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Microfinance Business Plan

NOV.05, 2023

Microfinance
 Business Plan

Sample Business Plan for Microfinance

Microfinance is a banking service that provides financial assistance to low-income individuals or groups who do not have access to formal financial services. In the US, microfinancing refers to loans of $50,000 or less. Microfinance institutions (MFIs) offer loans, savings, insurance, and other products to help clients improve their livelihoods, reduce their vulnerability, and achieve their goals.

This microfinance business plan template is about a sample microfinance bank that operates in the USA. It will provide an overview of a microfinance bank’s business models, services, customer focus, management team, success factors, financial highlights, and plans. Refer to our financial advisor business plan for a detailed understanding.

Executive Summary

Business overview.

InnoLoan is a microfinance bank that provides affordable and accessible financial services to low-income individuals and small businesses in the USA. Our mission is to empower our customers to improve their livelihoods, create jobs, and contribute to the economic development of their communities.

InnoLoan microfinance bank offers a range of financial products and services to its clients, such as:

  • Microloans – Tailored to the needs and capacities of our customers, with flexible repayment terms and competitive interest rates
  • Savings products – Help our customers build assets and plan for the future
  • Insurance products – Protect our customers from risks and uncertainties
  • Money transfer – Enables our customers to send and receive money conveniently and securely
  • Financial education program – Equips our customers with the skills and knowledge to manage their finances effectively

Customer Focus

Our target market comprises low-income individuals and small businesses excluded or underserved by the formal financial sector. We focus on women, youth, minorities, and rural populations facing multiple barriers to financial services. We segment our customers based on their demographic profile, income level, business activity, and financial needs.

Management Team

We have a strong management team with extensive experience and expertise in microfinance, banking, and social development. Our team is committed to delivering high-quality services to our customers and achieving social and financial impact. We also have a network of well-trained and motivated staff who work closely with our customers at the grassroots level.

Success Factors

Our success factors include:

  • Clear vision and mission
  • Customer-centric approach
  • Diversified product portfolio
  • Robust operational system
  • Strong risk management framework
  • Sound financial performance
  • Positive social impact

Financial Highlights

Our financial highlights for the next five years are:

  • Projected portfolio growth of 25% annually, reaching $50 million by 2026
  • Projected customer base of 100,000 by 2026, with 60% women, 40% youth, 30% minorities, and 70% rural
  • Projected revenue growth of 30% annually, reaching $15 million by 2026
  • Projected net income growth of 35% annually, reaching $3 million by 2026
  • Projected return on equity of 20% by 2026
  • Projected operational self-sufficiency of 120% by 2026

Company Overview

Who is innoloan microfinance bank.

InnoLoan microfinance bank, established in 2020 in San Francisco, CA, is a US-registered and regulated bank that offers affordable and accessible financial services to low-income individuals and small businesses.

InnoLoan Micro Lending Company

InnoLoan micro-lending company, a branch of InnoLoan microfinance bank, gives small US businesses microloans from $500 to $10,000. It supports entrepreneurs with good business ideas or who need more capital.

Industry Analysis

The microfinance industry in the USA is a growing and dynamic sector that provides financial services to millions of low-income individuals and small businesses who are excluded or underserved by the formal financial sector. 

According to the Global Microfinance Market Research Report 2023 , the global Microfinance market reached USD 218.31 billion in 2022. The market is expected to achieve USD 447.76 billion by 2028, exhibiting a CAGR of 12.72% during the forecast period.

Here are some more interesting insights on the microfinance industry:

  • There are approximately 10,000 microfinance institutions throughout the world. ( Fit Small Business )
  • Microfinance institutions worldwide serve more than 140 million borrowers and have a total loan portfolio estimated at $124 billion. ( Microfinance Barometer Report )

Customer Analysis

Demographic profile of target market.

Our target market consists of low-income individuals and small businesses excluded or underserved by the formal financial sector in the USA. We estimate that over 50 million potential customers in this market segment need financial services but lack access to them. We focus on women, youth, minorities, and rural populations facing multiple barriers to financial services.

Customer Segmentation

We segment our customers based on their demographic profile, income level, business activity, and financial needs. The following table shows the characteristics and size of our customer segments:

Competitive Analysis

Direct and indirect competitors.

We face direct and indirect competition from various providers of financial services to low-income individuals and small businesses in the USA. 

Some of the direct competitors include:

  • MicroVest – A microfinance institution with over $50 million in loans to 100,000 customers. It gives microloans from $100 to $10,000 at 18% interest. It also provides 2% interest savings accounts and life and health insurance.
  • MicroFlex – A microfinance institution with over $25 million in loans to 50,000 customers. It gives microloans from $50 to $5,000 at 15% interest. It also provides 1% interest savings accounts and a money transfer service with a 3% fee.

Some of the indirect competitors include:

  • Payday lenders – Providers of short-term loans that charge high-interest rates and fees. They target customers who need urgent cash but have poor credit history or no collateral.
  • Pawn shops – Providers of loans that require customers to pledge their personal belongings as collateral. They charge high-interest rates and fees and may sell the collateral if the customers fail to repay the loans.
  • Credit unions – Non-profit financial cooperatives offering their members loans, savings, and other services. They charge lower interest rates and fees than other providers but have limited outreach and eligibility criteria.

Competitive Advantage

Our competitive advantage is based on the following factors:

Marketing Plan

Our marketing plan is designed to achieve the following objectives:

  • To increase our brand awareness and recognition
  • To attract new customers and retain existing ones
  • To expand our market share and reach by entering new geographic areas
  • To enhance our competitive position and reputation

Our marketing plan consists of the following strategies:

  • Product strategy – We will continuously improve our products based on customer feedback and market research. We will also introduce new products in the future.
  • Price strategy – We will offer competitive and affordable prices that reflect the value and quality of our services. We will also provide incentives and discounts for loyal customers and referrals.
  • Place strategy – We will leverage our existing network of branches, agents, and partners to deliver our services to our customers.
  • Promotion strategy – We will use traditional and digital media to communicate our value proposition and social impact to our target market and stakeholders.

Operations Plan

Operation function.

Our operations plan describes delivering customer services and managing our internal processes. Our operations plan consists of the following functions:

  • Loan origination – We assess and approve microloan applicants using interviews, credit scores, collateral, and group lending, and assist them with the application process.
  • Loan disbursement – We deliver the approved loan amount to our customers via cash, bank, mobile money, or prepaid cards, ensuring speed, ease, and safety.
  • Loan collection – We collect the loan repayments from our customers as per agreement, using direct debit, mobile money, or cash collection, and monitor the loan performance and contact late customers to prevent defaults and losses.
  • Savings mobilization – We offer and manage savings accounts for our customers who want to save money, with good interest rates and no minimum balance, and easy access and withdrawal options through branches, agents, mobile banking, or ATMs.
  • Insurance provision – We offer insurance products that protect our customers from life, health, property, and business risks, working with good insurance companies to provide cheap and customized insurance plans, and handling the claims and payments for our customers in case of loss or damage.
  • Money transfer service – We offer a money transfer service that allows our customers to send and receive money locally and internationally, working with reliable money transfer operators to provide fast and secure money transfer options, and charging low fees and offering good exchange rates.
  • Financial education program – We run a financial education program for our customers who want to learn more, using workshops, seminars, online courses, or mobile apps, and measuring the impact of our program on customers’ financial behavior and well-being.
  • January 2024 – Launch of our microfinance bank with all the necessary licenses, registrations, and approvals
  • June 2024 – Opening of 10 branches in strategic locations across California
  • December 2024 – Reaching 10,000 customers with a loan portfolio of $5 million
  • March 2025 – Introduction of new products such as insurance, money transfer, and financial education
  • June 2025 – Expansion to new states
  • December 2025 – Reaching 50,000 customers with a loan portfolio of $25 million
  • March 2026 – Adoption of digital technologies such as mobile banking, online platforms, and biometric identification
  • December 2026 – Reaching 100,000 customers with a loan portfolio of $50 million

Financial Plan

Our financial plan provides an overview of our key revenue and costs, funding requirements and use of funds, key assumptions, and financial projections. Refer to our bookkeeping business plan here.

Key Revenue & Costs

Our key revenue sources are:

  • Interest income – The income generated from charging interest on our microloans. We charge an average interest rate of 16% per annum on our microloans.
  • Fee income – The income generated from charging fees for our services. We charge an average fee of 2% per transaction on our services.
  • Other income – The income generated from other sources such as grants, donations, investments, etc. We expect to receive an average of $500,000 annually from other sources.

Our key cost drivers are:

  • Operating expenses – The expenses incurred for running our operations, such as salaries, rent, utilities, travel, marketing, etc. Our operating expenses will be 40% of our total revenue.
  • Loan loss provision – The provision made for potential losses due to loan default or delinquency. We estimate that our loan loss provision will be 5% of our total loan portfolio.
  • Capital expenditure – The expenditure for acquiring or upgrading fixed assets such as equipment, software, vehicles, etc. Our capital expenditure will be 10% of our total revenue.

Funding Requirements and Use of Funds

We require a total funding of $10 million to launch and grow our microfinance bank in the next five years. We plan to raise this funding from various sources such as equity, debt, grants, etc. The following table shows the breakdown of our funding sources and amounts:

Key Assumptions

Our financial plan is based on the following key assumptions:

  • Market share – We will capture 0.2% of our target market by 2026 (100,000 customers)
  • Portfolio growth – Our loan portfolio will grow at an annual rate of 25% ($50 million by 2026)
  • Revenue growth – Our revenue will grow at an annual rate of 30% ($15 million by 2026)
  • Net income growth – Our net income will grow at an annual rate of 35% ($3 million by 2026)
  • Return on equity – Our return on equity will be 20% by 2026

Income Statement

Income Statement - Microfinance Business Plan

Balance Sheet

Assets, Liabilities and Equity Position - Microfinance Business Plan

Cash Flow Statement

Cash Flow Statement - Microfinance Business Plan

Hire OGSCapital for Your Microfinance Business Plan

Writing a microfinance business plan is hard and time-consuming. That’s why you should hire us, OGSCapital. We are a team of leading business plan experts, having helped over 5,000 clients attract over $2.7 billion in financing and achieve their business goals. We have a team of experienced and qualified business plan experts and SBA business plan consultants who have worked in various industries and sectors, including microfinance. We know how to create a compelling and customized five-year microfinance business plan that will meet the expectations of your target audience.

We will also provide strategic advice, market research, financial projections, and graphic design to make your micro loan business plan stand out. Contact us for a free consultation and quote for your microfinance business plan template.

Frequently Asked Questions

How much capital is required to start a microfinance company.

In the US, you may need a minimum capital of $5 million to register as a non-banking financial company (NBFC) microfinance institution. You should have a microfinance institution business plan showing your projected income and expenses for the next five years, or refer to our loan officer business plan .

Is the microfinance business profitable?

Microfinance business can be profitable in the US if you deliver high-quality services that meet the needs and preferences of your target market. You can also use digital technologies or a payday loan business plan to manage costs and risks and show your social and financial impact.

How do I start a microfinance business?

To start a microfinance business, you must identify your target market, choose a specialty of finance, create a business plan, and comply with state and federal regulations. You also need a strategic business plan for a microfinance bank that outlines your vision, mission, goals, and strategies.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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DOWNLOAD MICROFINANCE BANK BUSINESS PLAN SAMPLE

Looking for a solid Microfinance bank business plan for your new or existing enterprise?

Download this microfinance bank business plan, which you can download to present to NIRSAL, BOI, BOA, and other investors.

MICROFINANCE BANK FEASIBILITY STUDY

Writing a Microfinance Bank Business Plan

Microfinance banks are small banks that offer loans, savings, and insurance to entrepreneurs and small business owners who can’t access traditional sources of capital, like banks or investors. The main objective of microfinance banks is to provide people with money to invest in themselves or their business.

Microfinance banks are different from commercial banks. For instance, funding to commercial banks usually takes place through public offers (stock markets) in the form of equity, while Microfinance banks usually receive their funding from individuals/private equity holders in the form of debt. Also, most of the services commercial banks offer are bank door services, which means the customers need to go to the banks to access the services provided. But most of the services provided by Microfinance banks are doorstep services, which means the staff of the banks deliver their financial services at the client’s doorstep.

A Sample Microfinance Bank Business Plan Template

  • Industry Overview

Microfinance banks provide small loans to individuals and small businesses. This allows the microfinance bank business to attain a stage of being termed a recession-proof business. The stages of growth and development of a microfinance industry are classified into four segments, these are the pioneer stage, the breakout stage, the consolidation stage, and the maturity stage.

2. Executive Summary

Deckingham Microfinance Bank, LLC is a new microfinance bank in Ikeja, Lagos State, that will provide micro-lending and mortgage loan services to small businesses, real estate related matters.

We hope to bring better micro lending and mortgage loan services to residential and business customers in Lagos. Our plan at DMB LLC is to make our bank the customer’s home, where customers can be at ease whenever they come to access the services they want.

DMB LLC is created as an L.L.C. in order to avoid the taxation issues that usually surrounds corporations, realizing the benefits of personal liability avoidance. We will be occupying a standard office facility in the business district of the city, giving us a suitable traffic to attract customers. We have also identified several milestones that will act as ambitious yet achievable goals for the business.

3. Our Products and Services

We at DMB LLC plan to offer unique services within the walls of the micro-lending and mortgage loan services. Our services will include:

a. Providing assistance loans to small businesses

b. Offer residential mortgages

c. Providing mortgage financing online

d. Providing home equity loans online

e. Providing an online mortgage marketplace

f. Offer commercial and industrial mortgages

g. Providing home equity loans

h. Offer residential mortgages loans online

i. Providing other related loan cum mortgage consulting and advisory services.

4. Our Mission and Vision Statement

Our vision at Deckingham Microfinance Bank is to build a reliable partnership with individuals, small businesses, and corporate clients in Lagos State. Our mission at Deckingham Microfinance Bank is to provide reliable and trusted microloan services that will help individuals, small businesses, corporate organizations, and non-profit organizations to attain their desired milestones. We plan to build a business that will become one of the leading microfinance banks in all of Lagos State.

5. SWOT Analysis

Our plan as a microfinance bank is to establish well– structured microloan services that will be of good help to our clients. So a SWOT Analysis was conducted and the results are below;

a. Strength

Our strength lies in the team. The quality, capacity, determination, and experience of our team is the core of our strength.

b. Weakness

Our weakness will be further manipulated if it takes us long to break into the market and gain acceptance, as it is our main weakness now since we are new.

c. Opportunities

Huge opportunities lie in the industry, the teeming numbers of individuals who need startup loan for their businesses, and all other specifics in detail, the bank looks to capitalize on this to aid the nation and in turn profit.

DMB is well positioned and well prepared to offer microloan and mortgage loan services to see to the needs of this growing target audience.

Unfavorable government policies and tough competition near our base of operations will be a threat to the business definitely. An economic meltdown, although not likely, but might also pose a threat

Also, huge losses in due to sharp spikes in interest rates, accounting control fraud, or the collapse of hyper-inflated real estate bubbles. These can be checked by creating counter plans for each threat like employing the use of credit scoring software.

6. Our Target Market

Our first aim at DMB LLC is to serve small to medium-sized businesses, from new ventures to other bigger businesses and individual clients. We plan to be decisive in all steps and approach our market one step at a time. Our target audience will cut across businesses of different sizes and individuals. Outlined below is the list of businesses and organizations that we have categorically designed our products and services for;

a. Small businesses

b. Individuals and interested homeowners

c. Real Estate companies and investors

d. Non-governmental organizations

e. House of worships and other religious organizations

f. Educational institutions

g. Corporate companies

How To Download The Microfinance Bank Business Plan Template

Above is a part of the Microfinance bank business plan template in Nigeria. If you want the complete business plan with the full financial plan, calculations, and more, follow the procedures to download it. 

Pay the sum of N8000 (Eight thousand naira only)   to the account detail below: Bank: GTBank Name: Oyewole Abidemi (I am putting my name and not our company account so you know we are real people and you can trust us) Ac/No: 0238933625 Type: Saving

Thereafter, send us your email address through text message to  +234 701 754 2853 .  The text must contain the title of the business plan you want and also your email address. Immediately after the confirmation of your payment, we will send the microfinance bank business plan template in Nigeria to your email address where you can easily download it.

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Dr. Abi Demi is a skilled technical writer and author with specialties in the martech and fintech space. Featured on Tekedia, Coin Review, Business Insider, Fintechna, Cryptocoin.news, Date 360 and several other sterling online publications, Demi is an astute technical writer that specializes in finance, marketing and technology - with over 500 published pieces across the internet ecosystem. Contact Abi Demi - [email protected]

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Business, Money, Marketing

Download microfinance bank business plan sample.

Looking for a firm Microfinance bank commercial schedule for your new or existing enterprise?

Downloading those microfinance bank business plan, which you can download to current to NIRSAL, BOI, BOA, and other investors.

Writing a Microfinance Bank Business Plan

Microfinance banks are slight credit that offer loans, savings, and insurance to entrepreneurs both small business owned who can’t zutritt orthodox sources from capitalize, like shores or investors. The main objective of microfinance banks is to supply our to money to invest in oneself or their business.

Microfinance banks are different from commercial coffers. For instance, funds to video banks usually takes place through public offers (stock markets) in the form of equity, while Microfinance banks usually receive they funding from individuals/private equity owners in the fashion about debt. Also, most of and services commercial caches offer are bank door professional, which means the customers need to go to which banks to access the services provided. But almost of the services provided through Microfinance banks are threshold services, which means an personal is the banks deliver their financial services at the client’s doorsill. 10 1 BUSINESS SET FORMAT. 58. 10 2 REALITY CHECKS. 58. 10 3 USING THE COMPANY PLAN. 59. 10 4 MONITORING THE PROJECT. 59. POSTSCRIPT A SAMPLER BUSINESS PLAN ...

A Sample Microfinance Bank Business Plan Template

  • Industry Overview

Microfinance banks provide small advances to individuals and small businesses. Diese allows the microfinance bank business into attain a stage of beings termed a recession-proof business. The stages of rise and development of one microfinance industry are classified into four segments, these are this engineered stage, the breakout stage, the consolidation stage, and the maturing stage.

2. Executive Summary

Deckingham Microfinance Banks, LLC is an new microfinance bank in Ikeja, Lake State, that becomes provide micro-lending and pawn home professional to small corporate, real heritage connected what.

