestra una comprensión de los costos básicos asociados con el logro de sus objetivos. Muestra una sólida comprensión de todos los costos necesarios para alcanzar sus objetivos. Muestra los conocimientos básicos sobre la evaluación de decisiones financieras,pero es incapaz de definir su método para hacerlo y no es capaz de dar ejemplos. Muestra la capacidad de evaluar las decisiones financieras de manera sistemática a través de ejemplos, pero es incapaz de definir con claridad el método para hacerlo. Tiene un método sistematico definido para evaluar las decisiones financieras y es capaz de proporcionar ejemplos de cómo utilizar esto. Total de Puntos: 3ª Observación 16

17 Desarrollo de Capacidades Básicas Necesario o Ninguno Indicadores - 1 Importancia de la Educacion El Saber de Ingreso No muestra los conocimientos básicos en cuanto a la comprensión de la diferencia entre los El Saber de ingresos obtenidos y los ingresos devengados. Ingresos Obtenidos y Devengados Carece de los conocimientos básicos de cómo la educación puede afectar los ingresos. Es incapaz de definir con claridad sus fuentes de ingresos Sección 2: Ingresos y Trabajos Desarrollo de Capacidades Intermedias Necesarias - 2 Desarrollo de Capacidades Avanzadas Necesarias - 3 Capacidad Fuerte - 4 N/A Entiende que la educación afecta a Es capaz de ofrecer un ejemplo los ingresos pero no sabe cómo básico de cómo la hacerlo. educación afecta los ingresos. Es capaz de ofrecer un ejemplo claro de cómo la educación mejora la propia capacidad para ganar un ingreso más alto. Muestra una sólida comprensión de cómo la educación puede afectar los ingresos de manera positiva. Es capaz de explicar las fuentes de Es capaz de explicar las ingresos relacionadas con las fuentes de ingresos actividades económicas relacionados con las primarias, pero no incluye las actividades primarias y las actividades del día de trabajo o los actividades del día de programas de gobierno, las trabajo, pero no incluye los remesas, o asistencia programas de gobierno, las financiera adicional. remesas, o asistencia financiera adicional Es capaz de explicar todas las fuentes de ingresos (incluyendo pero no limitado a la agricultura, la ganadería, el trabajo de los programas de gobierno, las remesas familiares, y la construcción o la madera) Entiende la diferencia Es capaz de explicar con fundamental de los claridad la diferencia entre los ingresos obtenidos y devengados. ingresos devengados y no No entiende que devengados, pero no entiende estas cuentas combinadas sean necesariamente que estos por los ingresos totales y en general es su cuenta todos los ingresos incapaz de proporcionar totales misma. Además, son necesariamente ejemplos de cada capaces de proporcionar por uno (los ingresos obtenidos y lo menos un ejemplo de cada devengados) uno (los ingresos devengados y no devengados) Es capaz de explicar con claridad la diferencia entre los ingresos y los ingresos no ganados, y reconoce que todos estos subterfugios para el total del ingreso total. Además, es capaz de proporcionar ejemplos de los ingresos obtenidos y los ingresos devengados. Total de Puntos: 1ª Observación 2ª Observación 3ª Observación 17

18 Sección 3: Manejando del Dinero y Planificación Desarrollo de Capacidades Desarrollo de Desarrollo de Capacidades Básicas Necesario o Ninguno Capacidades Avanzadas Indicadores Intermedias Necesarias Necesarias - 3 Capacidad Fuerte - 4 N/A El Saber de Gastos No está claro sobre el total de gastos para el hogar por más de una semana. Esta persona se esfuerza para determinar los gastos frente a los ingresos durante un período de tiempo y no el seguimiento de cualquier información financiera para el hogar. Después de mucho esfuerzo es capaz de determinar los gastos básicos para el hogar. No realiza un seguimiento de ingresos o gastos. Es capaz de determinar los gastos de la casa contra los ingresos por un período de tiempo después de pensarlo. No controla los gastos para el hogar. Es capaz de mostrar con claridad los gastos de la casa contralos ingresos durante un período dado de tiempo con facilidad. Utiliza algún método de presupuesto para el seguimiento de esta información. La Relación No está claro sobre la relación entre Es capaz de ofrecer una entre el gasto y el logro de sus objetivos. explicación básica de la Gastos y qué relación entre el gasto y el logro Tiene que de sus objetivos. Hacer a Realizar sus Metas Entiende que su gasto afectará directamente la forma en que son capaces de alcanzar sus metas financieras en el futuro, pero no se refiere a ahorro. Muestra un conocimiento claro en relación con el gasto y entiende que la gestión de su dinero de manera responsable, incluido el ahorro, es esencial para alcanzar sus metas financieras. El Saber de Ingreso Anual Es incapaz de determinar su ingreso anual. Después de mucho esfuerzo y con ayuda es capaz de determinar el ingreso anual por sí mismos, pero no necesariamente el de familia. Con cierto esfuerzo, pero sin Es capaz de determinar los ayuda, es capaz de ingresos anuales con cierta determinar los ingresos facilidad por lo menos a sí anualespor sí mismos (pero no mismos, si no su familia. necesariamente de su familia) Total de Puntos: 1ª 2ª 3ª Observación Observación Observación 18

