Booklet 4 Scaling up and circular movement in Rural Social Enterprises

Booklet 4

Scaling up and circular movement in Rural Social Enterprises

René Mendoza with Fabiola Zeledón and Esmelda Suazo

Jesús told his disciples a parable (Mt 25: 14-30). A farmer, before traveling, entrusted his farm to them: to one he gave 5 talents, to another 2 and another 1, according to their capacities. On his return he asked for an accounting. The ones who received 5 and 2 had doubled them, the farmer was happy and rewarded them. The third had saved the talent and gave it back to him, the farmer was upset, told him that at least he could have placed it with bankers so it would earn interest, so he took the talent away from him and gave it to the one who had 10. “Because to everyone who has, more will be given and he will have abundance; but the one who does not have, even what he has will be taken away.”

This parable is not about avarice or despotism. It is about the fruit that comes from talents received. It is responding to the confidence received, deploying all capacities in order to bear fruit. The parable shows us that discouragement, fear or resentment should not keep us from feeling that confidence received, making us hide the talent. The fruit gives joy to the entire community.

So it is as well in Rural Social Enterprises (RSE)[1]. Two dozen people have placed their resources and entrusted a family to administer a community store or a coffee roaster, and another family to administer another store, and so on. The families received resources and trust in accordance with their abilities, they are left the challenge of responding with all their energy and multiplying their fruit. As an effect of those actions, the entire community will be happy.

On multiplying it, like the one who received 5 talents and doubled it to 10, they can receive more resources and trust. How? For the stores, Figure 1 shows us the path in the form of a staircase. But first let us recall that in the previous booklet Claudio Hernández warned us that we are “at different rungs of the ladder”. We address this challenge here: if we scale up collectively with clear rules, we move beyond the individual “ranking”. Even more, our vision is that they scaling up should not be indefinite, ever higher and higher, but it should be circular, that this is what figure 2 will show.

In figure 1, illustrated for a community store, we make a distinction between a conventional (or traditional) storefront, and the community stores that we are organizing. They scale up to the extent that they respond to the trust deposited in them, and in accordance with the energy and mindset that they apply to the talents received. How?

A community store starts on step 1 with a set amount of working capital. If it is managed well, keeping the amount on credit under 5% of total working capital, orders the inventory and orders, attracts customers and the administrator is able to get their earnings (30% of gross profits of the store) above 1500 córdobas, then that store can go up to the next step. As a consequence, SREs take 20% of the net earnings of the store to increase the initial working capital of the store. This step means moving from a conventional storefront to a community store, which means freeing itself from falling into the family rules of “give it to me on credit because we are family”, understanding that working capital is a collective asset, and cultivating an awareness that what benefits the family and the community is the fact that the stores continues to exist.

On step 2, in addition to meeting the challenges of step 1, they do a good job of recording the data, increase the clientele by 10%; process 1-2 products (e.g. popsicles, nacatamales) and form 1 to 2 local alliances (e.g. with bakers, seamstresses, people that make piñatas, raise chickens and have eggs, people who raise chickens, slaughter pigs or sell basic grains). It is a step where the administrator is able to get their gross profits of the store above 2,000 córdobas. If they are able to do all that, then they move to step 3 and they are assigned 20% of the social fund to work with.

On step 3, in addition to meeting the challenges of steps 1 & 2, and increasing clients by 10%, it processes more than 2 products and cultivates more than 2 alliances; lists products and necessary technology to be introduced into the community, such as rice cookers and thermoses, that have the potential of freeing up time for women depending on the conditions in the communities (e.g. if they have electric, water…). It is a step where the administrator can get their 30% of gross profits to be more than 3,000 córdobas. If the administrator is able to do all that, then the store moves to step 4, and their working capital is increased from between 5 to 20% from additional funds coming from new shareholders.

On step 4, in addition to meeting the challenges of steps 1, 2 and 3, and increasing customers by 10%, the store processes more than 3 products and weaves more than 3 alliances; the administrator gets their 30% of gross profits from sales to be more than 4,000 córdobas. As a consequence, this store is a candidate for the annual prize that the Assembly of shareholders grants to the best initiative. In a parallel fashion, the administrator can become initiative supervisor, after accompanying (organizing and advising) other stores, creating new initiatives.

In this way, the staircase (Figure 1) does not add more steps, it becomes a circle of synergy among several stores, roasters, bakers and other initiatives (Figure 2), while people continue being trained and taking on new responsibilities. It is trust which like pickled nancite becomes more dense and increases its flavor and energy.

So the wheel of community improvement turns, turns and turns. It does not go up. It does not go down. It revolves.

 

[1] This article is also for cooperatives and any other associative expression. The members contribute resources and ideas. They deposit them in the administration and organs of the cooperative. In doing so, they really are depositing their trust. In return, the administration and organs of the cooperative have the obligation that those resources and trust deposited in them bear fruit in accordance with the rules of their assemblies.

 

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