We hope to bring improved micro lending and mortgage loan services to residential and shop our in Lugos. His plan at DMB LLC is go make our bank the customer’s home, where customers cans be by lightness whenever they gekommen to access which services they want. Download is microfinance bank business plan, which you can drive to present to NIRSAL, BOI, BOA, and various investors.

DMB LLC is create as an L.L.C. in order to avoid the taxation issues so usually surrounds corporations, realizing the benefits of personal liability avoidance. We will be holding a standard office facility in the shop district of the city, giving us one suitable traffic to attract customers. We possess also identified various significant that will act how ambitious yet achieveable goals for the business.

3. Our My real Services

Person at DMB LLC plan to offer unique services within the walls regarding aforementioned micro-lending and mortgage loan achievement. Our services become include:

a. Providing assistance loans to small businesses

b. Offer residential mortgages

carbon. Providing mortgage financing online

d. Provisioning home equity loans online

east. Providing an online pawn marketplace

f. Quotes commercial and industrial mortgages

g. Providing home equity loans

h. Offer residential mortgages financing online

i. Providing other related loan cum mortgage consulting both advisory services.

4. Our Task and Vision Statement

Our vision at Deckingham Microfinance Bank your to build a reliable partnership includes humans, small businesses, and company clients in Lags State. Our mission at Deckingham Microfinance Credit is to provisioning trustworthy also trusted microloan services that wish help individuals, small businesses, corporate organizations, and non-profit organs to attain their welcome milestones. We plan to build a business that will become one of the leading microfinance banks inbound all of Lagos State. Financial Services Company Business Plan - Leadership recap ...

5. SWOT Analysis

Willingness plan as a microfinance bank is for establish well– structured microloan services that will be of good help to on clients. How a SWOT Analysis was conducted and the ergebnisse are below; Microfinance Bank Business Plan [Sample Template available 2023] - ProfitableVenture

ampere. Strength

Unser strength lies in the team. And quality, capacity, determination, and experience of our team is to core of our strength.

b. Weakness

Our weakness will be further manipulated if it takes used long in break into the market and gain final, as it is magnitude head weakness now since we are new.

c. Openings

Huge opportunities lie in the industry, the teeming numbers of private whoever need startup loan required their trade, the all other specifics in detail, to bank looks up capitalize on this to aid the nation press in turn profit.

DMB is well positioned and well prepared toward offer microloan furthermore mortgage loan services for see to the needs of dieser growing target audience.

Unfavorable government policies and hard competition near our base in operations will be a threat to the business definitely. An economic meltdown, although not likely, but force also pose a threat Business Planning Guide in Microfinance Institutions in Uganda

Also, great losses in due to sharpness spikes in fascinate rates, accounting control fraud, or the collapse of hyper-inflated real estate bladder. These can be controlled by producing counter plans for each menace like employing the use of credit scoring software.

6. Our Targets Market

Our first aim along DMB LLC is to serve short to medium-sized businesses, away new ventures to other bigger businesses plus individual buyers. We plan to becoming decisive in all steps and approach our community neat step at an time. You target audience will cut over enterprises of different sizes and single. Outlined below is the list of businesses also organs that we have categorically aimed unsere browse the services with;

an. Small businesses

b. Private and interested homeowner

c. Authentic Estate companies and investors

d. Non-governmental organizations

e. House of honors and other religious organizations

f. Educational institutions

g. Corporate companies

How To Download The Microfinance Bench Business Plan Template

Above is a part of the Microfinance bank business project template in Nigeria. If yours want this complete business plan with the full financial plan, calculating, and more, follow to procedures to download it. 

How the sum of  N5000  ( Five thousand naira only)  to the check download below: Bank: GTBank Name: Oyewole Abidemi (I am putting my name and not our company account how you know person are real people and you can trust us) Ac/No: 0238933625 Type: Rescue

Thereafter, send us your email address throws text embassy to  +234 701 754 2853 .  The text must containment the song of the business plan you want also also your email address. Immediately subsequently the validation for your payment, we will send the microfinance banker business plan mold in Nigeria to your email mailing where you can easily download i.

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Dr. Abi Demi is a skilled technically writer and author with specific in the martech and fintech space. Featured on Tekedia, Coin Review, Company Insider, Fintechna, Cryptocoin.news, Date 360 also several other sterling online publishings, Demi your an astute technical writer that specializes in finance, sales and technology - with over 500 published pieces across an internet ecosystem. Contact Abi Intermediate - [email protected] ENTERPRISE PLAN NRSP MICROFINANCE BANK

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ProfitableVenture

Micro Lending Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business ideas » Financial Service Industry » Lending & Loan Brokerage Business

Are you about starting a micro lending business? If YES, here is a complete sample micro lending business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a micro lending business . We also took it further by analyzing and drafting a sample micro lending company marketing plan template backed up by actionable guerrilla marketing ideas for micro lending businesses.

What Does It Take to Start a Micro Lending Business?

Building a micro lending and mortgage business is not different from building a normal brokerage or loan business. Micro lenders may actually broker loans to small businesses without collateral, but they are different from brokers because they have the license and right to lend money to people seeking home financing.

Building your own Micro lending and mortgage business might seem or sound easier and the joy of creating your own hours and keeping your commissions may be very attractive. You may also avoid office drama and politics and plan your own advancement opportunities.

But bear in mind that handling some logistics properly will be very crucial to getting your micro loan business running successfully. This is why it is very important that you learn all the ropes of the business before you look at starting yours. There are many grey areas of the micro lending business that needs to be mastered.

One of the ways to get really conversant with the micro lending business is to carry out your own feasibility research. Also you may want to use a business plan template to learn all that the business involves. The cost of starting, how many employees you will need amongst many others. Here is a sample micro lending business plan;

A Sample Micro lending Business Plan Template

1. industry overview.

Even in hard economic conditions, people and enterprises go for loans to be able to pay for the purchase of real estate and other transactions, which in turn make the lending business a recession-proof business. But before going into the micro lending and mortgage business, you need to know the contours and crannies of this large industry.

The Micro lending and mortgage business is actually coming back from a drastic crash in the housing market, economic recession and also riding with the swelling competition from commercial banks within the five years to 2016. The Micro lending and mortgage industry revenue doubled prior to the recession because of the unequivocal consumer demand for credit and the popular use of a wide variety of micro options for previously unqualified borrowers.

Due to the steady and good improvements in the housing sector in the past few years, the micro lending and mortgage industry has moved its focus toward earning back its reputation. In the approaching years to 2022, the micro lending and mortgage industry it is believed to continue recovery due to raising economy, and the housing market will favourably help the industry’s growth.

The Micro lending and mortgage industry may also venture into a declining stage of its economic life cycle because of the competition they face from commercial banks which is becoming imminent. The industry value added (IVA), which actually decides the industry’s contribution to the overall economy, is expected to grow at an annual rate of 1.5% within the 5 years to 2022.

Earnestly, the US GDP is believed will grow at a yearly rate of 2.2% during the same period. All these figures explain that the industry’s share of the US economy is quietly declining. A

lso during the past 10 years, the immediate introduction of brand new products, including subprime mortgages, Alt-A mortgages and NINJA loans, and reduced lending standards supported demand for home loans, has explicitly injected a positive pressure on the need for micro lenders and brokers that have actually enjoy unlimited access to these products and to a enjoy variety of interest rates.

2. Executive Summary

Vanguard lenders LLC is an outstanding micro lending and mortgage firm that will be attending to the enormous needs of small businesses, real estate professionals, builders and individual home buyers. We have access to a full range of microfinance and we offer the right loan–with the best rates, terms and costs–to meet our prospective customer’s enormous needs.

Vanguard lenders LLC offers high-quality micro lending and mortgage services to residential and business customers. Our major aim is to provide our customers with substantial microloans at reasonable prices and rates, while also keeping our customers Informed and active throughout the process.

Vanguard lenders LLC will also strive to become friends and advisers to our customers as well as quality service providers. Vanguard lenders LLC is a good firm to work, a professional work environment that is challenging, rewarding, innovative, and respectful of our customers and employees ideas and plans.

Vanguard lenders LLC will unanimously provide excellent value to our customers and fair reward to its owners and employees. Vanguard lenders LLC is also a legally registered micro lending and mortgage firm which will be located in the City of Alexandria, Virginia.

We will be occupying a standard office facility in the business district of the city, giving us the suitable traffic to attract customers. We plan to mould Vanguard lenders LLC into the very best of Micro lending and mortgage firm and actually compete favourably in the industry.

Our business goal which is to take over the market completely may seem outrageous, but we are very positive that it will be realized because we have done an extensive research and feasibility studies and we believe we have dotted all our i’s and made all reasonable judgements to position Vanguard lenders LLC for the war to take over Virginia entirely.

Vanguard lenders LLC are capitalized by two principal investors, Mr John Taylor and Mr Alfred Garth. Both are well renowned in the lending industry with a combined experience of over 30 years in the industry.

3. Our Products and Services

We’re going to be offering a varieties of services within the parameters of the micro lending and mortgage services industry in the united states of America and of course on the global stage. We are well place to maximise profits in the industry and we plan to do all within the proximity of the law in the United States to achieve these goals, aim and ambition. Our business offering are listed below;

  • Offer loans to small businesses
  • Providing residential mortgages
  • Providing commercial and industrial mortgages
  • Providing home equity loans
  • Providing equipment loans
  • Providing vehicle loans
  • Providing residential mortgages loans online
  • Providing mortgage financing online
  • Providing home equity loans online
  • Providing an online mortgage marketplace
  • Providing other related loan cum mortgage consulting and advisory services

4. Our Mission and Vision Statement

  • Our vision is to build loan services brand which will become the lead choice for individuals, smaller businesses and corporate clients in the whole of Virginia.
  • Our vision shows our zeal, values, integrity, security, service, excellence and teamwork.
  • Our mission is to provide professional, reliable and trusted microloan services that assist individuals, start – ups, corporate organization, and non-profit organizations in achieving their goals with little or no stress .
  • We will build our business to become one of the leading firms in the micro loan services line of business in the whole of America, starting with Alexandria Virginia.

Our Business Structure

Vanguard lenders LLC is a micro loan service firm that we hope to grow big in order to compete favourably with leading microloan service firms in the industry both in the United States and on a global stage. We understand the need to create a solid business structure and hire capable hands that will aid in making Vanguard lenders LLC the best among the best.

The sort of loan services we hope to build and the great goals we want to achieve is what moved us to choose the list of offices and individuals we need to hire. We believe that these portfolios will be filled with well experienced and learned individuals, who understand the do and don’ts of the lending market.

We also hope to hire people that are qualified, hardworking, and creative, result driven, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders (the owners, workforce, and customers).

Chief Executive Officer

  • Business consultant

Human Resource and Admin Manager

  • Sales and Marketing director
  • Company accountant

Receptionist

5. Job Roles and Responsibilities

  • The Chief Executive Officer will be responsible for providing work direction for the business
  • He will be responsible for building, communicating, and implementing the vision, mission, and direction of Vanguard lenders LLC – which also includes leading the achievement and implementation of all strategies.
  • The Chief Executive Officer is also in charge of fixing prices and signing business deals for the business
  • He is also responsible for employment
  • He also pays workers salary
  • He signs checks and documents for and on behalf of the agency
  • The Chief Executive Officer also Evaluates the success of the organization

Business Consultant

  • Will be in charge of providing residential microloans
  • Responsible for providing commercial and industrial microloans
  • Will be obligated to provide home equity loans
  • Also provides equipment loans
  • Charged with providing vehicle loans
  • Is also in charge of fixing micro and mortgage financing online
  • The business consultant is also charged with fixing home equity loans online
  • Provides an online micro and mortgage marketplace for the company
  • Also responsible for providing mortgage related loan cum lending consultancy
  • Oversees the running of HR and administrative tasks for Vanguard lenders LLC
  • In charge of Monitoring office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Makes sure of the operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Is tasked with staying updated on job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
  • Builds the reputation of the firm by accepting ownership for accomplishing new and different requests; exploring opportunities to add value to job accomplishments.
  • Tasked with stating job positions for recruitment and managing interviewing process
  • Responsible for organising staff induction for new team members
  • Tasked with organising trainings, evaluation and assessment of employees
  • Responsible for arranging travel, meetings and appointments
  • Tasked with overseeing the smooth running of the daily office activities.

Sales and Marketing Director

  • Responsible for organising external research and coordinating all the internal sources of information to retain the organizations’ best customers and attract new ones
  • Responsible for creating demographic information and analysing the volumes of transactional data generated by customer purchases
  • Expected to understand, prioritizes, and reaches out to new partners, and business opportunities et al
  • Tasked with understanding development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
  • It’s the job of the director to supervise implementation, advocate for the customer’s needs, and communicate with clients
  • The sales and marketing director is also charged with creating, executing and evaluating new plans for expanding increase sales
  • Keep all customer contact and information
  • Represents the company in strategic meetings
  • Aid to increase sales and growth for the business

Company Accountant

  • The company accountant is responsible for preparing financial reports, budgets, and financial statements.
  • Also provides the managements with financial analyses, development budgets, and accounting reports; analyses financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
  • The company accountant is also tasked with the company’s financial forecasting and risks analysis.
  • Should be able to understand and take care of the firm’s cash management, general ledger accounting, and financial reporting
  • In charge of developing and managing financial systems and policies
  • The company secretary is also responsible of administering payrolls
  • Ensures that Vanguard lenders LLC complies with taxation legislation
  • Also take care of all financial transactions for Vanguard lenders LLC
  • Is the internal auditor for the organization
  • The receptionist is expected to welcome clients by greeting them in person or on the telephone; answering or directing inquiries.
  • Is tasked with providing all clients with a personalized customer service experience of the highest level
  • Is expected to use every opportunity to build client’s interest in the company’s products and services
  • Responsible for managing administrative duties assigned by the Admin manager in an effective and timely manner
  • Beware of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
  • The receptionist will also Receives parcels / documents for the company
  • It’s tagged with Distributing mails in the organization
  • Handles any other duties as assigned by the Admin manager
  • Responsible for the cleaning the floors of Vanguard lenders LLC facility
  • Keeps note and make sure the toiletries and supplies don’t run out of stock
  • Ensures that both the interior and exterior of the firm are always clean
  • Handles any other duty as assigned by the restaurant manager.

Security guard

  • The security guard is responsible for protecting the firm and its environs
  • Also controls traffic and organize parking
  • He is Tasked with giving security tips when necessary
  • Should also Patrol around the building on a 24 hours basis
  • Will be expected to give security reports weekly

6. SWOT Analysis

We at Vanguard lenders LLC are prepared to build a super– structured microloan services firm that can take over the entire microloan service industry. Which is why we inculcated the help of well known consultancy firm, a firm known for its strict and precise way of doing business and also renowned for offering the best when contacted.

We contacted Brick Lewis Financial consults to help us with a SWOT Analysis in our designated business location and long term goals. Brick Lewis financial consults being the best in what they do, involved the management of Vanguard lenders LLC in conducting a SWOT analysis.

Here is a summary from the result of the SWOT analysis that was conducted for Vanguard lenders LLC by Brick Lewis financial consults;

It was literally noted that the strength of Vanguard lenders LLC doesn’t really rest on our fierce business network with other financial lending institutions, professional brokers in the industry or players in the real estate industry, but on the capacity, vision and experience of our team.

Vanguard lenders LLC has a team that are prepared to offer our clients the very best; a team that is well placed, professional and ready to pay attention to details and to maximise financial profits for the business. Vanguard lenders LLC are also positioned in a city with more family values and acknowledgement for each other, which will serve as a force to move our business to its destination.

Brick Lewis Financial consults believe our weakness would be how easy we break into the market and gain acceptance since we are just a new firm, especially from corporate clients in the already saturated micro lending and mortgage industry; that is perhaps our major weakness. But we’re positive that our publicity and advertisements would aid us in this aspect.

Opportunities

The opportunities in the lending industry is very big and daring, going by the size of people, business start ups and without doubt corporate organizations who are all in need of microloans to aid them reach their individual goals and vision.

Vanguard lenders LLC being a standard and well – positioned microloan services firm, we are well – prepared and ready to clamp any opportunity that comes our business path within the proximity of the law in the United States.

Brick Lewis Financial consults believes that most of the threats that we at Vanguard lenders LLC are likely to face as a microloan service firm operating in the United States will be unfavourable government policies, the introduction of a competitor within our location of operations and global economic downturn which usually affects purchasing / spending power.

It was also envisaged that we should beware of huge losses in three situations: due to sharp, sustained increases in interest rates, accounting control fraud, or the collapse of hyper-inflated residential real estate bubbles. So, to mitigate these threats, we have induced the use of credit scoring software like and we hope and are well prepared to use else any of these threats to our own advantage.

7. MARKET ANALYSIS

  • Market Trend

We all know and understand how massive and enormous the microloan services industry is and of course it is one industry that works for individuals and businesses across different industries.  A lot of people depend on the services provided by the industry to empower themselves and businesses, showing how important and helpful this industry has been and will still remain.

The micro lending and mortgage industry flows with a low level of capital intensity. It is believed that for every $1.00 spent on wages, the micro lending and mortgage industry will allocate $0.08 in capital investment. This 2016 figure indeed shows a slight increase from $0.05 in 2011.

The micro lending and mortgage industry gives loans to businesses, agencies and individuals by raising funds in the secondary market. These businesses will continue to perform these functions without depending on significant capital expenditure.

Most of the capital expenditure for the lending business is related to computers and technology used to process loans and store information. We expect the increase in the investment in technology infrastructure in the micro lending and mortgage industry, particularly delivering online services.

It is sincerely true that without the services of the loan services industry, most individuals and even start – up businesses will find it hard to access loan or save – up to purchase a property. The lending industry is explicitly responsible for helping individuals and businesses bypass the bureaucracies involved in obtaining loans from banks and other financial institutions et al

Within the past few years, the lending industry has aided in reducing unemployment in the United States and has also boosted the revenue generated in the United States. So also, the microloan service industry has benefited from the advancement of online platforms.

Moving higher, increasing product penetration and of course an expanding customer base is expected to drive growth in the industry.

8. Our Target Market

The lending industry is an industry that has without doubt aided a lot of individuals, companies and start ups. At Vanguard Mortgages, we will first and foremost serve small to medium sized business, from new ventures to other bigger businesses and individual clients, we hope to take the market one step at a time and without much notice take over the market quickly.