19 Indicadores Teniendo en cuenta la situación, aplicar el decisión sistemática de decisiones para identificar la mayoría de la opción rentable para la compra de un artículo del hogar que pueden requerir tomar un préstamo Escenario: Sección 4: Credito y Deudas Desarrollo de Capacidades Básicas Necesario o Ninguno - 1 Desarrollo de Capacidades Intermedias Necesarias - 2 Desarrollo de Capacidades Avanzadas Necesarias - 3 Capacidad Fuerte - 4 N/A No muestra una capacidad de evaluar las diferentes fuentes de crédito a fin de evitar una deuda inpagable. Entiende la manera de evitar una deuda inmanejable por medio del crédito, pero no lo define con un método sistemático para definir. Entiende los fundamentos del Muestra claramente la crédito, teniendo en cuenta las capacidad de ganancias que pueden ser evaluar las diferentes obtenidos por la fuentes de crédito de empresa (duro / soda) y los forma sistemática con costos, pero no muestra un facilidad y llega a una método sistemático claro para conclusión bien evaluar las opciones de pensada sobre la mejor financiamiento. manera de entrar en deuda manejable teniendo en cuenta los costos y los beneficios de la empresa (Duro / soda). Quiere comprar un refrigerador para su hogar pero también quiere comenzar a vender duros o sodas a sus vecinos. El refrigerador cuesta 600 y solo tienes 200 para comprarlo ahora. Entonces, quiere sacar un préstamo para cubrir los restantes 400. Considerando sus opciones financieras actuales (Intermediarios Hindú, Cooperativa Comunitaria, Banco Azteca, cualquier) cual es su mejor opción para comprarlo sin agravar su deuda? Total de Puntos: 1ª 2ª 3ª Observación Observación Observación 19

20 Desarrollo de Capacidades Básicas Necesario o Ninguno Indicadores - 1 Fondo Emergencia No entiende la importancia de los ahorros relacionados con el La desarrollo de negocios y el logro Importancia de metas financieras. de los Ahorros Es incapaz de proporcionar un ejemplo de una inversión o de explicar cómo se puede crecer El Saber de en valor Inversiones No entiende la importancia de un fondo de emergencia y actualmente no tiene. Sección 5: Ahorrar e Invertir Desarrollo de Capacidades Intermedias Necesarias - 2 Desarrollo de Capacidades Avanzadas Necesarias - 3 Capacidad Fuerte - 4 N/A Entiende la importancia fundamental de contar con un fondo de emergencia, pero actualmente no tiene. Entiende la importancia fundamental de contar con un fondo de emergencia y de alguna forma en la actualidad tiene un fondo de emergencia. Explica con claridad y entiende la importancia de tener un fondo de emergencia y actualmente cuenta con un fondo de emergencia con fácil acceso. Comprende la importancia básica de los ahorros relacionados con el desarrollo de negocios y el logro de metas financieras, pero no puede definir con claridad por qué. Puede definir qué ahorro es importante para el desarrollo de negocios y el logro de metas financieras. Muestra una sólida comprensión de que el ahorro es esencial para la formación de pequeñas empresas con el fin de proveer el capital inicial o de la garantía para obtener préstamos. Es capaz de ofrecer un ejemplo de una inversión, pero no se puede explicar con claridad la forma en que crece en valor. Es capaz de ofrecer un ejemplo básico y la explicación de la inversión y cómo se puede crecer en valor. Es capaz de ofrecer un ejemplo de una inversión y explicar exactamente cómo se puede crecer en valor. Total de Puntos: 1ª Observación 2ª Observación 3ª Observación 20

21 Business Brigades Workshop Development Financial Literacy Curriculum: Financial Responsibility and Decision Making

22 Section 1: Financial Responsibility and Decision Making Overall competency benchmark: Ability to apply reliable information and systematic decision making to personal financial decisions. Number of Workshops: 2 Approx. time of delivery 1-2 hours per workshop Standards covered: 4 At the end of each workshop there is a section entitled Delivery of Workshop which is intended to provide helpful tips and examples of how to approach the material. Please use these examples of how to implement the material as a starting point for your group to begin brainstorming other creative approaches of this material. Workshop 1: Covering Standards 1 & 2 The first workshop will cover standards 1 & 2 and should last between 1 to 2 hours. Materials Needed: Paper, pens, poster board, markers. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 1: Take Responsibility for Personal Financial Decisions The following four items should be covered with the family. Have a conversation with the family to gauge the understanding of financial decision making. Financial decisions will vary person to person depending on personal values and economic situations, so keep that it mind! Though all four items listed below need to be covered prior to advancing onto the next session, do not rush through any material. Take the time to ensure that the participants fully understand any and all topics. 1 Financial decisions and possible consequences What is a financial decision? Illicit examples Demonstrate that decisions have consequences, whether good or bad, by drawing a connection between a decision and its outcome 2 Identify ways to be a financially responsible individual Relate to the examples the family listed 3 Give examples of the benefits of financial responsibility and the costs of financial irresponsibility Remember to work the family s behavior and decisions into your examples 4 Define financial responsibility How does the family define financial responsibility? Remember there are several components to financial responsibility: living within one s means, good credit, saving, and budgeting.

23 Standard 2: Considering Alternatives and Consequences Standard 2 builds upon Standard 1 by supporting the individual to systematically consider alternatives and consequences of financial decision making. Several of the items below are activities to go through with the family and/or individual with the end goal in mind that the individual will have a greater understanding of how to evaluate varying financial actions. 1.Rank personal wants/ needs in order of importance 2. Set measurable short-term, medium-term, and long-term financial goals 3. Outline the steps in systematically evaluating alternatives and making a decision 4. Apply systematic decision making to a goal 5. Prioritize personal financial goals 6. Evaluate the results of a financial decision 7. Demonstrate ability to determine the cost of achieving goals 8. Give examples of how decisions made today can affect future opportunities Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). In situations such as these it is best to turn everything into a visual representation. For example, when discussing decisions and consequences a visual may be helpful to show the connection between spending money on lottery tickets and having less money to spend on school fees. This is why poster, paper and markers are helpful! Draw the Journey This activity is helpful in illustrating the connection between a decision and its outcomes/consequences. Draw out each step of the process, from evaluating alternative decisions, to the decision, and its outcome. Explain all the steps first then jumble up all the pictures and ask the community member to put them back in order. Try changing out one decision for a worse or better decision and examine the resulting outcome!

24 Delivery of Workshop Work with the family on their personal financial contract. Have the family add their definition of financial responsibility and ways they identified to be financially responsible. Are there pictures or examples that can be included in the contract for the family to look back on and review? Add their financial goals (short, medium, and long term). Use the SMART Goals framework to create goals. There is more information about goal setting at the end of this packet. SMART Goals Framework Specific- What will I do? (Who, what, where, why?) Measurable- How will I know I am finished? Attainable- Is my goal realistic? Relevant- Is my goal necessary for what I want to achieve in the end (long-run)? Time-bound- When will I do it? In Spanish Smart goals - Metas intelligentes S- Especifica M- Medible A- Realista R- Relevante T- fronterras de tiempo (en un plazo determinado)

25 Workshop 2: Covering Standards 3 & 4 Workshop 2 will cover standards 3 & 4 and should last between 1 to 2 hours. Materials Needed: Paper, pens, poster board, markers. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 3: Discussing Financial Issues 1. Explain how discussing important financial matters with household members can help reduce conflict 2. Identify differences among peers values and attitudes about money 1. Are there similar values and attitudes in the community and/or family that influence the individual? 3. Discuss pros and cons of sharing financial goals and financial information between partners of a household Standard 4: Control of Personal Information 1. List types of personal information that should not be disclosed to others and the possible consequences of doing so. 2. Determine what information should be shared, either within the household, or outside the home. Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). In situations such as these it is best to turn everything into a visual representation. For example, when discussing decisions and consequences a visual may be helpful to show the connection between spending money on lottery tickets and having less money to spend on school fees. Use the Draw the Journey activity. This is why poster, paper and markers are helpful! Work with the family on their personal financial contract. Have them write down the pros and cons or sharing financial goals and information. Make sure they have written which information can be shared within and outside of the home.

26 Keep operational goals small - Keep the low-level goals that you're working towards small and achievable. If a goal is too large, then it can seem that you are not making progress towards it. Keeping goals small and incremental gives more opportunities for reward. Set performance goals, not outcome goals - You should take care to set goals over which you have as much control as possible. It can be quite dispiriting to fail to achieve a personal goal for reasons beyond your control! In business, these reasons could be bad business environments or unexpected effects of government policy. In sport, they could include poor judging, bad weather, injury, or just plain bad luck. If you base your goals on personal performance, then you can keep control over the achievement of your goals, and draw satisfaction from them. Set realistic goals - It's important to set goals that you can achieve. All sorts of people (for example, employers, parents, media, or society) can set unrealistic goals for you. They will often do this in ignorance of your own desires and ambitions. It's also possible to set goals that are too difficult because you might not appreciate either the obstacles in the way, or understand quite how much skill you need to develop to achieve a particular level of performance. Source: Mindtools.com

27 Business Brigades Workshop Development Financial Literacy Curriculum: Income and Careers

28 Section 2: Income and Careers Overall benchmark: Use a career and/or education plan to develop personal income potential. Number of workshops: 1 Approximate time of Delivery: 1-2 hours Standards covered: 2 Materials Needed: Paper, pens, poster board, markers. At the end of each workshop there is a section entitled Delivery of Workshop which is intended to provide helpful tips and examples of how to approach the material. Please use these examples of how to implement the material as a starting point for your group to begin brainstorming other creative approaches of this material. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 1: Explore Career Options Cover the following topics during a conversation with your family. Research examples of how training and education can affect lifetime income and have examples ready to share. 1. Give examples of entrepreneurs in the community 2. Identify sources of employment in the community and surrounding area. 3. Give an example of how education and/or training can affect lifetime income. Have an example researched. 4. Compare personal skills and interests to various career options (if applicable). Consider creating a method to interview and evaluate the community member and find out what are his/her personal skills and interests. 5. Identify a career goal and develop a plan and timetable for achieving it, including educational/ training requirements, costs, and possible debt (if applicable). What are their dreams and ambitions? 6. Assess the cost-benefit of a career decision as it relates to the community; whether staying in the community or leaving the community to pursue your goal.