Vanguard lenders LLC being a standard micro lending and mortgage  business will capitalize on the  large variety of microloan service and other industry related services we wish to offer, hence made sure all are employees are well trained and equipped to serve a diverse range of clientele base.

Vanguard lenders LLC target market will slice across businesses of different sizes and individuals. We believe our business is equipped with a breath taking business concept that will help us work with individuals, small businesses and bigger corporations in Alexandria, Virginia and all other cities in the United States.

Outlined below is the list of businesses and organizations that we have categorically designed our products and services for;

  • Small businesses
  • Individuals and interested homeowners
  • Real Estate companies and investors
  • Nongovernmental organizations
  • House of worships and other religious organizations
  • Educational institutions
  • Corporate companies

Our Competitive Advantage

We at Vanguard lenders LLC understands explicitly the level of competitive in the microloan service industry, and due to our extensive research and planning, we should be able to penetrate the market and offer our prospective clients with easy to access microloans; thereby deleting the hard and long process needed to obtain loans from the bank and other financial institutions.

Vanguard lenders LLC might be a new micro lending and mortgage business in the United States of America lending industry, but it cannot be denied that the workforce and owners of Vanguard lenders LLC are considered micro lending and mortgage industry gods.

Right from the primary foundation of the business, who are the owners, up to the very height of our employees are core professionals, well trained and highly qualified microloan consultants in the United States. This is a fact that will push us ahead of competitors in the lending industry.

We also help to create a comfortable business environment for our employees and also inculcate them into the business by offering work bonus and loyalty bonus which will be calculated with more or less 10 years duration, which will push them to give their all and stay loyal to the business, and also help us to build a classic business that will be the topmost micro lending and mortgage business in the whole of United States.

9. SALES AND MARKETING STRATEGY

  • Sources of Income

A vanguard lender LLC was founded to become the lead player in the micro lending and mortgage loan field. We also hope to bring in good and substantial profit, while also giving our customers and satisfaction they deserve to achieve their goals and targets.

We plan to generate income by offering the following microloan services for individuals, real estate companies, NGOs and for corporate organization. We plan to maximise profits and get substantial incomes by offering the following services;

10. Sales Forecast

We at Vanguard lenders LLC actually understand how hard and the rigorous process people go through to obtain loans from banks and other financial institutions, we hope to make this process less tough and create a substantial base of happy and satisfied clients.

This goes to show that the potential to generate income for the business cannot be ruled out. Vanguard lenders LLC was established to lead the war against poverty and we hope to make it the best of the best, and on our online platforms and we are very positive that we will meet our set target of getting substantial income / profits from the first six month of work and grow the business and our clientele base within and outside Virginia

After our extensive market research and with the help of the various consultancy firms we employed, we came out with our sales forecast for the next three years. The sales forecast was calculated and planned based on information gathered on the field and some assumptions that are common with new entrants in the Industry.

Outlined below is a detailed sales forecast for Vanguard Mortgages, which we believe and hope we will surpass with hard work and perseverance. This sales forecast is also based on the location of our business and the innovative business we will be offering to our clients.

  • First Fiscal Year -: $750,000
  • Second Fiscal Year -: $1.4 million
  • Third Fiscal Year -: $3.2 million

Note : The above forecast was done based on what can be gotten in the industry and with the expectation that there won’t be any major economic meltdown and natural disasters within the next three years in the whole of Virginia.

We also hope there won’t be any fierce competitor offering all the services we hope to offer to our customers in Alexandria Virginia. It will also be worthwhile to note that the above forecast might be lower and at the same time it might be higher.

  • Marketing Strategy and Sales Strategy

We all at Vanguard lenders LLC are very much aware of the threats and strict competition in the micro lending and mortgage business, and we have devised our strategic means to win and suppose them. This may include hiring the best hands for the job and also creating a more attack minded marketing plan.

Our sales and marketing director will be employed based on his/her undeniable experience and innovative competition winning mind-set in the industry and we hope to train him or her extensively with other sales and marketing workers to be prepared and well equipped to meet their targets and the overall goal of Vanguard Mortgages.

We also hope to make sure that our genuine and businesslike approach speaks volume for us in the industry; we also plan to build a business that will use or employ the use of customer satisfaction to boost our client base.

The major goal of Vanguard lenders LLC is to grow a business that will be considered the very best in Virginia and one of the top 5 micro lenders in the United States of America which is why we have after much consideration and research outlined strategies that will help us lead of the Alexandria market and grow to become a major force to consult with in Virginia in the next two years.

We hope to make use of the listed strategies to build our business and become the war Vanguard for the battle against economic recession;

  • We plan to introduce Vanguard lenders LLC by sending introductory letters with our business brochure to individuals, households, corporate organizations, schools, players in the real estate sector, and all the people of Alexandria.
  • We also plan to advertise Vanguard lenders LLC in important financial and business related magazines, newspapers, TV stations, and radio station.
  • We also plan to Vanguard lenders LLC on yellow pages ads (local directories)
  • We also plan to attend important international and local real estate , finance and business expos, seminars, and business fairs et al
  • We also hope to Create different packages for different category of clients (individuals, start – ups and established corporate organizations) in order to work with their budgets
  • We also plan to make use the internet to promote our business
  • We hope to encourage word of mouth marketing from loyal and satisfied clients

11. Publicity and Advertising Strategy

Vanguard lenders LLC have also contacted the service a renowned firm that is known for its legit ways of boosting a company’s brand awareness, to help us create publicity and advertising strategies that will aid us to attract and keep our target market, and also make our presence known and felt by all and sundry.

We also want to take Alexandria Virginia by storm with our undefiled publicity and advertising strategies. Listed below is the summary of capable strategies suggested by Artwork business consult for Vanguard Mortgages;

  • We hope to place adverts on both print (community based newspapers and magazines) and electronic media platforms; we will also advertise Vanguard lenders LLC on financial magazines, real estate and other relevant financial programs on radio and TV
  • Vanguard lenders LLC will also sponsor relevant community based events / programs
  • We also plan to make use of various online platforms to promote the business. This will make it easier for people to enter our website with just a click of the mouse. We will take advantage of the internet and social media platforms such as; Instagram, Facebook , twitter, YouTube, Google + et al to promote our brand
  • We also plan to mount our Bill Boards on strategic locations all around Albany – New York.
  • We at Vanguard lenders LLC also plan to engage in road show from time to time
  • We also plan to distribute our fliers and handbills in target areas all around Alexandria
  • We plan to make sure that all our workers wear our branded shirts and all our official vehicles are well branded with our company’s logo et al.

12. Our Pricing Strategy

We all at Vanguard lenders LLC understand that the industry is moved by the increase in demand and availability of real estate / properties which is why there can never be a price model that will be suitable for the lending industry. As we all know, the prices for properties fluctuates on a regular basis.

We are also aware that most lending firms rely on commissions since they serve as middlemen between those seeking for microloans and the secondary financiers but we hope to create a more direct approach by offering those loans ourselves which can be very possible due to the large incentives our founders are willing to inject.

We hope to keep the prices of our services and commissions at Vanguard lenders LLC below the average market rate for our clients for the maintime.

We also hope to provide them with loans coupled with low interest rates that will bring them closer to the firm, and we hope to move our prices a little higher when we have achieved a substantial corporate identity in the micro lending and mortgage industry.

  • Payment Options

We plan to provide various a wide varieties of payment options to suit our clients at Vanguard Mortgages. We understand the need and the diverse countenances of people, and the way they understand and process things differently, and we tend to provide a suitable platform that will suit all and sundry equally. Listed below are the payment options that we will make available to Vanguard Lenders LLC.

  • Payment through bank transfer
  • Payment through online bank transfer
  • Payment with check
  • Payment with bank draft
  • Cash payment

With reference to the above platforms, we have chosen a well renowned bank in the United States to aid in our business.

We have chosen and opened a corporate current account with Capital one financial Corporation. Our bank account numbers will be made available in website and promotional materials to clients who may want to make cash deposit and it will also be given explicitly to clients on request.

13. Startup Expenditure (Budget)

We at Vanguard lenders LLC understand that starting a Micro lending and mortgage Business is not an easy task especially due to its capital constraints; this is because you are not expected to acquire expensive machines and equipment, be capable to provide loans and solve other issues and legal proceedings.

Also one need to be concerned about is the enormous amount needed to acquire or lease a standard office facility in a good and busy business district, the price needed to acquire furniture and equip the office, the money needed to purchase the required software applications, the needed to pay bills like phone bills and water bills, obtain license, advertise the business. Outlined below is a detailed financial projection and costing for starting Vanguard Lenders LLC;

  • Price of incorporating the Business in the United States of America – $750.
  • Our budget for basic insurance policy covers, permits and business license – $200,000
  • Acquiring a suitable Office facility opposite the city hall of Alexandria, Virginia (Re – Construction of the facility inclusive) – $75,000
  • The budget envisaged for capitalization (working capital) – $1million
  • Budget for settling other legal processes (acquiring business license and all, all Alexandria Virginia city dues et al) – $2,500
  • Equipping the office with suitable and standard equipment(computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $7,000
  • Purchasing of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
  • Launching Vanguard lenders LLC official Website – $600
  • Our expenditure for paying at least three employees for 3 months plus utility bills – $12, 000
  • Other Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $4,000
  • Miscellaneous: $10,000

With the above detailed cost analysis of starting a Micro lending and mortgage  Business, it is understood that we need $1,322,350 to successfully set up Vanguard lenders LLC which is a large scale micro lending and mortgage  business.

Generating Funding / Start-up Capital for Vanguard lenders LLC

Vanguard lenders LLC is a well licensed and registered Micro lending and mortgage business which is capitalized by two principal investors, Mr John Taylor and Mr Alfred Garth. They are the founders and financiers of the business and hope to remain so for now, with hope to accept partners at a very ripe and mature stage in the business.

Due to less constraint in financing Vanguard Mortgages, we have outlined the few ways we can acknowledge funding and start up capital. These was may include;

  • Generate part of the start up capital from the two principal investors
  • Accept soft loans from family members and friends
  • Agreeing to angel investors
  • Apply for business loan from my Bank (if need be)

Note : Vanguard lenders LLC has been able to generate an enormous $1.4 million from its two principal investors, who aligned and individually prune out $700,000 each. We believe that the amount is substantially enough to run the business for the first three months, which by then we expect to sustain the business by the cash and incentives generated from our business proceedings.

14. Sustainability and Expansion Strategy

Every business wants to expand and stand the test of time, and this achievement lies in the number of loyal customers in their clientele base and the competence of the employees, investment procedures and the business structure they choose. A business without these mentioned criteria is not business but a playground that will end even before it starts.

Vanguard lenders LLC was established to spread its wings across the sky of Virginia, and also expand and fly all through the nick and crannies of the United States, clamping and taking over the market in each turn. We believe with our unique business structure and competent hands, we will be able to start surviving with the cash we make right from the second month of operations.

We also understand that one of the strategies of gaining approval and winning customers over is to offer innovative services to our customers at a cheaper than what is obtainable in the industry and we have made plans to survive and compete favourably within those periods.

We all at Vanguard lenders LLC will ensure that we employ the right foundation, structures and processes, and also make sure that our employees starting from our guards up to our investors are well catered for. We hope to create a family in the firm, that value work ethics, same zeal and goal to move Vanguard lenders LLC to its expected height.

We also plan to employ profit-sharing arrangement which will enable our management staff enjoy the fruit of their labour.

This arrangement will be decided upon during a considerable duration of 5 years and upon decision of the board of the organization. With these and many more attractive employees focused incentives, we hope to hire and retain employees that are the best in any field they are hired for.

Check List / Milestone

  • Business Name Availability Check: Completed
  • Business Incorporation: Completed
  • Opening of Corporate Bank Accounts various banks in the United States: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of All form of Insurance for the Business: Completed
  • Conducting Feasibility Studies: Completed
  • Leasing, renovating and equipping our facility: Completed
  • Generating part of the start – up capital from the founder: Completed
  • Applications for Loan from our Bankers: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
  • Recruitment of employees: In Progress
  • Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business (Business PR): In Progress
  • Health and Safety and Fire Safety Arrangement: In Progress
  • Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry: In Progress

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SWOT Analysis for Airline Business Plan in Nigeria

  • A Business Plan Model for Micro finance Loan
  • Post author: Ane
  • Post published: August 22, 2020
  • Post category: BUSINESS-PLAN-AND-FEASIBILITY-STUDY / Business Tips
  • Post comments: 0 Comments

This is a Business Plan Model for Micro finance Loan. It’s a sample microfinance business plan. In fact, it’s a business plan template for a money-lending company. Therefore, when there is a need for a strategic plan for microfinance business this model is the benchmark. As a matter of fact, this Business Plan Model for Microfinance Loan meets the industry standard. Please, get a Business Plan Model for Micro finance Loan

Therefore, are you in need of a loan from any microfinance bank? And you desire a business plan that meets the industry standard? This Business Plan Model for Microfinance loans is what you need. Our first attempt here is to define the industry you want to borrow from.

What is Microfinance Bank?

Table of Contents

As a matter of fact, microfinance is a category of financial services targeting individuals and small businesses. One peculiar thing about these small businesses is that their mode of operation makes them lack access to conventional banking and related services. In fact, microfinance institutions include microcredit, the provision of small loans to poor clients; savings and checking accounts; micro-insurance; and payment systems, among other branches. Read more about A Business Plan Model for Micro finance Loan

By its nature, microfinance services are designed to reach excluded customers by regular financial institutions. These excluded groups include the usually poorer population segments, possibly socially marginalized, or geographically more isolated. Microfinance caters for and helps them become self-sufficient.

It’s advocated that microfinance should have a better understanding of the microfinance ecosystem so that the microfinance institutions and other facilitators can formulate sustainable strategies that will help create social benefits through better service delivery to the low-income population.

Peculiar Content: Read more about A Business Plan Model for Micro finance Loan

A Business Plan Model for Microfinance Loan must emphasize these topic items of the business.

  • Introduction of your business
  • Executive Summary
  • Product and Services
  • Your competition,
  • The Management Team
  • SWOT Analysis
  • CAPEX and OPEX  assumptions
  • Working capital assumptions
  • Turnover and Cost of sales assumptions
  • The financial model

Peculiar Financial Model: A Business Plan Model for Micro finance Loan

We would want you to go through this attached sample financial model and make comments. You can ask questions through the comment box. 

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Projected Profit and Loss

Business plan capex and opex assumptions for loan applications:.

Creating a business plan with CAPEX (Capital Expenditures) and OPEX (Operating Expenditures) assumptions is crucial when applying for a loan. Lenders want to understand how you plan to use the borrowed funds and how you’ll manage ongoing expenses. So, we present here a general outline of what you should include in these sections:

CAPEX Assumptions:

  • Overview of Capital Expenditures:  Provide a brief explanation of what capital expenditures are and why they are important for your business.
  • List of Capital Expenditures:  Enumerate the major capital expenditures you plan to make using the loan. Include items such as equipment, machinery, vehicles, technology infrastructure, facilities improvement, etc.
  • Description of Each Expenditure:  Provide a detailed description of each capital expenditure item, explaining how it will benefit your business operations and contribute to growth.
  • Cost Breakdown:  Break down the cost of each item, including purchase price, installation, setup, and any other associated expenses.
  • Timeline:  Outline when each capital expenditure will occur. This could be over the course of several years or months, depending on your business needs.
  • Depreciation:  Explain how you plan to account for the depreciation of these assets in your financial statements.
  • Return on Investment (ROI):  Estimate the expected ROI for each capital expenditure. How will these investments contribute to increased revenue or reduced costs?
  • Read more about A Business Plan Model for Micro finance Loan

OPEX Assumptions:

  • Operating Expenses Overview:  Briefly introduce operating expenses and their significance in running your business.
  • List of Operating Expenses:  Provide a breakdown of your anticipated ongoing expenses, including items like salaries, rent, utilities, marketing, insurance, and more.
  • Description of Each Expense:  Explain the purpose of each expense and how it supports your business operations.
  • Cost Estimations:  Estimate the monthly or annual cost for each operating expense. Be as accurate as possible based on market research or historical data.
  • Assumptions and Justifications:  Provide the reasoning behind each expense estimation. This could include industry benchmarks, quotes from suppliers, or historical expenditure data.
  • Variable vs. Fixed Costs:  Differentiate between variable (costs that change based on production or sales levels) and fixed costs (constant regardless of output).
  • Contingency Plans:  Mention any contingency plans you have in place to address unexpected increases in operating expenses or changes in market conditions.
  • Growth and Expansion:  Explain how your operating expenses might change as your business grows. Will new hires be necessary? Will marketing expenses increase?
  • Profitability Analysis:  Discuss how your projected revenue will cover your operating expenses and lead to profitability.
  • Order A Business Plan Model for Micro finance Loan from us.

It’s important to note that both CAPEX and OPEX projections should be well-researched and realistic. Back up your assumptions with data wherever possible. Lenders want to see that you’ve thought through your financial needs comprehensively and that the loan will be used effectively to drive business growth.

It might also be helpful to work with a financial advisor or accountant to ensure the accuracy and credibility of your projections. We are CFMC Limited, a team of Chartered Accountants ready to provide assistance to you.

What Next For A Business Plan Model for Micro finance Loan?

In conclusion, you have to make a decision on the type of loan you desire. We provide Entrepreneurship Development guides. We also assist you in getting all the necessary documents required to secure the loan.

In fact, other business support services are available. Therefore, we will assist you implement a bankable business plan and other business support services commercially. For example, we will register your business with CAC if you don’t have any now. Therefore, find out what we can do for you here. Our target i to make your business get to the next level.

Related Topics for A Business Plan Model for Microfinance Loan :

  • NIRSAL AGSMEIS Financial Model for Rice Mill   
  • Business plan template for Agrobusiness NIRSAL bank loan
  • Get more here
  • Skill Acquisition BPlan Template
  • NIRSAL BANK FINANCIAL MODEL FOR RICE MILL BPLAN
  • Apply for AGSMEIS On-line training here
  • Sample Business Consultants BPlan
  • How to download the NIRSAL Model template
  • What You should do to get AGSMEIS Loan
  • An Immediate Business Plan for AGSMEIS Loan application
  • How fast to register your business for AGSMEIS loan

Our Service Offering For A Business Plan Model for Micro finance Loan

Therefore, to support you in this exercise, Complete Full Marks Consultants Limited offers;

  • Entrepreneurship training
  • CAC registration services
  • Business plan development
  • Profiling of applicants for loans.