29 Standard 2: Identify Sources of Personal Income 1. Describe all sources of income Define income: an activity that produces income. In other words, activities that provide you and your family with the money it spends on food, housing, school, cloths, transportation, cell phones, etc. Make sure to ask questions about income earned from steady employment, odd jobs, extended family, governmental assistance, land (real estate or farm land) etc. 2. Define earned income vs. unearned income Earned income: received in exchange for work or services provided. Salary, wages, paychecks Unearned income: cash or benefits received without being required to perform work or services. 100 por 60 ( 100 social security benefit for citizens over age 60) Common sources of income in the Torti region: agriculture, forestry, employment in a store in town, construction, selling goods. Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). In situations such as these it is best to turn everything into a visual representation. This is why poster, paper and markers are helpful! Uncovering Resources Together, work with the family members to map our the community s resources in terms of opportunities for employment. If you are working with someone who has an entrepreneurial spirit, the activity could be expanded to see what type of business opportunities exist within the area. Is there a need for a certain service or product that this person could provide? What s on My Plate Provide the family a paper plate and work with them to divide up the paper plate into categories of income. This activity will help demonstrate where their income comes from and how much of the whole pie come from wages versus benefits.

30 Business Brigades Workshop Development Financial Literacy Curriculum: Planning and Money Management

31 Section 3: Planning and Money Management Overall benchmark: Ability to organize personal finances and use a budget to manage cash flow. Number of workshops: 2 Approximate time of Delivery: 1-2 hours per workshop Standards covered: 4 At the end of each workshop there is a section entitled Delivery of Workshop which is intended to provide helpful tips and examples of how to approach the material. Please use these examples of how to implement the material as a starting point for your group to begin brainstorming other creative approaches of this material. Workshop 1: Standards 1 & 4 Materials Needed: Paper, pens, poster board, markers. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 1: Develop a plan for spending and saving Cover the following topics during a conversation with your family. This is will a sensitive conversation, so keep that in mind. This standard will require you to ask many questions, but include the community member in your calculations of expense categories, etc. 1. Determine household expenses and sources of income Identify categories of expenses and sources of income Determine annual and monthly income and expenses 2. Prepare a personal spending diary 3. Discuss the components of a personal budget, including income, planned saving, taxes, and fixed and variable expenses 4. Given a household, calculate percentages for major expense categories Include the member in the process of calculating the categories, if possible. 5. Identify changes in personal spending behavior that contribute to wealth building.

32 Standard 4: Develop a personal financial plan 1. Develop, monitor, and modify a personal financial plan, including goals, net worth, expenses, savings plan, and budget. Include behaviors from spending diary and the story book from Standard 1. Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). When explaining a topic sometimes it is best to turn everything into a visual representation. This is why poster, paper and markers are helpful! After you have identified sources of income and categories of expenses, use the What s on My Plate activity to illustrate how the income and expenses make up the family s budget. What s on My Plate The family member receives a paper plate. On that plate, the group will work with the family to draw or pie chart all their expenses (income), broken-up into categories. This visual representation of how their income is used (or where it comes from) will help them decide how much they can commit to save. Work with the family to fill out the daily spending diary page. This page can be adapted to reflect weekly or monthly spending. Can you adapt the page to better fit the family s needs? Develop the family s personal financial plan. Help them identify the components of their budget. Make sure to include their financial goals or help them to develop goals, if this isn t previously completed. Develop an anecdote or story book of a character changing spending behaviors and benefiting from said change.

33 Business Brigades Workshop Development Financial Literacy Curriculum: Credit and Debt

34 Section 4: Credit and Debt Overall benchmark: Ability to maintain creditworthiness, borrow at favorable terms, and manage debt. Number of workshops: 1 Approximate time of Delivery: hour Standards covered: 1 Materials Needed: Paper, pens, poster board, markers. At the end of each workshop there is a section entitled Delivery of Workshop which is intended to provide helpful tips and examples of how to approach the material. Please use these examples of how to implement the material as a starting point for your group to begin brainstorming other creative approaches of this material. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 1: Identify the Costs and Benefits of Debt Cover the following topics during a conversation with your family. This is will a sensitive conversation, so keep that in mind. Consider creating a informative pamphlet about credit and debt. 1. Explain how interest rate and loan length affect the cost of credit 2. Determine the cost of repaying a loan under various rates of interest and over different periods Create several examples an switch out principle, interest rate, repayment period. 3. Explain how debt can be used as an investment 4. Define all requirements and terms for a loan and complete a standard loan application form What are the requirements for a loan from the local community bank. 5. Given a realistic and applicable scenario, apply systematic decision making to identify the most costeffective option for purchasing a household item that may require taking a loan

35 Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). When explaining a topic sometimes it is best to turn everything into a visual representation. This is why poster, paper and markers are helpful! Examples Diagrams are helpful in creating visual representations of budgets and repayment plans. Think about using the What s on My Plate activity to include a monthly loan payment into the family s expenses. What would the family s expense categories look like now? Create a pamphlet explaining the terms of a loan. Make sure it demonstrates how different interest rates and length of the loan will affect the payments. To illustrate the process of applying for a loan and paying off debt use the Draw the Journey activity Draw the Journey When presenting on a process (such as applying for a loan and paying it off, etc), prepare a picture for each step in the process. Explain the process to the household. Then jumble up the order of the pictures and have the household put them back in order while asking them to explain each step in the process. Work with the family on their personal financial contract. How will credit and debt fit into this financial contract to help the family achieve their financial and other goals? This is an interactive activity that engages and empowers the individual.

36 Business Brigades Workshop Development Financial Literacy Curriculum: Saving & Investing

37 SAVING AND INVESTING Section 5: Savings and Investments Overall benchmark: Ability to implement an investment strategy that is compatible with personal goals. Number of workshops: 1 Approximate time of Delivery: 1-2 hours Standards covered: 2 Materials Needed: Paper, pens, poster board, markers. At the end of each workshop there is a section entitled Delivery of Workshop which is intended to provide helpful tips and examples of how to approach the material. Please use these examples of how to implement the material as a starting point for your group to begin brainstorming other creative approaches of this material. Remember to begin each meeting with a friendly conversation or icebreaker to build trust and ease the flow of communication. For reference on various icebreakers please review 100 Ways to Energise Groups: Games to Use in Workshops, Meetings and the Community. Standard 1: Discuss How Saving Contributes to Financial Well-being Cover the following topics during a conversation with your family. This is will a sensitive conversation, so keep that in mind. Consider creating a informative pamphlet about savings and savings accounts. 1. Describe the advantages and disadvantages of saving for a goal (short-term, medium-term, and long-term) 2. Describe ways that people can cut expenses to save more of their incomes You may have to converse with the family to figure out their typical expenses. 3. Explain the value of an emergency fund 4. Explain why saving is a prerequisite to investing 5. Identify and compare saving strategies, including paying yourself first What are the different savings strategies available for the individual? Enumerate the differences & benefits between strategies. 6. Develop a definition of wealth based on personal values, priorities, and goals

38 SAVING AND INVESTING Standard 2: 1. Give an example of an investment and explain how it can grow in value 2. Apply systematic decision making to determine which cash is not needed for short-term spending or emergencies 3. Define the time value of money and explain how small amounts of money invested regularly over time grow exponentially 4. Calculate and compare simple interest and compound interest 5. Explain why games of chance are not good investments for building wealth Delivery of Workshop Some of these topics are not as easy as just Q and A. For a few of these topics you will need to work with the family to determine the answer (for many in rural Panama, the topics presented here will be the first time these individuals are asked about such things). When explaining a topic sometimes it is best to turn everything into a visual representation. This is why poster, paper and markers are helpful! Diagrams are helpful in creating visual representations of budgets and repayment plans. Use the What s on my plate activity to create a visual representation of the family s expenses. And then they can determine where to cut spending and start saving. What s on My Plate The family member receives a paper plate. On that plate, the group will work with the family to draw or pie chart all their expenses, broken-up into categories. This visual representation of how their income is used will help them decide how much they can commit to save. Create a pamphlet explaining what a savings account it. Make sure it demonstrates that money in a savings account can grow in value. To illustrate the process of opening a savings account and earning interest, use the Draw the Journey activity Draw the Journey When presenting on a process (such as opening a savings account, depositing money, earning interest, etc), prepare a picture for each step in the process. Explain the process to the household. Then jumble up the order of the pictures and have the household put them back in order while asking them to explain each step in the process.

39 SAVING AND INVESTING Delivery of Workshop It is suggested to approach these concepts through the use of analogies and anecdotes. For example, A penny saved is a penny earned, Pay yourself first and Grasshopper and the Ant: There is an ant and a grasshopper who are neighbors. All summer the ant works at collecting food while the cricket sits back, relaxing and eating the summer bounty. Everyday the cricket makes fun of the ant for working so hard during the summer when he should be relaxing like the grasshopper. The ant explains that he is the wiser one because when the harsh winter comes he will be prepared in case there is no food. When the winter does come, it is a particularly harsh winter and there is no food to be found. The ant is prepared and his savings has paid off while the grasshopper starves out in the cold. Filling Your Glass: In this example, imagine there is empty glass (or bucket). The glass represents the person s savings account, and the top of the glass represents a goal. Each week the person puts a little water into the glass. The glass is slowly filled (representing the saving and accumulation of water). Each week the level of water rises and the person is closer and closer to reaching the goal. You can further expand this example to include getting a loanif the person reaches a certain level in the glass he/she may be able to take out a loan for the rest of the amount. Work with your group to create simple and applicable anecdotes! Work with the family to further fill out their personal financial contract. How will savings and investment fit into this financial contract to help the family reach its financial and non-financial goals?