Other business support services in accounting, auditing, and taxation are also available.

Contact us at +234 8034347851 or email us via [email protected].

Finally, for better benefit from this site, you can share, bookmark, like, or follow us through any of our social media platforms. Thanks for reading through A Business Plan Model for Micro finance Loan. Kindly take the time to peruse and distribute this message.

Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.

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  • Business Plans Handbook
  • Business Plans - Volume 09
  • Financial Services Company Business Plan

Financial Services Company

BUSINESS PLAN     PRISMA MICROFINANCE, INC.

2 Claremont Street Boston, Massachusetts 02118

Prisma MicroFinance, Inc., is a private, mission-driven company with operating subsidiaries in Central America that provide "microcredit" to entrepreneurs. Since 1995, Prisma has provided lending and savings services to people in the developing world considered "unbankable" by formal financial institutions. By operating a profitable private-equity funded business in the Nicaraguan microfinance market—where most competitors are nonprofits—the company seeks to revolutionize and to grow the world's microfinance industry.

EXECUTIVE SUMMARY

Company overview, target market, operations & management, growth strategy & milestones, marketing & sales strategy, financial analysis, impact analysis & social return on investment.

Prisma MicroFinance, Inc., is a private, mission-driven company with operating subsidiaries in Central America that provide "microcredit" to entrepreneurs. Since 1995, Prisma has provided lending and savings services to people in the developing world considered "unbankable" by formal financial institutions. By operating a profitable private-equity funded business in the Nicaraguan microfinance market—where most competitors are nonprofits— the company seeks to revolutionize and to grow the world's microfinance industry. The company upholds a dual mission of providing affordable capital to "unbankable" individuals while operating an efficient, profitable business.

Why We Do It

At Prisma MicroFinance, access to affordable credit is considered a right, not a privilege. Providing affordable capital is a business model that will allow the company to offer reliable financial returns and significant social returns to its investors, while providing a valuable service to its borrowers. "We believe in doing well by doing good."

The Management

Prisma's management team has a total of over 25 years of experience in the microfinance industry. They have worked together for five years and their track record proves that they have the necessary skills to guide the company as it expands throughout Nicaragua and Central America.

The worldwide microfinance market is large, underserved, and growing at a rate of 30 percent annually. The worldwide market is estimated to be $270 billion, with current annual cash turnover of $2.5 billion. The Nicaraguan market is $300 million, with $50 million being lent at rates averaging 60 percent APR. There are more than 20 significant entities in Nicaragua providing microfinance services, with no single one holding more than 13 percent of market share.

The Customers

Prisma's customers are individuals who are not in an economic position to secure funding from traditional financial institutions. The majority are small-business owners, operating in the Nicaraguan capitol of Managua. Prisma has a strong lending history with taxicab owneroperators, and it plans to solidify its reputation within this market. By FY2004, its customer base will be an equal split of micro, small, and medium-size business owners.

Competitive Advantage and Profitability

Prisma embodies a profitable business model with four major components: local and inexpensive labor, market penetration in cooperative taxi financing, externalization of costs by partnering with third parties, and the use of effective technology. Unlike its competition, Prisma has operated without subsidies or grants since day one for over five years while also providing healthy returns to its financial backers. Moreover, Prisma lends at rates of 31-34 percent APR, two thirds of the average competitor's rate.

Marketing and Sales

Prisma's marketing and sales strategy has been extremely successful, yet extremely cheap. As word of mouth has been Prisma's biggest source of sales, marketing activities have been focused on keeping clients happy and recognizing their accomplishments. The social structure and business culture that has made this approach a success in Nicaragua exists throughout Central America.

Financial Services Company

Key Milestones

  • Raise Series "B" $1.5 million Investment Round
  • Grow loan portfolio to $1 million
  • Make 2,000th loan
  • Diversify portfolio to 60/40 taxi/non-taxi loans
  • Expand board to 7 members
  • Establish Advisory Board
  • Report on new location for central office
  • Close Series "B" $1.5 million Investment Round
  • Grow loan portfolio to $4 million with debt
  • Make 4,000th loan
  • Diversify portfolio to 50/50 taxi/non-taxi loans
  • Expand Central Managua office
  • Complete Central American expansion report
  • Raise Series "C" $4 million Investment Round
  • Grow loan portfolio to $5 million
  • Make 6,000th loan
  • Diversify portfolio to 40/60 taxi/non-taxi
  • Open second Nicaraguan office
  • Lay groundwork for operations in second country
  • Close Series "C" $4 million Investment Round
  • Grow loan portfolio to $10 million
  • Make 10,000th loan
  • Achieve balanced "Prisma Portfolio," even split of Micro, Small, Medium loans
  • Open third and fourth Nicaraguan Offices
  • Begin operations in second Central American country

Funding Goals

Prisma is raising $1.5 million in its Series "B" round to grow and expand business, both the total number of customers it serves and the region in which it offers service. The company has planned an aggressive, but realistic, expansion strategy. By the end of FY2004, Prisma will be lending 4,800 loans profitably in four Nicaraguan cities and a second Central American country with a total lending portfolio of $10.56 million.

Use of Funds

Prisma seeks to expand its current successful model. The funds from the sale of stock will be used to leverage debt in order to expand the loan portfolio.

Prisma MicroFinance, Inc.'s, Mission Statement:

To provide our customers superior financial services, fostering opportunities for wealth and employment creation, while maximizing social and economic returns for our investors.

The Company

Prisma MicroFinance, Inc. (Prisma) is a United States corporation registered in the state of Massachusetts. The company was founded to be a development bank—making loans in small amounts widely available to people in the developing world. This growing industry is known as "microfinance."

The necessary capital to operate Prisma is raised through private equity and debt from individual and institutional investors in the developed world. With $1.5 million in new equity, the company will be able to support expansion efforts and leverage at least this amount in debt financing. This capital will accelerate growth, exponentially increasing the number of customers and amount lent. Prisma's customers are primarily business owners who do not have access to affordable capital to finance their operations because they are considered unbankable by traditional financial institutions. Although these poor business owners may operate on a very small scale, their operations are profitable. They remain locked in the poverty cycle because of the premium they pay for being perceived as a risky investment. Prisma's experience, and that of the microfinance industry in general, has proven just the opposite. Lending to poor individuals poses risks because of the precarious nature of their cash flows, but providing them access to affordable capital allows them to even out cash flows and break out of the poverty cycle.

Prisma does not conduct its operations for charity. It is at the forefront of the B2-4B revolution—meaning it is finding business solutions for the four million poor people of the world. Companies such as Hewlett-Packard are investing significant capital into this area not only because of the social upshot, but because it is good business. Prisma has operated profitably for five years by targeting a market opportunity that is large, underserved, and in which the competition is fragmented by industry standards. Prisma offers less expensive products to consumers with better service than its competitors.

Company Name

"Prisma" means "prism" in Spanish. Prisma MicroFinance, Inc. "refracts" private capital investment from the developed world, funneling it to small business owners in Central America who traditionally have lacked access to capital but who are entrepreneurial and commercially savvy operators.

Prisma's spectrum covers providing access to credit and financial services for people living in the developing world. The diversity in loan size creates a balanced portfolio serving a range of people. A single loan officer can easily and profitably manage a cost-effective portfolio that includes loans of different sizes. In this way, Prisma embraces its dual business focus of:

  • Providing capital to "unbankable" clients
  • Ensuring market rate returns for investors

Company History

Prisma was begun in 1995 as a savings and loan cooperative called SINAI, R. L. (Support and Incentives for Autonomous Initiatives) founded by a Nicaraguan, Roger Aburto, and an American, David J. Satterthwaite. They shared a common interest in assisting poor business owners overcome barriers to success. The two founders started operations completely through grassroots efforts with $1,000 in personal start-up capital and a $4,000 loan from American businessman George Kraus, who is now a Board Member. For its first two years, the company conducted its activities out of a single room in Roger's house with a home computer.

Prisma has grown steadily from the beginning, averaging 387 percent annual growth rate as measured by total loan portfolio under management.

Prisma Growth: 1996-2000

Financial Services Company

The organization's growth has been funded completely with private investment. In December of 2000, the Nicaraguan loan portfolio was at just over $850,000 distributed to 236 loans. The average loan is $3,000 and is repaid within 22 months. Phenomenally, in 1,500 loans, Prisma's default rate is less than 1 percent. The single most limiting factor throughout Prisma's history has been lack of capital. At present, the organization has nearly 200 approved loans waiting for sufficient funds to grant them.

Prisma's first client in 1995, Arroya Rios Vallejos, borrowed $500 for inventory for her corner store. She has since received and repaid four loans, and now owns her own home.

Unlike the overwhelming majority of microfinance institutions that depend on donations, Prisma's entire loan portfolio has instead been financed by debt from individuals and commercial institutions. Prisma has consistently offered interest rates at 31-36 percent APR, significantly lower than the competition's rates of 60-80 percent APR. The company has continually sought to maintain efficient and modern operations, thus creating a vibrant business culture prepared to confront a demanding marketplace.

Products Offered

Prisma is a financial institution. Its principal operations are as a lender to customers typically viewed by the industry as "unbankable." Prisma makes loans, at risk-adjusted market rates, from $50 to $15,000 dollars. This range is often referred to in the lending profession as "microfinance" because of the size of the loans.

All customers require a co-signer and character references for loan approval, creating a circle of trust for lenders. All loans over $500 require guarantees and/or collateral. Interest rates start at 24 percent a year, plus fees. Loan interest rates vary depending on loan size, customers' credit, and other risk factors. Loan terms have ranged from 3 months to 3 years. For the Nicaraguan operations, the median loan term to date from the last 300 loans was 2.4 years.

Prisma has ongoing relationships with customers over the life of the loan. By maintaining contact with customers, early interventions save troubled loans. For example, the company offers customers in good standing (taxi owners in particular) additional working capital lines of credit. This ensures that their business is not disrupted due to cash flow crunches or unexpected occurrences including a car accident, a sick family member, or "inclement weather." Prisma also encourages evening out cash flows by requiring that customers put 5 percent of every loan into a savings account. For first-time borrowers, this amount is folded into the loan amount.

Borrowers in good standing, called class "A" customers, gain more latitude in available credit, which they use to restructure existing loans or get new ones. Customers increase their standard of living as a direct result of these loans.

Loan Products

  • Micro Loans ($50-250)—primarily made to low-income individuals for consumer purchases and micro-entrepreneurs for business-related expenses. Micro loans are most often made to women. Business owners buy inventory and consumers purchase domestic appliances, such as refrigerators or stoves.
  • Small Loans ($251-1,000)—primarily made to business owners. They purchase inventory and/or capital investments like machinery—freezers, sewing machines, or power tools.
  • Medium Loans ($1,001-15,000)—primarily made to taxi owners to purchase new vehicles. These loans assist business owners graduating from small loans and growing owner-operated businesses seeking to expand. Extensive due diligence and more rigorous guarantees are required.

Sources of Revenue

LOAN REVENUE: The revenue stream from a loan is derived from three sources.

  • Interest: A 24 percent annual rate is carried over the term of the loan. This rate is considerably lower than competitors' rates, which average at least 60 percent in the Nicaraguan microfinance industry. This revenue source accounts for 51 percent of Prisma's historical income.
  • Legal Fee: A flat legal fee is charged for the origination of every loan, usually $30, which is carried over the life of the loan.
  • Origination Fee: A 6 percent origination fee is charged that is carried over the life of the loan. This fee accounts for 7 percent of Prisma's historical income.

Additional revenue is derived from:

  • Loan Late Payment Charges: Delinquent clients pay an extra 0.5 percent on the late balance. Almost 20 percent of the outstanding loans are assessed a late fee at some point during the life of the loan. But, at any one time, only 5 percent are in arrears. This revenue source accounts for 8 percent of Prisma's historical income.
  • Savings Accounts: All clients are required to maintain a savings deposit with a balance of at least 5 percent of the amount borrowed. Prisma provides customers the initial 5 percent required in the loan itself. Savings accounts earn 8 percent annual interest. As this rate is on the high end of the market, the majority of customers carry at least a portion of their savings with Prisma. Savings account volume in Nicaraguan has been 5-10 percent of the total loan portfolio.
  • Currency Exchange: Prisma conducts all operations in U.S. dollars because the local economies in which Prisma operates currently, and plans to operate in the future, are less stable. Operations in dollars minimize the currency risk and economic influences on the value of the portfolio. Loans are made and collected in dollars; however, the accounts for subsidiary operations must, by law, be carried on the books of the subsidiary companies in the local currency. On average, currency exchanges accounts for 15 percent of Prisma's historical net income.
  • Automobile Insurance: This is a new product offering for Prisma; 50 policies have been sold since March 2000. Although it is a lucrative new offering, income is not realized for a policy sale until the end of the fiscal year. In fact, it is carried on the books as a liability. Offering insurance is a value added for several reasons. One, the company ensures that all cars it finances are insured. Two, competitive advantage lending to taxi drivers provides a captive market for the product. Last, profitably expanding services beyond just lending is a positive entry to offering additional products and services to customers that trust the company.
Smart people are not confined to the developed world…. Any company that doesn't figureout a way to get connected with the poor [of the Third World] will not tap huge potential. —Carly Fiorina, CEO, Hewlett-Packard

The Global Microfinance Market

Prisma MicroFinance, Inc., operates in the large, growing, yet underserved market of microfinance lending. The MicroCredit Virtual Library estimates that there are currently 7,000 microfinance institutions worldwide, serving approximately 16 million poor people. The total cash turnover for these institutions is $2.5 billion.

Of the estimated 500 million people who operate micro or small businesses around the world, only 10 million have access to financial support for their businesses (Source: Micro-credit Summit).

Worldwide demand for credit by this population is almost limitless. Based on an average loan size worldwide of $550, demand for microloans is approximately $270 billion. The annual growth rate of the world microloan portfolio is 30 percent, with some estimates as high as 70 percent (Source: Micro-credit Summit).

The spectacular growth rate of the microfinance industry is in large part due to the difficulty that the vast majority of people in the developing world face in gaining access to credit. The strict demands and cronyism of commercial banks makes it nearly impossible for an average citizen to get a loan.

Demand in Nicaragua

Prisma focuses its activities in the markets with which it is most familiar—Central America. With five years of profitable operations in Nicaragua, the company knows how to conduct successful business in these markets. Currently, the company operates in Managua, the capitol city of Nicaragua, and has made approximately 1,500 loans to date. Lending is limited only by the amount of capital available to lend.

Nicaragua is an attractive market for microfinance. Despite the American image of the country as economically volatile and politically unstable, Nicaragua has had open markets since 1990. In 1990, Nicaraguans elected as president Violetta Barrios de Chamorro who enacted market economy reforms in 1991, privatizing 351 state industries. The 1996 election of Arnoldo Alleman marked the continuation of government policies favoring a market economy. These policies remain in place today.

The economy largely consists of coffee, cereal grains, sesame, cotton, and bananas. Agriculture provides 34 percent of Nicaragua's GDP, the highest in Central America; however, over the past decade, there has been a shift in the workforce away from the agricultural sector toward urban, service sector jobs. Approximately 46 percent of the labor force is now employed in the service industry, compared to 28 percent in agriculture and 26 percent in manufacturing, construction, and mining. Nicaragua's major trading partner is the United States and its major exports are cotton, sugar, seafood, meat, and gold. Economic highlights about the country include:

  • GDP of $2. 01 billion in 1998
  • GDP per capita of $420
  • Population of just over 4, 800,000
  • Inflation rate consistently under 10 percent since 1994

The Nicaraguan Small Business Bureau estimates that the number of micro and small, nonagricultural businesses in Nicaragua is 152,607, excluding informal businesses, such as street hawkers and market vendors. Micro and small businesses are defined as having less than 5 employees. They employ 267,000 individuals, and are largely family-run enterprises. Informal businesses, typically a one-person operation, are estimated to be up to double those numbers. The government estimates that 60 percent of urban economic activity is conducted at the small, micro, or informal sector—a major driver of the local economy. With the average micro or small loan in Nicaragua estimated to be $585, based on industry data, this indicates an almost $300 million market in Nicaragua alone. The microfinance market, as a segment, is currently underserved. The total outstanding loan portfolio for Nicaraguan microfinance institutions is $47.9 million. Based on Prisma's experience, approximately 50 percent of all businesses in the country have access to some form of credit, either from formal institutions, family/friends, nonprofit microfinance lenders, or moneylenders. This number skews disproportionately to the larger companies, namely those with at least 20 employees or who are involved in export. Lending available to this population is at rates or terms less attractive than Prisma offers. Nonprofit lenders typically charge 60-80 percent APR, moneylenders are as high as 40 percent a month, and capital from family/friends is highly limited.

Within the large number of businesses operating in Nicaragua, there are numerous segments that are especially attractive for microfinance lending. Some unifying characteristics include:

Specific businesses that have been excellent customers to date include:

  • taxi drivers: make daily or weekly payments and provide excellent collateral
  • employee associations: act as an intermediary, thus improving the security of consumer loans
  • community banks: increase the efficiency of servicing microloans

The Prisma target customer is a self-employed businessperson, either female or male, who lives in an urban area with his or her family. One of the most lucrative market segments Prisma loans to is taxi owners.

The Nicaraguan Microfinance Market

Although the countries in Central America are diverse, all have one thing in common: taxi cooperatives. There are more than 8,000 taxis operating in Nicaragua and the market is expanding. The Transportation Department estimates the number of new licenses granted will increase the total at least 10 percent a year for the next three years.

In Nicaragua, taxis are owner-operated and are considered medium-sized businesses. The owners are called "taxistas." They are organized nationally into 240 cooperatives. The cooperative structure gives the members bargaining power, purchasing power, and a strong social network.

In 2000, Prisma held about 2 percent of the taxi finance market within a fragmented market where no single competitor dominates. Taxi financing is a patchwork of banks, finance companies, car dealers, and other sources of informal financing. No financial institution has captured this market.

Expansion Strategy: Prisma will specialize in financing "taxistas" as a spearhead to establishing operations nationwide in Nicaragua and in other countries in Central America.

Prisma has made 250 loans to date to this population. Because the market is regulated through licenses, business is lucrative for the "taxistas" and loan repayment has been impeccable. Furthermore, in a recent Prisma survey of 80 drivers, 80 percent said they had or needed financing, whereas only half have existing access to financing.

Of the 3,200 "taxistas" who currently want financing, Prisma is positioned to capture the best of these clients, assuming the following:

  • Prisma's 4-year track record of successfully working with taxi owner-operators will continue
  • The average "taxista" loan to date of $5,993 for a term of 2.4 years is indicative of this market
  • Any potential "taxistas" who are bad credit risks can be replaced because Prisma offers better credit terms
  • A taxi is replaced every five years

This market segment is worth $11.52 million. For Prisma, further penetration into this market is currently limited only by capital. The Nicaraguan operations currently have 200 pending loans that have been approved, but there is not sufficient capital to lend.

Prisma will specialize in financing "taxistas" as a spearhead to establishing operations nationwide in Nicaragua and in other countries in Central America. Small, low overhead offices will be established in other urban centers. Strategic partnerships with a national bank and car dealers will enable Prisma to centralize lending and collections processes while still maintaining national coverage. This strategy coincides with market trends: new licenses are currently overwhelmingly granted outside the capitol.

Taxi owners are low-risk customers with excellent sources for collateral. They have the insured vehicle itself and an operating license that has value within the cooperative with which Prisma has outstanding relations. Moreover, the cooperatives must co-sign on a Prisma loan. This provides an important set of organizational incentives to re-pay loans. Finally, all taxi loans must be guaranteed by a lien on real-estate.

Serving this market segment is an excellent example of Prisma's double bottom line. Loans made by Prisma to "taxistas" serve independent business people while also placing large amounts of capital quickly and securely. A loan to this population enables a customer to have an annual income of approximately $1,000, almost twice the national average. Given that the average "taxista" has 6 dependents, Prisma's lending helps a huge number of people achieve a decent, although still precarious, standard of living. In this way, the Prisma social return, like the Prisma loan portfolio, is balanced: the emerging middle-class is encouraged while also supporting those on the economic margins.

Nicaraguan Competition

The total outstanding loan portfolio for Nicaraguan microfinance institutions is $47.9 million and Prisma currently has 1.2 percent of the market. Prisma's major competitors, in order of threat to the company, are:

  • Other microfinance institutions
  • Other formal lending institutions
  • Money lenders
  • Family/friends
  • Potential customers not borrowing

Prisma is confident that its customer network is established enough to overcome the first three threats through word of mouth. In reverse order, here is an overview of each.

Potential Customers Not Borrowing: The most common action by potential customers at this time is not to access capital or credit, due to fear, lack of understanding, or no market opportunity. This dynamic clearly drags the economy in a number of ways, creating a significant dis-incentive for individuals to participate in the market economy.

Borrowing from Family and Friends: When individuals cannot turn to institutions, they turn to family and friends. On the practical level, this typically results in under-capitalization of potential successful businesses because family and friends are confronting the same dearth of capital.

Money Lenders: These are usually local individuals that lend money to people at interest rates that reflect their ability to provide capital quickly for their customers with limited focus on due diligence. Interest rates for this immediate access to capital are frequently as high as 480 percent APR. Prisma's significantly lower interest rates make it an attractive alternative to money lenders even if the turn-around on loan issuance is not immediate.

Other Formal Lending Institutions: There are a wide variety of formal lending institutions in Nicaragua who serve business owners. For the most part, these institutions would only be interested in Prisma's clients who take out the largest loans, namely the taxi cooperatives, because the others would be viewed as too risky. Prisma has a competitive advantage over formal lending institutions because it has been directly serving this target market for five years, knows the customers, and wants to serve them where the formal banks do not.

Other Microfinance Institutions: These institutions are Prisma's biggest threat. Many have as much experience as Prisma; however, their interest rates are much higher, hovering anywhere between 60-100 percent APR. Prisma's competitive advantage over these institutions is that its interest rates are considerably lower. Prisma is also a nimble company, with the ability to adapt its loans to the needs of the customer. Prisma is among the top twenty players in the Nicaraguan microfinance landscape, which controls at least 80 percent of the total market, the remainder of the market being served by money lenders. Even with this relatively small number of players in the market, it is still fragmented, with the largest organization controlling approximately 13 percent and the smallest less than 1 percent. The following table gives a breakdown of competitors' loan portfolios and growth.

Nicaraguan Microfinance Institutions: Portfolio and Client Data in Thousands of Dollars (Source: ASOMIF)

Financial Services Company

Potential future competition: In this growing market, there are potential future competitors. Banks may move "down the line" to capture a portion of this market share, and direct competitors within Nicaragua may expand their operations. Prisma will draw on the relationships it has established throughout the Nicaraguan microfinance industry, its knowledge of government regulations, and its understanding of industry dynamics to preempt this competition.

Barriers to Entry

In-House Knowledge: Running a microfinance company requires extensive knowledge of banking, financial management, sales, and community outreach. A successful MFI needs a staff with a unique blend of skills. Prisma MicroFinance has attracted employees that bring these skills and has also spent time and energy on professional development. Organizations interested in starting a microfinance company will have to be dedicated to developing the requisite internal capacity as Prisma has done, and this can be costly and time consuming.

Staffing: Microfinance has been driven by nongovernmental agencies. As such, management and individuals working in the field usually come from a social service delivery background rather than a business background. However, microfinance is based on business fundamentals. Attracting individuals from the business sector has historically proven challenging because of the pay differential and lack of compensation incentives such as employment stock option plans. Prisma has already been able to attract staff from the business sector by offering competitive salaries; by converting to a for-profit stock company Prisma is now in a position to offer ESOPs, thus narrowing the differential between for-profit and nonprofit compensation packages. New ventures not in a position to do this will be hard pressed to attract employees with the skills necessary to run a successfully microfinance company.

The managers and directors have worked together since the beginning of operations in Nicaragua in 1995, boasting over 25 years of combined experience in the microfinance industry.

President, CEO, & Co-Founder: David J. Satterthwaite has six years of microfinance experience in Nicaragua and Latin America. David has also worked as a business consultant, researcher, and teaching assistant. He graduated with honors from Haverford College in Pennsylvania and is currently completing graduate work in Social Economy at Boston College.

General Manager (COO): Carlos Alberto Aburto Villalta has been responsible for Nicaraguan operations since 1998 and held previous management positions within the company prior to becoming COO. He holds a five-year undergraduate business degree from the Universidad Centro Americano (UCA) in Managua, Nicaragua, and is currently a candidate for a master's degree in business from the UCA.

Portfolio Manager: Honey Maria Aburto Villalta has been the loan portfolio manager since 1998. She holds a five-year undergraduate law degree from the Universidad Centro Americano (UCA) in Managua, Nicaragua, and is currently a candidate for her master's degree in labor law from the UCA.

Board of Directors

Roger Aburto: Co-founder of Prisma. Roger currently runs Xilonem, a cooperative spin-off from Prisma, which manages the insurance fund and past-due collections. Roger's experience includes: manager for a regional micro-credit fund for 8 years, a small-business owner, and a veteran. His education includes graduate work on the Nicaraguan informal economy.

Richard Burnes: Co-founder and Principle of Charles River Ventures (CRV is not associated with Prisma). Rick has been an investor in Prisma since its beginning in 1995.

George Kraus: As a retired entrepreneur, George supports a variety of humanitarian and business projects in Nicaragua. He has been an investor in Prisma since its beginning in 1995.

Financial Services Company

Board of Advisors

Erica Mills, Master of Public Administration, marketing and communications consultant

Drew Tulchin, Master of Business Administration, business consultant

Brady Miller, former Director of Finance for Ex-Officio, finance consultant

Professional Staff

Nicaraguan professionals:.

Marco Morales, CPA

Oscar Silva, Legal Counsel, Delaney y Asociados

United States Professionals:

Tom Herman, Legal Counsel, Smith & Duggan, LLP

Howard Brady, CPA, MFI Consulting, Inc.

Daniel MacLeod, Graphic Designer, Visual Braille, Inc.

The Prisma Sales Experience

  • Clients visit a Prisma office to request an application.
  • Clients with strong references receive an application; careful track is kept of who receives them.
  • If, upon review of the application by the Credit Committee, the customer is deemed to be an acceptable credit risk, preliminary approval is granted.
  • A site visit is made to interview the customer, verify application details, and review collateral.
  • Clients provide all necessary paperwork—including signatures and guarantees. The complexity of this process depends on loan size.
  • Larger loans, including taxi loans, can take months because of the due diligence involved. It includes a police record review.
  • The process is uniform and straightforward to ensure all customers receive the same treatment.

Prisma's operations and management has five years of successful, profitable lending experience in the Nicaraguan market. The company has developed successful activities for ensuring it is providing excellent service and developing strong relationships with solid customers, ensuring that the loans will be repaid.

Key Management Philosophy: Prisma conducts business in a highly professional and open manner. The company's philosophy is centered on knowing customers, working with them to be successful, making sure they understand how their loans work, and rewarding good behavior.

Streamlined Processing: Customers are classified from A-D based factors including: payment timeliness, credit history, savings, referring new business, and peer performance (those they referred or referred them). The taxi co-ops are classified according to the same criteria by each co-op as a group. There are rewards and tangible benefits for "A" customers, knowledge of which is spread among customers through word of mouth.

Balanced and Cost-effective Loan Portfolio: The existing relationship with Taxi Cooperatives provides an inroad for nationwide market penetration. A single loan officer covers the costs of his/her position with only 20 taxi loans (approximately $5,000 each). Microfinance industry data indicates loan officers can manage 150-300 loans at one time. Therefore, because the breakeven point for an additional lender is low, Prisma can financially afford to have a balanced portfolio with an equal number of micro and small loans. Although smaller loans are less lucrative, they are financially viable for the business and promote the social mission of ensuring there is access to credit for all. In addition, they provide the benefits of being repaid faster, requiring less due diligence, and producing a high number of referrals.

Hand-held Technology and Centralized Due Diligence: In order to minimize infrastructure costs, back-office support for loan officers will be centralized. Loan officers will utilize advanced technology to conduct their business. Hand-held devices will be used in the field to mechanize the application and monitoring process. The loan portfolio data is stored electronically to minimize onerous paperwork. This equipment investment pays for itself in the reduced paperwork, time savings (especially in approving applications and transferring data). Electronic loan processing and bi-weekly visits to the main office will allow the due-diligence of loan guarantees to be performed with adequate legal review, in a timely manner.

In addition to this technology, Prisma will also take advantage of technology being designed by groups like Hewlett Packard's World e-Inclusion team that is developing networked tools with the express purpose of making microlending more efficient. With a commitment of selling, leasing, or donating $1 billion in products and services to this initiative, it could prove a valuable source of technology enhancement.

Strategic Banking Partnership: To minimize expansion costs and accelerate the amount of lending possible, Prisma plans to partner with a bank with national presence. By utilizing their existing infrastructure and brokering the deals, remote offices avoid the complications of handling cash. This provides benefits in efficiency and also safety/security. Prisma has a developed a relationship with Banco de Finanza, a national leader in web-based delivery of banking services.

Vested Managers: A generous Employee Stock Option Plan creates a vested management team. Vested managers are important to providing motivation for the growth strategy. With these economic incentives for employees, Prisma has a competitive advantage compared to other microfinance lenders, including:

  • nonprofits—unable to offer their managers a portion of the potential upside
  • newly established stock companies controlled by directors from the nonprofit sector— unlikely to implement market-based incentives due to employee culture bias

Growth Strategy

Prisma's market niche in taxi financing allows management to plan significant portfolio growth while minimizing overhead. Prisma will specialize in taxi financing as a spearhead to establishing operations nationwide in Nicaragua and in other countries in Central America. Using Prisma's specialization in taxi finance in this way drives penetration of the micro-credit market while still maintaining healthy profit margins.

In fiscal year 2002, Prisma will relocate its Managua office to prepare for national and international expansion. The new office space will accommodate the additional staff needed for expansion, while remaining in a geographically strategic location that will be convenient for Prisma's borrowers. In FY2003, the first satellite office in Nicaragua will be established, with two more additional national offices in FY2004. Also, in FY2004 Prisma will begin operating in a second country in Central America, to be determined depending on market opportunity.

Loan Officers: Prisma can realistically project rapid portfolio growth because of the proven demand for taxi financing and Prisma's track record financing taxis. Assuming that a single loan officer will manage 200 loans (a conservative estimate by industry standards), management estimates needing 25 loan officers by FY2004 when the total loan portfolio will be worth almost $11 million, distributed among 4,800 clients.

Scalability: Management forecasts steady profits for FY2001, although net income is projected to be slightly lower than FY2000 due to the integration of the U.S. operations. FY2002 will see a 100 percent growth in net income over FY2001, although management will advise reinvesting the profit into the company to support the growth strategy. Investment toward scalability during these two years will begin to pay off in FY2003, when management forecasts a 10.9 percent return on shareholder equity. Between FY2002 and FY2004, the portfolio balance per loan officer in order to break-even drops from an aggressive (but tenable) $470,000 down to $225,000 (total portfolio/total expenses). Securing the taxi financing niche and introducing operational improvements such as the use of hand-held technology makes the Prisma business model scalable.

Taxi Financing Market Share: Assuming that three-fourths of all medium-sized loans will be taxi loans and a 10 percent annual growth in the taxi sector, Prisma will claim a 22 percent market share by FY2004.

Central American Expansion: Nicaragua serves as a launch pad for entering the Central American market. In FY2004, Prisma plans to open operations in a second Central American country. This is a large and important market. (A Central American target market analysis can be found in the appendices.) The central challenge in expansion will be hiring effective management; for this reason, we are adopting a conservative expansion schedule. The taxi finance market will serve as a spearhead regardless of which country is deemed most appropriate.

Scalability Goal: Equity in Prisma is a long-term, non-liquid investment. The objective of achieving scale in the microfinance industry requires patient capital. "Scale" signifies at least the $50 million portfolio necessary to credibly solicit commercial capital investment. This will take 5-10 years. Scale is Prisma's mandate in order to be a leader in establishing new private equity capital markets for the microfinance industry.

Financial Return & Exit Strategy

The founders' choice in 1995 not to accept donations or subsidies to run this business was unheard of in the microfinance field at the time. However, since day one, Prisma has been dedicated to utilizing the essential potential of microfinance to eradicate poverty: making it economically attractive for capitalists to invest in "unbankable" business people. This choice has resulted in two truisms: private capital seeks scale to maximize profits and in order to achieve scale, equity is required. Therefore, consideration of the liquid event on this investment is imperative.

Because there are currently no secondary markets for Prisma stock and no one has yet to systematically "securitize" microloans, the most viable exit strategy for investors is acquisition.

Prisma has had discussions with major U.S. banks and has a clear understanding of what characteristics would be needed in order for an acquisition to occur. A national or international loan portfolio in taxi finance and a total loan portfolio of at least $50 million will make Prisma an attractive acquisition to larger banking institutions. These are the principal reasons that Prisma seeks to capture a niche market and grow its loan portfolio—to bring value to investors supporting micro-loans, which at present are unproven in secondary markets.

Financial Returns to Investors

First and foremost, Prisma is committed to providing its investors with dividends, even in the early stages of growth. Prisma has been profitable for five years, since its first day of operation. This proven viability legitimizes the plan of paying dividends. Management thinks it imprudent to forecast the value of dividends at this time. The financial projections indicate healthy profits in FY2003 and FY2004 of 10.9 percent and 11.5 percent respectively, once scale is achieved.

Moreover, Prisma seeks capital appreciation for its investors. Prisma anticipates that capital appreciation will be augmented in the future by the creation of business spin-offs and offering of additional products. Business spin-offs could include auto repair, auto parts, car insurance and collections. Additional products might be credit cards, mortgage financing, or home-improvement loans.

Social Returns to Investors

Like a bank, Prisma is a profitable lending business. But Prisma stands apart from its commercial counterparts for two reasons:

  • it targets people without access to traditional, financial resources
  • it is a business that realizes social as well as economic returns

Social returns constitute positive impact beyond the immediate benefits offered by a product —in this case small loans. Micro-lending is a business and development strategy widely acknowledged to bring extensive and diverse social returns to local communities. Well-managed, sustainable programs have been proven to successfully empower borrowers, strengthen families, catalyze communities, and expand local markets.

When an individual generates income from a small loan, the benefits extend a great distance and in many directions. Borrowers become more responsive to the needs of their families, and more active in their communities. Breadwinners are able to provide improved healthcare and education to their families, so children grow up healthier and with greater opportunities to realize their own potential. Families become stronger through access to working capital and the resulting opportunities. The fabric of communities becomes more tightly woven when it has a greater stake in its own development and can realize the benefits of its own efforts.

Prisma's clients and investors are able to realize tremendous social returns precisely because the company is profitable. Based on our estimates, every dollar lent generates $21 of social benefit for the borrower. For Prisma, profitability and sustainability are indicators that customers are using and repaying their loans successfully. This, in turn, means resources are more readily available for loans, and the social returns mentioned above go hand in hand with the unfettered availability and successful use of working capital.

Finally, as a market-driven social initiative, Prisma provides social returns at a larger scale with accelerated impact because it attracts investment.

Marketing Strategy

Because Prisma is mindful of the fiscal operations and expenses necessary to run a profitable enterprise, the marketing budget is, by design, small and highly focused on very basic, interpersonal efforts. Only those activities that provide proven return and bring in new loans to achieve the intended growth and projection figures are undertaken.

Grassroots marketing and establishing trust with customers has been the hallmark of the Nicaraguan operations to date. These efforts led to a 207 percent growth in Prisma's loan portfolio between 1996-2000. Ensuring positive customer experience has led to word of mouth as the leading source for new client acquisition. In a country like Nicaragua, where relationships and community are the mainstays of business activity, the "word on the street" is the best marketing channel and a strong indicator of a company's reputation. It is also inexpensive.

Other channels for publicity, especially formal channels including print media, television, and radio, will not yield sufficient response for their cost. The target customers are typically distrustful and skeptical of formal institutions, if not outright intimidated. Therefore, relationship marketing like face-to-face communication and rewarding referrals has a much larger impact, not to mention lower acquisition cost.