40 SECTION 3: Business Education & Counsel 40

41 BUSINESS ED. & COUNSEL Reasons to Promote Micro-Enterprises Around the world, millions of low-income entrepreneurs are building better lives for themselves and their families by starting and expanding tiny businesses. The vast informal sector of the economy is comprised of micro-enterprises, micro-businesses with one to 10 workers, including the owner. Poor families launch micro-enterprises to generate income, build savings, and acquire assets as a cushion against natural disasters, illness or death, and other crises. As these enterprising households pull themselves out of poverty, they can improve their access to safe drinking water and more nutritious food, improve their housing, and educate their children. This is grass-roots development. * Micro-enterprises provide most of the goods and services that meet people s basic needs in developing and redeveloping countries (such as the former Soviet states). * Often micro-enterprises are the only economic organizations that function in a time of crisis. * Micro-enterprises require small amounts of capital to enter the market and produce results quickly. * The small size of micro-enterprises makes them simple to operate. * Micro-enterprises use local products and skills. * Micro-enterprises are labor intensive and create jobs. * Micro-enterprises improve the income of the entrepreneurial poor. * Micro-enterprises are a catalyst for comprehensive community economic development. There are more than 1 billion micro-enterprises worldwide. The income from these micro-businesses enables the working poor to take some control over their lives. Additionally, the benefits of microenterprise development extend to the broader society. In both transition economies and the developing world, micro-enterprises play an important role in the nation s economic growth and job creation for those unable to find employment in the formal sector. Through micro-enterprise, the poor become business owners, build assets, and invest in their communities. International private volunteer organizations (PVOs), indigenous non governmental organizations (NGOs), and government-sponsored development organizations, such as the United Nations Development Programme (UNDP), the World Bank, and the U.S. Agency for International Development (USAID), all realize the value in helping to create and sustain micro-enterprises. People cannot be developed, they can only develop themselves. Julius Nyerere Assistance for Micro-Enterprises Falls into Three Broad Categories 1. Financial services credit and savings: microfinance institutions (MFIs), usually indigenous NGOs, are the direct providers of credit and saving services. International PVOs and government development agencies frequently provide MFIs with capital and technical assistance until the MFIs can become selfsustaining. Your Business Brigade 41

42 BUSINESS ED. & COUNSEL 2. Nonfinancial services business development services (BDS): nonfinancial services include: entrepreneurship training, consulting services, information technology assistance, etc. Ideally, these services also are provided by local organizations with international PVOs and government development organizations supporting the projects only until they can become self-sustaining. 3. Subsector targeting: often a number of micro-enterprises operate in the same subsector. Intervening to improve the subsector can increase the profitability of a large number of similar micro-businesses. Analysis of a subsector may result in efforts to expand markets, improve production methods, introduce new raw materials, and/or work to secure more favorable or less restrictive regulations for the subsector. All three approaches are valid and, when implemented appropriately, effectively millions of microentrepreneurs have been reached through micro-financial services. Through the implementation of your Business Brigade project you will be directly providing financial services as administered through the cooperative and nonfinancial services through your role as a Business consultant or counselor. The Role of a Brigader as a Business Counselor Generally, counselor is a more appropriate role for a brigader than consultant or advisor when working directly with micro-enterprise owners and managers. An understanding of the words advising, consultancy, and counseling - as used in the field of development - helps explain why counselor is the preferred role. Consultancy is expert advice on specialized technical and managerial issues, provided by a skilled and experienced consultant who appraises the situation and recommends a course of action. For a long time, consultancy was the standard model used by small and medium enterprise development agencies. However, in recent years, there has been increased concern over a number of aspects of consultancy: An expert s recommendations from another country are not necessarily valid in a developing or redeveloping country. Bad advice, if taken, can be devastating to a struggling small business. There is often a social and cultural distance between the consultant and the local businessperson that prevents the local businessperson from sharing information with the consultant. As a result, many consultants are unable to offer effective recommendations and do their jobs right. Consultancy, particularly where it is free of charge or heavily subsidized, is not accepted by micro- and small-business owners. And, last but not least, consultancy can lead to dependency. When small- and micro-business owners come to depend on consultants to fix their problems they are not building the management capacity to run their businesses. Advising is to offer advice, to recommend, or suggest. It differs from consulting in that the advisor is not necessarily an expert. Nevertheless, most of the concerns are the same.. Your Business Brigade 42

43 BUSINESS ED. & COUNSEL A foreign advisor s advice, recommendations, or suggestions may not be appropriate under different economic conditions. A foreign advisor is apt to encounter the same reluctance with information sharing as a consultant Free of charge advising may be viewed with suspicion. Business owners question the motives behind the advice and the value of the free advice. Advising can lead to a dependency situation rather than capacity building. Counseling is a guided process of self-discovery, whereby the counselor guides and helps the client identify problems, opportunities, and resources, define options, and select a course of action. It could also be described as coaching for micro-enterprise owners with the view to strengthening their entrepreneurial capacity and competence. Counseling requires a high level of interpersonal skills, such as being able to listen, empathize, communicate, and motivate. Counseling, too, raises concerns. Counselors from big businesses or those with a high level of business education can find it difficult to pursue a capacity-building process of counseling and sometimes revert to telling the business owners the solutions to their problems. Encouraging people to learn for themselves takes patience and a lot of time. It is hard to obtain direct payment from clients for counseling services, since the business owner may not see a direct product of the counseling (e.g., in the form of a business plan or written report offering recommendations). It is more difficult to assess the benefits of counseling, since capacity-building outcomes are often not as tangible as monitoring and evaluating business improvements based on consulting or advising recommendations. Counseling also offers grassroots capacity-building opportunities. In the ideal situation, your counterpart as well as micro- and small-business owners benefit from your counseling efforts. During the business counseling process you have ample opportunities to: share technical skills, share American culture, and gain firsthand experiences about local life and culture to share with friends and family when you return to the United States. Challenges Faced by Micro-Enterprises Now we turn our attention to some common concerns of these small- and micro-businesses. Businesses need capital, suppliers, equipment, buildings, customers, employees, and, above all, proper management. We shall investigate how we can find out the needs of any specific business, and we shall see that they do not always need what they believe they need. Nevertheless, small- and microbusinesses do face difficulties. In particular: Capital: most entrepreneurial business people are short of capital, since they have more ideas than they have money to put them into effect. Nearly all small business people state that their biggest, or even their only, problem is shortage of capital. This is not always correct. Banks may not be an option if the business lacks collateral to secure a loan or the loan is too small or too risky to justify a bank s transaction cost. Families may be willing to lend money, but when this source is exhausted the small company needs to turn elsewhere. MFIs may be the solution since their mass-marketing lending methods allow them to make small loans at a reasonable cost. Your Business Brigade 43

44 BUSINESS ED. & COUNSEL Customers: every business needs customers, but micro- and small- business people often find it particularly difficult to sell enough of their products or services to keep them busy and earn a reasonable living. They cannot afford to hire professional salespeople or advertise; big international companies are not competing in remote rural markets, and the small-businesses are at a disadvantage even in their own villages. They are far less able to sell their goods in the growing urban areas, where people often need the products, because the large firms can afford to use modern marketing tools. The Internet may offer some hope. Particularly in the craft market, small rural craftspeople are able to access national and international markets through the Internet. Access to and an understanding of the Internet can open new markets for previously isolated businesses. Another possibility is for a small business to join with other businesses to reach more customers than it is possible to reach on its own. The quality of goods or services may cause customers to purchase someplace else, but often it is a lack of customer service that turns customers away. Microenterprise owners may not realize that how they treat their customers has as much to do with their sales as the products and services themselves. Joint activities: small-business people often need to cooperate with one another to obtain reliable and economical supplies of raw materials, to market their goods, and to present their views to government and the general public. Individually it is difficult to order large amounts of raw materials and get quantity discounts, market their products outside their local area, and be heard by government and the public. Yet, any form of cooperation requires initiative from an experienced person who has the time and ability to organize it. Frequently, the only way micro- and small-businesses can compete with larger ones for sources of supply, for markets, and for government attention is through cooperative efforts. Information: micro- and small-businesses are often unable to take advantage of services provided by government, development agencies, or NGOs because they do not know about them. They may also lack information on emerging markets for their services and products. Here again joint activities and the Internet help bridge the communications gap, as does the radio in rural Honduras, MFIs informing their clients of training and marketing opportunities, and development organizations like Global Brigades. Management: finally, and most important, micro- and small-business people are in need of management assistance. They must compete with managers and management techniques, which have been tried and tested in large firms. We have already defined small business as those where management is, in a sense, a part-time activity, carried on by someone who is mainly a craftsperson or a shop assistant. Smallbusinesses cannot afford to hire full-time managers, so their owners have to learn to do it themselves. Micro-businesses are often new operations, and children have not had the opportunity to learn from their parents. Small-business people sometimes need more capital, but they nearly always need management training. Better management can help them make better use of their limited capital. Many small-business people fail to realize that if they do get a loan they will have to repay it with heavy interest charges. Better management can also help them identify low cost marketing techniques and design their products and services to appeal to their customers. As you start working with a small-business owner or manager, be a detective. Through observation and conversations discover what would make the business more profitable and able to grow - more capital, additional customers, better access to marketing and technical information, joint activities with other small business people, or improved management. You must be able to do more than pass on standard business advice and check that it is followed on subsequent visits. A good business counselor is a sort of business doctor who can examine each patient individually, diagnose the problems, and then ask the right questions to help the business owner or manager figure out the remedies to heal them. Your Business Brigade 44