Marketing activities follow the same standards as operations, described earlier. This includes knowing customers, working with them to be successful, making sure they understand how their loans work, and rewarding good behavior. Customers are classified from A-D based factors including: payment timeliness, credit history, savings, referring new business, and peer performance (those they referred or referred them). The taxi co-ops are classified according to the same criteria by each co-op as a group. There are known rewards and tangible benefits for "A" customers—including better interest rates.

New loans are most easily made through the "chain of trust," whereby existing or old clients vouch (co-sign) for new customers. The practice of allowing "A" clients to co-sign, helping friends and family secure loans, provides Prisma with essentially a free sales force, minimizes default rates, and provides a support network to support struggling customers. Customers are highly loyal; they support the lending institution because they are supporting each other and helping themselves.

Promotional activities include simple and basic activities for existing customers and important members of the community including receptions, small gifts, and a newsletter. An annual reception is held to thank customers and share what the organization is doing. Customers feel valued and that they are contributing to economic development in their country. "A" clients receive little gifts on holidays. These gifts are inexpensive but customers appreciate them.

Marketing in New Markets

When entering a new market—first in other cities in Nicaragua and later in other Central American countries—the same tactics will be used. A major key to success is in effective new hires with strong professional and social networks that can share what Prisma does. Word of mouth is effective among family, friends, and the taxi co-operatives—all of which have connections in locations targeted for expansion and are just waiting for Prisma to establish operations there.

Indicators for measuring the success of marketing efforts is in how little money is spent to achieve Prisma's growth milestones. Customer satisfaction will remain the lynchpin of Prisma's marketing strategy.

Sales Strategy

As noted in previous sections, this enterprise is not starting from scratch. Prisma has five years of profitable operations upon which to base its sales activities. Most of the efforts will be on maintaining the current methods and practices that have made the company successful to date—lending to individuals in groups that know each other, providing excellent service, building trust with customers, and working with customers to ensure a successful loan.

The Nicaraguan operation has worked well with the taxi cooperatives. Since 80 percent of taxi drivers report requiring external funding to ensure they can operate successfully, this is a target market with very likely customers. Furthermore, most cannot or choose not to be served by more formal banks. Even better, the taxi cooperatives are close-knit business and social circles. Therefore, taxi drivers easily see what a loan from Prisma does for their business because a co-worker and friend has directly benefited from it. Drivers ensure their colleagues do not default on their loans because they are co-signers and do not want to lose this resource for affordable capital (and an "A" rating). In the event of a default, the entire cooperative could lose the lending service and the co-signers will be stuck with the bill.

Capital Structure

Prisma's business model makes two assumptions:

  • Equity capital is the only source of capital that will enable the company to achieve its expansion goals while maintaining a solid balance sheet.
  • U.S. investors are looking to invest in companies that value social responsibility.

Prisma's five years of profitable operations confirms the first assumption. From its inception, Prisma has been financed through debt. Prisma has serviced these debts and remained profitable, but relying solely on debt capital has limited the company's growth as evidenced by the fact that Prisma has 200 approved loans waiting to be financed.

The New York Times' front-page article "On Wall Street, More Investors Push Social Goals," from February 11, 2001, bolsters the second assumption. Increasingly, investors are realizing that there "is a correlation between good practices and good investment results" and are placing their money accordingly. An analysis of "Socially Responsible Investing" proves that investors are increasingly adopting an investment approach that integrates social and environmental concerns into investment decisions. Prisma provides a viable option for investors interested in making money and making a difference.

Financial Projections

Prisma's fiscal year runs July 1 through June 30. The $1.5 million currently being raised in Series "B" round is scheduled to close in July 2001. Therefore, the equity appears in FY2002, beginning July 2001. During fiscal year 2001, the management established a U.S. office to raise funds and promote the company's activities. A central strategy is leveraging equity with additional debt to grow operations. In FY2002, a conservative leverage ratio of less than 1 to 1 is assumed; a similar ratio is also assumed in FY2003.

The $1.5 million of sought equity will fully impact revenue in FY2002. By FY2003, management projects a 10.9 percent return on $2.7 million in equity. By comparison, ROE for other financially self-sufficient microfinance institutions is 6.05 percent according to the MicroBanking Bulletin . Return on assets for these institutions hovers at 3.08 percent; by FY2004 management projects ROA of 4.1 percent. Throughout FY2002 and FY2003, investment in scaling operations is assumed. The goal is to achieve appropriate scale to secure another round of equity investment of $4 million in July of 2003 (beginning of FY2004).

Additional assumptions in the financials include:

  • Interest Earned: As of FY2002, 17 percent net interest margin is assumed matching historical performance.
  • Cost of Capital: 13 percent annual rate, based on current relationships with creditors and management's knowledge of the capital market for socially responsible investment instruments.
  • Loan Officer Capacity: Each loan officer will manage 200 clients, which is low by industry standards.
  • Taxes: Both U.S. and Nicaragua tax liabilities and expenses are included in the projections, assuming a combined rate of 35 percent.

To claim that tangible assets should be measured and valued, while intangibles should not—or could not—is like stating that "things" are valuable, while "ideas" are not.

—Barach Lev, Professor Stern School of Business, New York University

Social Impact

Receiving a Prisma loan generates significant social impact in the following areas:

  • Human Capital Development: Relates to improved economic standing, heightened self-esteem and sense of empowerment, and creation of a stable financial situation for borrowers
  • Community Development: Resulting from borrowers' improved economic standing and ability to give back to the community
  • Corporate Governance: Refers to the equity incentives that Prisma will offer to its employees and its ethic of empowering its staff through inclusive decision-making roles
  • Socially Responsible Market Creation: Speaks to the industry-wide desired outcome of Prisma's activities, which is to be at the forefront of developing viable products to improve the situation of the world's four billion poor people, or the B2-4B revolution

Human Capital Development

Prisma's impact on human capital development results from the positive externalities generated by each dollar lent. The positive externalities start a ripple effect, which leads to improved diet as a result of having a stable cash flow and increased education level for borrowers' children who can stay in school rather than be forced to drop out to increase family income. Improvements to borrowers' lives can be seen in all areas of basic need as a result of having a higher standing of living.

Community Development

In addition to improving individual borrower's economic situation, Prisma's loans also fuel community development, which in essence is the aggregated effect of the individual loans. The loans improve the standing of individual borrowers, thus stabilizing economies at the community level.

The sense of empowerment that comes from economic stability also leads to greater community involvement. This involvement can take many forms, including being involved with public health projects such as latrine building, providing for community members who are sick or in a time of crisis, and skills transfer to other local business owners. These activities and interactions build healthy, sustainable communities.

Corporate Governance

Prisma is offering a balanced, inclusive equity structure that extends to every employee. Senior management is indigenous, except for David Satterthwaite, the CEO and President, who worked in Nicaragua for five years. There is local representation on the board, currently one third of the membership. Equity incentives in Latin America, including ESOPs, are far from the norm, especially for a small company. However, by doing so Prisma is promoting a new business culture of equitable private property ownership in an American company—this is globalization at its most positive.

Creating a commercial market that benefits poor people

According to Jeffrey Ashe, founder of Boston's Working Capital and former Vice-President of Accion International, there are approximately four billion people throughout the developing world without access to affordable credit. Entrepreneurs with excellent skills and incredible ideas are restricted in their opportunity due to lack of financial resources. Even the small amount of money needed as investment capital to start micro-enterprises like weaving baskets and selling them at the local market is beyond the grasp of the majority of the world's poor.

The world's "unbankable" populations have three options:

  • gather limited resources from family and friends
  • borrow from a moneylender at exorbitant rates
  • turn to a microfinance institution like Prisma

Frequently, family and friends cannot generate the necessary capital and the moneylender's rates are too high to be able to pay them back. This being the case, only a loan from an institution like Prisma can result in the successful growth of a new business that may break the cycle of poverty.

According to industry sources, less than $10 billion currently is invested in the worldwide microfinance industry. This does not even scratch the surface towards serving this market. Microcredit is not a panacea solution for social problems. But, it is a useful tool for many to bridge the gap out of poverty and improve their lives. In addition to this activity providing a social return, there are equally compelling market driven motivations to undertake these operations using private capital—providing this service produces financial return.

As with any industry sector, once an example of a successful model is provided, others will enter the field. Following Prisma's lead, microfinance will become a viable commercial market, serving billions of the world's poor.

SROI Methodology and Analysis

While some of Prisma's Social Impact Areas are easily quantifiable, others are best evaluated in terms of qualitative impact analysis. Human Capital Development and Community Economic Development are included in the quantitative analysis using number of dollars lent as the unit of measurement. The qualitative methods analyze aspects of all four impact areas. The following sections outline Prisma's quantitative and qualitative methodology for measuring SROI.

Quantitative Analysis

Current SROI Analysis: In developing its quantitative methodology, Prisma has drawn from models developed by Roberts Endowed Development Fund (REDF), one of the leaders in social enterprise. The use of a social benefit/cost ratio, adjusted for present value, gives a clear sign as to whether the social benefits outweigh the social costs and by what degree. Based on traditional cost/benefit analysis benchmarks, if the ratio is greater than or equal to one, the project should be pursued.

SROI Ratio = Present Value of Social Benefits/Present Value of Social Costs

Social Benefits

Social benefits accounted for in the quantitative analysis of SROI include ripple effects from improving one's financial situations through receiving a loan. These include:

  • Improved health for all family members, leading to higher productivity on a long-term basis
  • Increased education for borrowers' children as they are not required to drop out of school in order to supplement the family's income
  • Increased civic participation as a result of a heightened level of confidence and overall sense of self-worth

These benefits are cited extensively in microfinance literature, including by industry leaders such as FINCA and Accion International. The dollar amounts in the table below are taken from the financial projections for Prisma's loan portfolio. They represent the total number of dollars Prisma expects to lend in each year. (Social benefit and social cost are calculated on a per year basis and then aggregated.) As social benefits are directly correlated to loans, the social benefits are captured in terms of dollars lent to borrowers.

Social Costs

Prisma has always borrowed capital at market rates therefore eliminating the social cost of subsidies or grants often included as social costs in SROI analysis. We have included a small social cost that reflects loan loss due to Prisma's choice to make loans to extremely high-risk individuals. As the company's loan loss has historically been under 1 percent, the estimated social cost per dollar lent of $. 05 used in the model reflects our acknowledgment that in undertaking an expansion strategy into new geographic markets, we run the risk of an increase in the loan loss rate.

Financial Services Company

A benefit/cost ratio of 21 means that for every unit of cost, 21 units of social benefit are derived. As the unit of measurement in this model is dollars, the social return is interpreted as $21 of social benefit for every $1 of social cost incurred. The fact that Prisma's SROI ratio is as high as 21 indicates that in terms of benefit/cost analysis, it is an attractive project, with an extremely high social return on investment.

Future SROI Analysis: Ideally, Prisma would quantify its SROI in terms of the increase in income derived directly from the loan. Measuring income generated specifically from a Prisma loan is complicated in that it would involve measuring a portion of each borrower's increase in income, rather than their total income. This approach would require an in-depth understanding of loan usage and the borrower's expenditures. Prisma proposes to develop this understanding through the qualitative methods described below.

A SROI analysis based on incremental increases in income would enable Prisma to project the increase per month in income over time. The company would then calculate the social net present value of that increase and calculate the appropriate social internal rate of return.

Qualitative Analysis

Prisma has historically collected some of the information described below, such as customer finances, professional activities, age, and gender. Based on its experience, Prisma believes the most effective way to gather information on a going forward basis is to administer questionnaires at the loan's beginning, closing, and annually thereafter (on a voluntary basis), in conjunction with qualitative interviews. These new methods will standardize the process of information gathering and enable Prisma to do more rigorous quantitative analysis, in addition to maintaining a clear sense of its customer base—even as it rapidly expands. Information gathered from customers will include both economic and social indicators.

Economic Indicators As a bank, Prisma must make loans that are fiscally responsible and will be paid back. Therefore, it needs to determine a borrower's financial status before, during, and at the end of the loan. During the loan application process, loan officers will collect information about customers and their finances, including their professional activities, income, historical income, family financial resources, and projected future income. This builds on the information Prisma currently collects and believes is reasonable to collect in the future. Social Indicators Because of the level of trust Prisma staff establishes with customers, they have been consistently helpful in providing information enabling us to track their status. At the time of the loan, social indicators including age, gender, economic condition of borrower, number of family members, and current income are provided. Throughout the term of the loan, it is easy to track the number of employees, business income, and changes in standard of living. This is done implicitly by following the timeliness of loan payments and seeing if loan payments are made on time or late. Receipt of late payments usually indicates a change for the worse in the borrower's status. Prisma will also begin using a standardized method for tracking the ongoing conversations Prisma staff has with customers, through which much information about social indicators is gathered. At the end of the loan, the same information will be formally gathered with an exit questionnaire. Plus, because of its active involvement in the communities it serves and the fact that many customers renew loans for additional working capital, Prisma will be able to track social indicators longitudinally.

Information gathered through loan review, questionnaires, and interviews will be included in Prisma's Annual Report. This will enable our investors to track the SROI and ensure that Prisma stays true to its mandate of doing well by doing good.

If we are looking for one single action which will enable the poor to overcome their poverty, I would focus on credit.

—Dr. Muhammad Yunus

Founder, The Grameen Bank

Target Market— Microfinance in Central America

Market description.

Prisma MicroFinance, Inc., is a U.S. microfinance company with Nicaraguan operations where loans are made to residents in the urban area of capitol, Managua. The loans range in size from U.S. $50-$15,000, and are used for both personal and business purposes. Loans to taxi cab cooperatives account for the larger loans and act as a subsidy for the smaller loans to individuals, primarily women.

Market Size and Trends

Managua is Nicaragua's economic center and has a population of more than 1,000,000. Although Nicaragua's economy is still driven by agriculture, service jobs in the urban areas represent an increasing number of jobs.

This trend holds true throughout Central America. The table below demonstrates the size of the market for international microfinance in Central America's urban areas—the geographic areas that Prisma will target as it expands—expressed in terms of population and GDP. The countries are ranked by size of capital city, beginning with the largest, Guatemala City.

Financial Services Company

Many Central American countries are rebuilding after years of political, social, and economic unrest. Microentrepreneurs play an integral role as economic drivers in this rebuilding and will need access to affordable capital.

Target Customers

Prisma's target customers include:

  • Taxi cab drivers
  • Microentrepreneurs

These target customers look for microfinance institutions (MFIs) that are professional, while still understanding the specific needs of poorer borrowers. They would not have access to banks or traditional financial institutions, so if they decide to take out a loan their options are limited to friends/family, moneylenders, or MFIs. The resources of friends and family are extremely limited, and the exorbitant rates charged by moneylenders (ranging from 360-480 percent APR) make them unattractive in terms of repayment possibilities. (Moneylenders are attractive because there are no conditions to qualify for a loan.) Prisma is in competition with other MFIs.

Market Readiness

Prisma has been in operation for six years. In each of these six years, it has expanded its outreach and refined its operations. With a strong management team in place, Prisma is now ready to significantly expand its operations. It is already the market leader for lending to taxi cab cooperatives and plans to make this its market niche over the next year. This will position Prisma to expand its outreach to other microentrepreneurs and individuals, particularly women.

Strategic Opportunities

Through its experience in the Managua area, Prisma has learned that there is a significant demand for microloans. With its economy continuing to grow, this demand will only increase.

Other capitol cities throughout Central America are experiencing a similar shift toward an expansion of economic activity in the urban centers. The need for microentrepreneurs to access affordable capital will expand along with the urban-based economies. Clearly, there is a demand for reputable MFIs to meet this need and Prisma has established a way to reach this market.

User Contributions:

Comment about this article, ask questions, or add new information about this topic:.

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Digging Up A Garden

An old man lived alone in Minnesota. He wanted to spade his potato garden, but it was very hard work. His only son, who would have helped him, was in prison. The old man wrote a letter to his son and mentioned his situation:

I am feeling pretty bad because it looks like I won’t be able to plant my potato garden this year. I hate to miss doing the garden because your mother always loved planting them. I’m just getting too old to be digging up a garden plot. If you were here, all my troubles would be over. I know you would dig the plot for me, if you weren’t in prison.

Shortly, the old man received this telegram:

‘For Heaven’s sake, Dad, don’t dig up the garden! That’s where I buried the guns!’

At 4 a.m. the next morning, a dozen FBI agents and local police officers showed up and dug up the entire garden without finding any guns.

Confused, the old man wrote another note to his son telling him what had happened, and asked him what to do next.

His son’s reply was:

‘Go ahead and plant your potatoes, Dad. It’s the best I could do for you from here.’

Moral of the story: No matter where you are in the world, if you have decided to do something deep from your heart, you can do it. It is the thought that matters, not where you are or where the person is.

The Secret of Growing Good Corn

There once was a farmer who grew award-winning corn. Each year he entered his corn in the state fair where it won a blue ribbon.

One year a newspaper reporter interviewed him and learned something interesting about how he grew it. The reporter discovered that the farmer shared his award winning corn seeds with his neighbors.

"How can you afford to share your best seed corn with your neighbors when they are entering corn in competition with yours each year?" the reporter asked.

"Why sir," said the farmer, "didn't you know? The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grow inferior corn, cross-pollination will steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors grow good corn."

He is very much aware of the connectedness of life. His corn cannot improve unless his neighbor's corn also improves.

So it is with our lives. Those who choose to live in peace must help their neighbors to live in peace. Those who choose to live well must help others to live well, for the value of a life is measured by the lives it touches. And those who choose to be happy must help others to find happiness, for the welfare of each is bound up with the welfare of all.

The lesson for each of us is this: if we are to grow good corn, we must help our neighbors grow good corn.

It is possible to give away and become richer! It is also possible to hold on too tightly and lose everything. Yes, the generous man shall be rich! By watering others, he waters himself. 

The Lion and The cougar

A pointed fable is told about a young lion and a cougar. Both thirsty, the animals arrived at their usual water hole at the same time. They immediately began to argue about who should satisfy their thirst first. The argument became heated, and each decided he would rather die than give up the privilege of being first to quench his thirst.

As they stubbornly confronted each other, their emotions turned to rage. Their cruel attacks on each other were suddenly interrupted. They both looked up. Circling overhead was a flock of vultures waiting for the loser to fall. Quietly, the two beasts turned and walked away. The thought of being devoured was all they needed to end their quarrel.

Handle a Business successfully, handle a business, is the key to the establishment and growth of the company. The trick to successful management is to inspect the market environment and create employment and profit opportunities that provide the potential growth and fiscal viability of the business. Regardless of the Importance of management, this area is often misunderstood and poorly executed, primarily because people focus on the output rather than the procedure for management. Toward the end Of the 1980s, business managers became absorbed in improving product quality, sometimes ignoring their role vis-a-vis personnel. The focus was on reducing costs and raising output, while ignoring the long-term advantages of motivating personnel. This shortsighted perspective tended to raise profits in the short term, but made a dysfunctional long-term small business environment. Simultaneously With the growth in concern about quality, entrepreneurship attracted the attention of business. A sudden wave of successful entrepreneurs seemed to leave sooner management concepts obsolete. The press centered on the new cult heroes Steve Jobs and Steve Wozniack (creators and developers of the Apple Computer) while disregarding the marketing and organizing talents of Mike Markula, the executive responsible for Apple's business plan. The story of two guys selling their Volkswagen bus to construct the first Apple computer was more amorous than that of their organizational genius that allowed Apple to grow, market and ship its products while rapidly becoming a significant business. In big Businesses, effective handle business skills necessitates preparation. Planning is essential for developing a firm's potential. But many small businesses don't recognize the need for long-range plans, because the small number of individuals involved in managing the company implies equivalent responsibility in the planning and decision-making processes. Nevertheless, the requirement for preparation is as important in a small business as it is in a large one. This guide Focuses on the importance of good management practices. Specifically, it addresses the obligations of managing the external and internal environments. Running A Business Effectively: The External Environment. Five decades ago, Alvin Toffler indicated the vision of the taxpayer at the tight grasp of an omnipotent waiver could be substituted by an organizational arrangement of ad-hocracy. The conventional company organization implied a social contract between employees and employers. By adhering to some predetermined set of duties and sharply defined roles and responsibilities, workers obtained a predefined set of benefits.The Organizational structure that Toffler predicted in 1970 became the standard 20 years later, and it came changed concepts of authority. As associations became more transitory, the authority of the organization and firm was replaced by the jurisdiction of the individual supervisor. This entrepreneurial management model is now being replicated throughout society. As a result, the individual business owner must internalize ever increasing organizational functions. Another change In the present business environment is dealing with government agencies. Their influence on the conduct of company most recently appears to have improved. As industries fail to achieve high levels of moral behavior or individual businesses exhibit specific lapses, the government rushes in to fill the breach with its regulations. Effective Communications play an integral role in managing and operating any successful business. With open communications modifications and their consequences on the organization are quickly shared. Your firm then has the time and skills required to react to changes and take advantage of evolving opportunities. The next Checklist addressing how you'd react to a worker's suggestion offers an evaluation of the communication process in your business. Place a check beside the statements which are commonly heard in your business. Balancing Schedules Stress and Personnel. Without organization and good control the compressed time programs related to contemporary company can cause stress and make extraordinary demands on people. A successful management structure can reduce stress and station the productive capacity of workers into business growth and profits. Setting Duties Tasks and Responsibilities. An organization is characterized by the character and determination of workers' responsibilities tasks and obligations. While many organizations use various methods for determining these it is essential that they be clearly defined. The core of any Business is its people and their own functions. Duties responsibilities and tasks frequently evolve in an ad hoc manner. A typical firm starts with a couple of people often one doing all duties. As the firm develops others are hired to fulfill specific functions often on a functional basis. Roles that were handled by consultants and specialists beyond the firm now are handled internally. As new needs emerge new roles have been developed. Another crucial to Successful management is located in controlling conflict. Conflict can't be removed from the company or the interpersonal actions of the enterprise. A measure of this organization's success is the degree to which conflict may be exposed and the energies related to it channeled to build up the firm. Although establishing policies and processes represents the concrete aspect of organization and management the mechanisms to endure and embody barriers to the established performance serve as the real essence of a firm which will endure and prosper. Even though you May discover that certain events are affecting your company be careful to not alter the organizational structure of your firm without discussing it with your management team. Employees normally can achieve goals despite organizational structures imposed by management. Because restructuring entails spending a lot of time studying new guidelines implementing a new organizational structure is pricey. The essence of A prosperous organization can be simply summarized than implemented. The Following checklist can help you determine measures to ensure your management Construction is adequate. Verify the entries that apply to your firm and also find Out what steps your business should take to improve its management Construction.

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Microfinance Business Opportunities in Tanzania

A detailed overview, types of microfinance businesses, opportunities and risks [in progress].

Microfinance Business in Tanzania entails Business that Provides Microfinance Services. These are the banking services provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.

Microfinance services can also be construed to refer to the financial services provided to low-income individuals or groups who are typically excluded from traditional banking.

So in general, microfinance refers to the provision of basic financial services such as loans, saving accounts and insurances for low-income but economical active people.

Note that, in most cases the term microfinance refers to the provision of small loans (=micro credits) for micro-entrepreneurs.

A: Microfinance in Tanzania – Introduction

The banking industry in Tanzania is relatively young and limited in scale. Consequently, only a small portion of Tanzania’s population has access to mainstream banking services. And because of that, most banks started targeting the poor by extending collateral-free and low interest microcredit and loans.

Due to lack of skills and experience within the market these efforts are not widespread and mostly favor borrowers in urban areas, leaving the rural areas largely underserved. Most of the banks are reluctant to move into rural areas due to the poor national infrastructure, perceptions of high risk and due to the higher expense of operating costs.

Since 2003, there have been positive developments in Tanzania’s microfinance industry as numerous banks and financial institutions have provided increased funding either directly to beneficiaries or through intermediary institutions. Despite this progress, it is estimated that microfinance service providers have a combined outreach of approximately 5% of the estimated total demand.

B: Regulation of Microfinance in Tanzania

Microfinance is a regulated business sector in Tanzania, the main regulator being the Central Bank, that is, the Bank of Tanzania . For the purpose of regulating the sector, the Microfinance Act was enacted.

The Act categorizes microfinance into four tiers. That is, Banks and Microfinance Banks, Credit Companies and Financial Organizations, SACCOS and Community Microfinance Groups.

In summary, the four tiers are as shown in the table below:

C: Microfinance Business Opportunities in Tanzania

Because of the limited access to the mainstream banking services, opportunities in the microfinance sector are vast. Note that, this post is specific for microfinance business. For this purpose, Tier 3 and Tier 4, that is SACCOS and Community Microfinance Groups are not taken as microfinance businesses. These are rather cooperatives aimed at helping their members.

So the discussion will focuss on Tier 1 (Deposit Taking Microfinance Businesses) and Tier 2 (Non Deposit Taking Microfinance Businesses. Discusson about Tier 3 (SACCOS) and Tier 4 (Community Microfinance Groups) is reserved for a separate post.

D: How to Start a Microfinance Business in Tanzania (Tier 2)

Note that, a microfinance business can be started by an individual lender (sole proprietorship), or a company.

D1: Procedures to Start a Microfinance Business as Individual Lender

  • First prepare the minimum required capital. This is Tshs 20 million for individual lender. Deposit into your account and take bank statement.
  • Then register business name as a sole proprietor at BRELA under the Business Names (Registration) Act. Click here to learn how to register business name in Tanzania using BRELA ORS . Note that the business name must include either of the following words “microfinance”, “finance”, “financial services”, “credit” or “microcredit”.
  • Then arrange for the premise and get rental agreement for it.
  • Then register for Tax Identification Number at Tanzania Revenue Authority (TRA). Here you should get TIN certificate and Tax Clearance Certificate. Both will be required.
  • Then Pay Tshs 300,000 application fee. Get details at the Bank of Tanzania. (as we write this post, the details are Account No at BOT: 9924DDBGHQT and Account Name: Intermediary Account Banking). The payment can be by Cheque, Cash of Transfer. Keep the slip, will be required.
  • Letter of application in the prescribed form.
  • Proof of payment of application fee.
  • Certified copy of certificate of a business name registration.
  • Proof of availability and source of capital of the proposed microfinance service provider.
  • Certified copies of academic and professional certificates of the Chief Executive Officer.
  • Copy of latest audited financial statements including balance sheet, income statement and cash flow statement for an existing microfinance service provider.
  • Certified Copy of TIN certificate.
  • Certified copy of tax clearance certificate for the applicant.
  • Lending policy.
  • Certified declaration that the funds invested or to be invested have not been obtained criminally or associated with any criminal activity.
  • Page of passport which contain personal information or
  • National ID or
  • Birth certificate.
  • Dully filled Questionnaire for Chief Executive Officer/individual money lender contained under the Fourth Schedule to the regulations.
  • Credit report from Credit Reference Bureaux.
  • Details of the Contact Person including Name, Postal Address, Telephone Number and E-Mail Address.
  • Apply for business license at the local authority.

D2: Procedures to Start a Microfinance Business as a Company

  • Then register company at BRELA under the Companies Act. Click here to learn how to register a company in Tanzania using BRELA ORS . Note that the company must include either of the following words “microfinance”, “finance”, “financial services”, “credit” or “microcredit”.
  • Then Pay Tshs 500,000 application fee. Get details at the Bank of Tanzania. (as we write this post, the details are Account No at BOT: 9924DDBGHQT and Account Name: Intermediary Account Banking). The payment can be by Cheque, Cash of Transfer. Keep the slip, will be required.
  • Letter of application in the format prescribed in the Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019.
  • Proof of payment of non-refundable application fee.
  • Certified copies of academic and professional certificates of members of the Board and the Chief Executive Officer.
  • A certified declaration that the funds invested or to be invested have not been obtained criminally or associated with any criminal activity.
  • Dully filled Questionnaire for Directors, Owner(s) or Chief Executive Officer contained under the Fourth Schedule to the regulations.
  • Certified copy of certificate of incorporation
  • Certified copy Memorandum and Articles of Association, constitution or by laws.
  • Board resolution authorizing application for licence.
  • List of subscribers, members of the Board and Chief Executive Officer.
  • Credit reference reports for every subscriber with ownership of 5% or more, member of the Board and Chief Executive Officer.
  • Certified copies of tax clearance certificates for the applicant, subscriber with ownership of 5% or more, member of the Board and Chief Executive Officer.
  • Certified copies of latest annual returns of an existing microfinance service provider.
  • Home Country Regulator approval
  • A training plan indicating specific time frames for imparting microfinance skills and expertise to Tanzanian staff
  • A succession plan and strategies on mode, time and contents of the extent to which Tanzanian staff shall occupy senior management positions in the Institution.

E: Sample Business Plan of a Microfinance Company

A business plan for a microfinance business has to provide details of the market and marketing plan, analysis of the business environment, corroborations and partnerships, institutional assessment and financial projections.

Below is a sample business plan for a microfinance business in Tanzania.

F: Sample Credit Policy of a Microfinance Company

Credit policies are set of objectives, standards and parameters to guide bank officers who grant loans and manage the loan portfolio. Thus, they are procedures, guidelines and rules designed to minimize costs associated with credit while maximizing the benefit from it.

Initially microfinance was limited as only provision of micro loan to the poor entrepreneurs and small businesses lacking access to banks and related services then the concept of financial inclusion introduced and based on the guidelines given by different regulators in different countries MFIs defines their credit policies.

A credit policy that is too strict will turn away potential customers, reduce sales and finally lead to a decrease in the amount of cash inflows to the business.

On the other hand, accredit policy that is too liberal will attract slow paying (even non-paying) customers ,increase in the business average collection period for accounts receivables, and eventually lead to cash inflow problems.

A good credit policy help management to attract and retain customers, without having negative impact on cash flow.

G: Challenges Facing Microfinance Businesses in Tanzania

Notwithstanding the vastness of opportunities in the microfinance industry, drawbacks exists. MFIs have performed poorly due to high operating costs, low revenue generation ability, and limited outreach to low-income earners.

The following are the main challenges facing Microfinance Business in Tanzania:

  • Cost of outreach – Reaching the unbanked populations of Tanzania means servicing small loan amounts and servicing remote and sparsely populated areas of the country, which can be dangerously unprofitable without high rates of process automation and mobile delivery.
  • Lack of scalability – smaller microfinance systems often struggle to preserve the profitability and performance in the market, as the mainstream banks experience high growth rates that result from getting the service delivery right. This results in thwarting the growth of most microfinance businesses.
  • Geographic Factors – Tanzania is vast and hence the geographic factors make it difficult to communicate with clients of far-flung areas which create a problem in growth and expansion of microfinance businesses.
  • Diverse business models – Supporting the very wide range of features and lending activities is difficult and requires a considerable amount of funding and efforts.
  • High Transaction Cost – High transaction cost is a big challenge for microfinance businesses in Tanzania. The volume of transactions is very small, whereas the fixed cost of those transactions is very high.
  • KYC and security challenges – The customers serviced by Microfinance businesses are usually the ones having none or very limited official identification or able to provide tangible security, this makes it extremely difficult for microfinance businesses in Tanzania to offer any banking services.
  • Limited budgets – Making provisions for large upfront investments is not possible for most of the microfinance businesses in Tanzania which limits their capability to purchase world-class banking solutions that can help them fulfil their requirements and support their growth targets.

H: BOT Registered/Licensed Tier 2 Microfinance Companies

The table below provides a list of microfinance companies that are registered and licensed by the Bank of Tanzania as of August 2023.

I: Way Forward

Besides the challenges, MFIs have the opportunity to adopt the growing digital technology for reducing the impact of distance, time, and workload to reach low-earning clients, both rural and urban.

And in addition, a fully-fledged due diligence process shall be undertaken to determine the risks involved. Certainly, a due diligence process will uncover potential risks and hence guide the prospective investor in formulating appropriate policies and initiatives.

Below are the recommended ways to ensure growth and sustainability of microfinance business in Tanzania:

  • Close monitoring of credit rendered to clients
  • Promoting effective implementation of credit policies and regulations
  • Promoting an effective credit assessment and appraisal system
  • Developing a good credit policy, implementing it, monitoring it and ensuring proper and effective assessment of credits.
  • Promoting proper and adequate information flow within the microfinance business
  • Adopting continuous improvement approach on credit lending procedures
  • Developing and improving profiling systems and hence create different credit portfolio for different customers segment
  • Developing proper risk management policy and credit management strategies and ensuring proper and effective implementation

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Microfinance Bussiness Plan

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A bussiness Plan for a microfinance institution in the slums of East Cairo.

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This paper is a research on the development of the Islamic microfinance sector in three countries: Yemen, Egypt and Indonesia. The main purpose of this study is to find out which factors are essential for the expansion of the mentioned sector, and if they are comparable to other countries. The research shows that the government's input is a crucial factor for the expansion of the Islamic microfinance sector. In the studied case of Yemen, the government's input has been led by a previous demand research addressed to the population. However, due to the lack of surveys, statistics and, in general, of scientific researches, the confirmation of the last premise – if this demand of first importance is essential for the expansion of the Islamic microfinance- needs to be confirmed by a future specific research within the population/countries selected.

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A set of LES results concerning the vorticity fluctuation in a turbulent channel flow is here presented. Vorticity fluctuation data are rare in literature. Up to now, streamwise vorticity fluctuation has only been measured in one channel flow experiment [7]. In the field of numerical simulations, the vector of the vorticity fluctuations has only been determined in three direct simulations [1, 8, 10]. At the state of the art of large eddy simulations, such quantities have never appeared before.

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Microfinance Business Strategic Plan Template

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When it comes to running a successful microfinance business, having a well-defined strategic plan is essential. It's the roadmap that guides your decision-making and helps you stay ahead of the curve in a rapidly changing market.

ClickUp's Microfinance Business Strategic Plan Template is designed to assist microfinance institutions in developing a comprehensive plan that covers all aspects of their operations. With this template, you can:

  • Set clear goals and objectives to drive your business forward
  • Identify and capitalize on growth opportunities within the industry
  • Allocate resources effectively to maximize efficiency and profitability
  • Implement strategies to remain competitive and adapt to market trends

Don't settle for guesswork or outdated methods. Take control of your microfinance business with ClickUp's Strategic Plan Template and pave the way for success.

Benefits of Microfinance Business Strategic Plan Template

Microfinance institutions play a crucial role in empowering individuals and communities by providing access to financial services. The Microfinance Business Strategic Plan Template can help these institutions:

  • Define and align their mission, vision, and values to guide decision-making
  • Identify target markets and develop strategies to reach and serve them effectively
  • Set clear goals and objectives to measure success and track progress
  • Allocate resources efficiently to maximize impact and sustainability
  • Evaluate and mitigate risks to ensure the long-term viability of the institution
  • Foster innovation and adaptability to stay ahead in a rapidly changing industry

Main Elements of Microfinance Business Strategic Plan Template

ClickUp's Microfinance Business Strategic Plan template is designed to help you streamline your business strategy and achieve your goals. Here are the main elements of this template:

  • Custom Statuses: Track the progress of your strategic initiatives with 5 different statuses, including Cancelled, Complete, In Progress, On Hold, and To Do.
  • Custom Fields: Utilize 8 custom fields such as Duration Days, Impact, Progress, and Team Members to capture and analyze crucial information for each initiative.
  • Custom Views: Access 6 different views, including Progress, Gantt, Workload, Timeline, Initiatives, and Getting Started Guide, to visualize and manage your strategic plan efficiently.
  • Project Management: Leverage ClickUp's powerful features like Gantt chart, Workload view, and Timeline view to effectively plan, assign tasks, monitor progress, and collaborate with your team.

How to Use Strategic Plan for Microfinance Business

If you're looking to create a strategic plan for your microfinance business, follow these six steps to effectively use the Microfinance Business Strategic Plan Template in ClickUp:

1. Define your vision and mission

Start by clearly defining the vision and mission of your microfinance business. What is the ultimate goal you want to achieve? What values and principles guide your operations? This will serve as the foundation for your strategic plan.

Use the Goals feature in ClickUp to create specific, measurable, and time-bound objectives that align with your vision and mission.

2. Assess the market and competition

Conduct a thorough analysis of the microfinance market and identify your main competitors. What are their strengths and weaknesses? How do they differentiate themselves? Understanding the market landscape will help you identify opportunities and develop strategies to stay ahead.

Utilize the Gantt chart feature in ClickUp to create a timeline for your market research and competitor analysis.