45 BUSINESS ED. & COUNSEL Micro-Enterprise Owner Capacity Building Capacity is the ability to put ideas into action. Micro-enterprise owners and managers often have great ideas, but they lack the ability to put those ideas into action. They often lack the ability to calculate cost, to attract customers, to deal with relatives, to form links with similar businesses, etc. These microenterprises and their owners/managers are a diverse lot, and of course their competencies also differ. However, there are certain basic changes that would increase the capacity of most microenterprise owners/managers. 1. Changes in attitudes and behavior, not just an increase in knowledge. We want the business owner to perform better and not merely to be able to pass an examination in management. 2. Ability to analyze their own situations. It is not enough to learn facts about business in general. They must see how these teachings apply to their own businesses. 3. Evidence of bigger profits. Appealing to the profit motive is a learning motivator. We may not see financial reports showing higher profits; micro-enterprise owners/managers are reluctant to share this information, but we may see improvement in business facilities, more employees, or improvement in living conditions of the owner s family. 4. Willingness to practice what they are learning on their own. Micro-enterprise owners/managers work alone; unlike owners and managers of larger firms, they do not have the encouragement of colleagues. 5. Permanent changes in management skills. We want the business people not just to perform better when we are watching, or the following month, but for many years. 6. It is extremely important that the micro-enterprise owners/managers choose what is right for themselves as individuals, and not just follow general rules that may be quite wrong in particular cases. Micro-enterprises are vulnerable; individually these tiny firms have little power to protect themselves from misfortune, or bad advice, and owners often depend entirely on their businesses to support themselves and their families. Applicable Guide to Business Counseling There are numerous elements at play when counseling micro-enterprises, but in this section you will find a practical guide for approaching business counseling for micro-enterprises. The following material is formatted into four phases: Business & Organizational Capacity Assessments, Strategic & Operational Planning, Project Management & Leadership Building, and Business Plan Development. Implementation of each phase will be determined based off initial needs assessments, previous brigades, impact evaluation & oversight of the cooperative. Your Business Brigade 45

46 BUSINESS ED. & COUNSEL Business & Organizational Capacity Assessment In order to determine how to approach counseling a microenterprise it is important to first listen and evaluate the needs of the micro-enterprise before implementing any project. Strategic & Operational Planning Project Management & Leadership Building Business Plan Development Depicted in the flow chart below are the stages of implementation for the business education and counseling curriculum for both Global Brigades staff and brigade volunteers formatted into three stages (pre-brigade, during brigade, and post-brigade). Pre: Global Brigades Staff Initial Assessments and Community/ Business Outreach Students Brigader Education and Workshop Template Development on Campus During: Implementation of Workshops and Consulting Curriculum Material Implementation of Workshops and Consulting Curriculum Material Post: Follow-up and Impact Assessment using Proxies Share Materials and Experience with other Brigaders and other Schools Your Business Brigade 46

47 BUSINESS ED. & COUNSEL Contents of Business Education and Counsel Materials Household visit s protocol and introduction, Empowerment through Empathy and Encouragement Business & Organizational Capacity Assessment Performing a Diagnostic Strategic and Operational Planning Performing a diagnostic Project Management and Leadership Building Accounting: Fixed vs Variable Costs Business Plan Development Business Planning Your Business Brigade 47

48 Business Brigades Workshop Development Household Assessments: Empowerment through Empathy and Encouragement 48

49 HOUSEHOLD EMPOWERMENT Introduction After understanding the community and project context, we can concentrate on how our project(s) might stimulate positive change in the community. In order to succeed, we need to understand that change is always met with some level of resistance and leading the change process among community members requires empowering them through empathy and encouragement; and involving them through communication and education. The Theory of the Bucket and the Dipper Each of us has an invisible bucket. It is constantly emptied or filled, depending on what others say or do to us, whether directly or indirectly. When our bucket is full, we feel great. When it's empty, we feel awful. Each of us also has an invisible dipper. When we use the dipper to fill other people's buckets - by saying or doing things to increase their positive emotions - we fill their buckets and we also fill our own bucket. But when we use that dipper to dip from other people's buckets - by saying or doing things that decrease their positive emotions - we not only diminish them, but also diminish ourselves. Like the cup that runneth over, a full bucket gives us a positive outlook and renewed energy. Every drop in that bucket makes us stronger and more optimistic. But an empty bucket poisons our outlook, saps our energy, and undermines our will. That's why every time someone dips from our bucket, it hurts us. So we face a choice every moment of every day: We can fill one another's buckets, or we can dip from them. It's an important choice - one that can profoundly influence our relationships, productivity, health, and happiness.

50 HOUSEHOLD EMPOWERMENT Emotional Empowerment is a Full Bucket A Person with a Full Bucket Feels: Recognized and appreciated Respected Understood Supported Optimistic and positive Affirmed A sense of belonging Trusting of leadership and group A Group or Community of Full Buckets is Characterized by: More creativity More initiative More teamwork More productivity More success More fun How Change Threatens to Dip from People's Buckets People may lack a familiar relationship with the change initiator. People may have a bad history with, bad initial impression of, or are influenced by a bad reputation circulating about the change initiator. People may perceive or observe hypocrisy on the part of change initiators. Conclusion: A lack of trust between people experiencing the change and those initiating the change dips from people's buckets. The effectiveness of the organized group in charge of implementing the change may be limited by a self-imposed culture of blame. Conclusion: Negativity and pessimism within a group caused by the "blame game dips from people's buckets. They may be afraid of being different. They may fear an inability to adapt to the change. They may see the change as a threat to their identity and culture. Conclusion: The intimidation of significant social, emotional and intellectual transitions dip from people's buckets.