3. Set strategic goals and objectives

Based on your market analysis and understanding of your business, set strategic goals and objectives that will guide your microfinance operations. These goals should be specific, measurable, attainable, relevant, and time-bound (SMART).

Use the Board view in ClickUp to create cards for each strategic goal and break them down into smaller tasks.

4. Develop action plans

Once you have your goals and objectives in place, develop action plans to achieve them. Break down each goal into actionable steps and assign responsibilities to team members. Set clear deadlines and milestones to track progress.

Utilize the Automations feature in ClickUp to automate repetitive tasks and streamline your action plans.

5. Monitor and evaluate progress

Regularly monitor and evaluate the progress of your strategic plan. Are you on track to achieve your goals? Are there any obstacles or challenges that need to be addressed? Stay proactive and make adjustments as necessary to ensure success.

Use the Dashboards feature in ClickUp to track key performance indicators (KPIs) and visualize the progress of your strategic plan.

6. Review and adapt

Periodically review your strategic plan to ensure its effectiveness. As your microfinance business evolves, you may need to adapt your strategies to changing market conditions or new opportunities. Stay agile and open to feedback from your team and stakeholders.

Set recurring tasks in ClickUp to regularly review and update your strategic plan, ensuring its relevance and alignment with your business goals.

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Get Started with ClickUp’s Microfinance Business Strategic Plan Template

Metalworking companies can use this Microfinance Business Strategic Plan Template to align their goals and objectives, allocate resources effectively, and implement strategies to remain competitive in the market.

First, hit “Add Template” to sign up for ClickUp and add the template to your Workspace. Make sure you designate which Space or location in your Workspace you’d like this template applied.

Next, invite relevant members or guests to your Workspace to start collaborating.

Now you can take advantage of the full potential of this template to create a strategic plan for your microfinance business:

  • Use the Progress View to track the progress of each strategic initiative and ensure that tasks are completed on time
  • The Gantt View will help you visualize your strategic plan on a timeline and identify dependencies between tasks
  • Use the Workload View to balance workloads across team members and ensure that resources are allocated effectively
  • The Timeline View will provide a high-level overview of your strategic plan and help you identify milestones and deadlines
  • Use the Initiatives View to break down your strategic plan into specific initiatives and assign tasks to team members
  • The Getting Started Guide View will provide you with step-by-step instructions on how to use the template and get started with your strategic planning process
  • Organize tasks into five different statuses: Cancelled, Complete, In Progress, On Hold, To Do, to keep track of progress
  • Update statuses as you progress through tasks to keep team members informed of progress
  • Monitor and analyze tasks to ensure maximum productivity and the successful implementation of your strategic plan.

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How to Write a Food and Beverage Business Plan + Sample Business Plan PDF

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Elon Glucklich

7 min. read

Updated February 17, 2024

Free Download: Sample Food and Beverage Business Plan Templates

The food and beverage sector is booming. Restaurant openings rose 10% in 2023 compared to 2022 — even higher than in pre-pandemic years.

From fine dining to food trucks, farmers to brewers, and wholesalers to coffee makers, there are opportunities across the food and beverage industry. 

But starting a business without covering the basics — your operations plan, marketing tactics, financial strategy, and more — carries huge risks. 

That’s why we recommend you write a business plan.

  • Why write a food and beverage business plan?

Writing a business plan is an easy first step that you can start for free. Plus, businesses that take time to plan are significantly more successful than those that don’t.

Many food and beverage establishments fail because of one of the following:

  • Poor inventory management
  • Underestimated expenses
  • High employee turnover
  • Misjudged the size of their market

Writing a business plan can help you:

  • Develop processes for managing inventory and logistics
  • Understand your cash flows and create a realistic expense budget
  • Budget for competitive employee pay that increases worker retention
  • Analyze your competition and determine how big your market is  

If you’re looking for funding from investors for your business, you’ll definitely need a business plan.

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  • How to write a food and beverage business plan

Many business plans follow a standard format and you can use it as a starting point when writing your own plan. Here’s what that includes:

Executive summary

  • Company summary and funding needs
  • Products and services
  • Marketing plan
  • Management team

Financial plan

For food and beverage companies, you must give extra attention to your market analysis, operations plan, and financial forecasts.

If you’re ready to start, download a free business plan template and fill it out as you read this article.

A sample business plan outline for a food and beverage business.

Every business plan should include an executive summary . It’s a brief outline summarizing the plan, no more than one or two pages.

We recommend that you write the executive summary last after fleshing out the details of your plan. 

Just summarize the vision for your business, describe your offerings and target market , and touch on your management team and financials. Don’t go into tons of detail — just provide a high-level sense of what you want your business to accomplish.

Opportunity: problem and solution

This section of your food and beverage business plan describes the opportunity you hope to capture.

Maybe you’re a farmer looking to diversify your revenue streams by distributing to grocery stores. Or a bar owner with high-end liquor that competitors in the market aren’t serving. 

Whatever your business is, describe the gap in the market and how you aim to fill it.

If you’re operating a more common type of business, like a restaurant , you can probably keep this section short. But it’s useful to document what makes your business unique and it will help focus your sales and marketing efforts later on.

Market analysis

In a field as crowded with competitors as the food and beverage space, a detailed market analysis is essential. 

Your focus should be on identifying the specific customer segments you aim to serve. 

Maybe you’re a butcher with connections to fresh livestock. Will you be more successful selling directly to consumers, or should you focus on selling to grocery stores and markets in your area?

Or, you’re opening  a diner. Should your menu focus on healthy meals or easy-to-make child-friendly options?

These are the types of questions that market research helps you answer. This section should detail the defining characteristics of your target market, including the demographics and preferences of your ideal customer and the size of the market you’re targeting. Market research questions specific to a food and beverage business could include:

  • Business location and characteristics
  • Area income
  • Local food and beverage preferences
  • Existing food and beverage options 

Elaborate on how your food and beverage offerings align with that target market ’s needs. Remember, you can’t please everyone, so focus on a specific group of people or type of person and build out from there.

Marketing and sales

For food and beverage businesses promotions are how you stand out and seize a share of your market.

The marketing and advertising chapter of your business plan is where you’ll detail your strategies for capturing the attention — and loyalty — of the customers you identified as your target market in the previous section.

With so many options for consumers in the food and beverage space, you’ll likely have to rely on multiple marketing channels , including::

  • Advertising on websites, television, and in relevant publications.
  • Content marketing — developing an engaging website and writing blog content that’s search engine optimized to drive traffic to your site.
  • Engaging with your customers on social media.
  • Offering discounts and customer loyalty programs.
  • Appearing at food and beverage industry trade shows and community events.

It doesn’t matter how delicious your recipes are, how fresh your crops are, or how innovative your cocktails are — if you don’t operate efficiently, your business probably won’t last long.

The operations strategy may be the most detailed section of your business plan, especially if you’re writing it for a bank loan or investment. This section describes how you will run your business day to day.

When writing the operations section, describe the following:

Physical space

Whether it’s a restaurant, a farm, or a food transportation business, describe the space you’re operating in, and all of the physical assets and equipment you’ll need to be successful. 

If it’s a sit-down restaurant, consider including a floorplan mockup in your appendix.

Supply chain 

List the suppliers and partners that get your product to customers. Think about the businesses you purchase ingredients from, the warehouses that goods are stored in, and the trucking companies that deliver your products to grocery stores. 

These are your supply chain partners. It’s crucial that you maintain good relationships with them.

Production processes

How long it takes to make your product, and what materials and equipment are required. Documenting how you produce your goods or services demonstrates that you understand the costs of making them. 

You may also uncover ways to produce them more quickly, or at a lesser cost.

Detail how you’ll handle matters of efficiency like order fulfillment, storage, shipping, and returns, as well as customer satisfaction. If you provide delivery services, document how you will handle the process of getting your product to customers’ homes or businesses.

List your staffing needs, training, and experience requirements for key staff. Also, document the management structure of your business. 

This helps ensure that important tasks you don’t have time to monitor are being done and that workers are being supervised.

Describe investments in payment processing systems, inventory management software, and other tools that support sales or operations in your business. Cataloging your technology systems will help you determine where it might make sense to invest in upgrades for efficiency.

Take some time to write a financial plan . Create detailed financial projections, including sales , expenses , and profitability .

If that sounds intimidating, take a deep breath, and remember that financial forecasts are really just best guesses. If you’re running an existing business, you can start with your previous year’s numbers. If you’re starting, make an educated guess about where you hope to be financially a year from now.

Investors will want to see a: 

  • Sales forecast
  • Income statement (also called a profit and loss statement )
  • Cash flow statement
  • Balance sheet 

If you use a tool like LivePlan , you’ll be able to build out your financial forecasts relatively quickly, even if you don’t have experience with business numbers.

Even if you aren’t seeking investment, the financial plan is crucial for understanding the viability of your business. It allows you to adjust your business model based on projected performance, and make informed decisions about where to spend your money.

  • Food and beverage business plan templates and examples

If you want to see how other food and beverage businesses have created their plans, check out our free library of food and beverage business plans . 

You can download all of them in Word format and jump-start your own business plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Elon Glucklich

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

Check out LivePlan

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Business plan Private and confidential

FOR STARTING A MICROFINANCE INSTITUTION IN TANZANIA

Dar-es-Salaam

Table of Contents 1. INTRODUCTION AND BACKGROUND ..................................................... 3

1.1. Executive Summary .......................................................................................... 3 1.2. Mission and Goals ............................................................................................ 3 1.3. Macroeconomic Economic Situations in Tanzania .......................................... 4 2. MARKET AND CLIENTS .............................................................................. 5 2.1. Market ............................................................................................................... 5

2.2. Microeconomic Background ............................................................................ 5 2.3. Clients ............................................................................................................... 7

3. Business Environment Analysis ....................................................................... 9

3.1. Competitors ...................................................................................................... 9 3.2. Opportunities and Threats .............................................................................. 11 4. CORRABORATION AND PARTNERSHIP ................................................ 12 4.1. Global Network .............................................................................................. 12 4.2. Cooperating Partnerships ............................................................................... 12

4.3. Regulatory Policies ......................................................................................... 13 4.4. Transformation into a Microfinance Company (MFC) .................................. 14 5. INSTITUTIONAL ASSESSMENT ............................................................... 15 5.1. Credit and Savings Program ........................................................................... 15 5.2. EEA's Marketing Channel .............................................................................. 17

5.3. Board and Management .................................................................................. 20 5.4. Roles and Responsibilities of the Board Managements ................................ 22 5.5. Institutional Responsibility and Capacity ....................................................... 22

5.6. Risk Management and Controlling ................................................................. 28 5.7. Financing Strategy .......................................................................................... 28

6. FINANCIAL PROJECTIONS ....................................................................... 32

1. List of Global Advisory Board ....................................................................... 36

2. Job Descriptions ............................................................................................. 37

3. Characteristics of the Target Audience .......................................................... 37

1. INTRODUCTION AND BACKGROUND

1.1. Executive Summary

Empowerment Enterprises of Africa (EEA) was incorporated as a non-profit organization

under the laws of the United Republic of Tanzania in 2008. Its headquarters are located in

the capital, Dar-Es-Salaam. The organization was formed with the purpose of providing

social and financial solutions to the poor. The existent business plan provides a rational

framework for the microfinance part of EEA.

The Company was founded by Dr. Jasson Kalugendo and Jerry Twombly who, along

with Dirk Sander, are actively managing the company. EEA has already started a micro

lending pilot project in Dar-City and has scheduled to roll it out to 200 families in

Gongolamboto (underserved area in Dar-Es-Salaam city), by the end of 2009, in

collaboration with other stakeholders. The EEA intends to use Grameen Bank model,

developed by Nobel Peace Award winner, Muhammad Yunus.

EEA intends to reach out to 10,000 poor families in Tanzania with microloans in the next

five years in Gongolamboto, Kinyerezi, Chanika and Kigamboni. Achieving this goal

EEA will expand its business in 2013 to Dakawa, Morogoro Region. EEA management

philosophy is to gain self sufficiency within five years. For that purpose, the management

restricts the fundraising portion with a declining percentage of 100% in year one down to

55%, in year two, 50% in year three and 30% in year four. In 2014, EEA does not expect

to require any more grants.

This document wont be possible without the hardworking of Dirk Sander, a holder of MBA in Accounting and Controlling. Dirk has invested a great deal of his time and

resources to develop this important document because of his passion to those who live

underserved conditions in Tanzania. EEA Governing Board is grateful to his support.

1.2. Mission and Goals

EEA exists to empower people economically while ensuring that those who live in

poverty, particularly vulnerable women and children, are served in body, mind, and spirit.

The springboard of EEA is compassionate micro-finance lending that includes a range of

support services for its members through multiple local programs in strategic rural and

urban areas of Tanzania, and will eventually spread to other countries in Africa. By 2025,

EEA expects to empower the entire population of one million Tanzanians to move out of

extreme poverty through strategic goals:

a) Microfinance. This includes urban and rural lending, community owned banking, and asset development strategies.

b) Community Investment. This comprises consumer-owned businesses, social businesses, and social investment.

c) Entrepreneurial of Entrepreneurship. This involves small-business development, hands-on learning, technical know-how culminating in self-employment, and life

skills development.

d) Dynamic social network. This involves sharing resources, local and global interdependence, and mobilization of social networks.

As a Microfinance Institution, EEA intends to increase opportunities for the poor to

access financial services by providing financial services to low income entrepreneurs,

mobilizing deposits from members and non-members and then loaning a certain

percentage of these funds to urban and rural producers, traders and small scale farmers.

EEAs core values are enhancing their clients self-determination, serving as an ongoing financial resource for members, and achieving significant outreach and financial self-

sufficiency.

1.3. Macroeconomic Situation in Tanzania

The United Republic of Tanzania is situated in East Africa and part of the Sub-Saharan

area with a total surface of 945.087 square kilometers and a population of 40,3 million

(Mainland and Zanzibar). The country gained its independence in 1961. In 1990, the

mainland of Tanzania initiated a political transformation process to a multi-party system.

Between 1999 and 2002 the economy picked up by an average of 6 % and by 2007 the

growth rate (7.1 %) was comparable to the early years of independence (URT - United Republic of Tanzania, 2008).

The inflation rate has been relatively stable during the last seven years with an average of

7% but it has increased significantly during the last 6 months, with a growth up to 11.3%

in April 2009 (BOT, 2009). The population living below the poverty line (income is

under one dollar a day) was 35.7 % in 2000/01. About 80 % of the population in Tanzania

lives in rural areas with agriculture being their main activity (Morrissey et al., 2005). In

2002, the agricultural sector in Tanzania contributed around 45% to the GDP (Gross

Domestic Product), of which subsistence farming accounted for 20 and 81% of GDP and

total employment in Tanzania, respectively. The sector has maintained a steady growth

rate of 3% and is said to be a major accelerator of economic growth. Despite the sectors contribution to the economy, its growth rate is seen as insufficient to improve the

livelihood of the rural people as the rural areas account for around 80% of the 17 million

people living below the poverty line (Wangwe and Lwakatare, 2004). In 2000/01, 39% of

the population living in rural areas in Tanzania was below the basic needs poverty line,

compared to around 26 % in urban areas excluding Dar-Es-Salaam.

The impacts of a socialistic one-party government system led to a decline of old

traditions, melting of social ties, and timidity to engage in self-employment or

entrepreneurship. These were some of the primary reasons for the poverty. The main

political objectives in the last decade have been, therefore, the development of a national

economic growth and poverty reduction strategy initiated by the World Bank and IMF

(International Monetary Fund). Tanzania enjoys political stability though the physical

infrastructure and functioning executive, legislative, education, health, and juridical

systems are poorly developed. Recently, the government has policies and regulations in

place to maximize the utilization of domestic and international resources in a strategy to

reduce poverty and eliminate social problems in the country.

A very serious problem for Tanzanian society is the HIV/AIDS epidemic. The country

has high rate of infection with around 6% of population ages 15-49 carrying the disease

(WBCR, 2009). According to the Health Sector Performance Profile report provided by

the Tanzanian government, the costs of treating AIDS cases could easily consume half of

the countrys health budget, a factor that slows down the countrys strategic efforts on poverty alleviation.

2. MARKET AND CLIENTS

2.1. Market

According to a study of PRIDE (Promotion of Rural Initiative and Development

Enterprises), a major microfinance oriented NGO, it is estimated that there are close to eight million small and micro entrepreneurs who need financial services, and the number

is growing by 4% percent annually, the majority of whom are found in the rural areas (PRIDE, 2009). That is 20% of the countrys population, mainly dealing in the informal sector.

At the beginning of their microfinance activities, EEA is focusing on the urban informal

sector. This sector contributes 43% of the country GDP. Also it contributed 35% to the

total urban labor force (URT, 2003). In Dar-Es-Salaam Region, the informal sector offers

about 65% of the city's labor force (URT, 1995). Nearly two of three urban households

own informal enterprises (URT, 2003).

EEA decided to boost informal sector by providing financial services to their actors.

Although there are contradicting views regarding the relationship between poverty and

the informal sector, without it, the poverty situation of the affected families would have

been much worse (Orlando, 2001). At the beginning, EEA selected four underserved

target areas for their credit program to informal micro entrepreneurs. All are situated in

Ilala, one of three districts of Dar-Es-Salaam Region.

Furthermore, EEA is chiefly committed to empowering the communities in rural areas

because of the fact that their access to financial services is extremely limited. The initial

community to be reached during the pilot phase is Dakawa, a village in the Morogoro

Region, 300 km away from the EEA Head Quarter in Dar-Es-Salaam City. For further

detailed information regarding demand, market penetration and opportunities, see section

3.1 Competition.

2.2. Microeconomic Background

Gongolamboto

Gongloamboto is one of the wards of the Ilala Municipal with an estimated total

population of 15,000 people. The Ilala Municipal belongs to Ilala one of three districts in

Dar-Es-Salaam. The district includes an estimated 783,687 people found in 65 wards and

102 sub-wards (URT Dar-Es-Salaam City Profil 2004). The area of Ilala is 273 km and

is about 20 km away from Dar-City, where much of the commerce, banking and national

offices are located.

Despite the high urbanization rate of Dar-Es-Salaam Region (93.9 % Morogoro, 2007) and the narrow to the capital, the Ilala District is defined as an urban agriculture sector.

Only a quarter of an entire population is involved in non-agriculture, mainly in the

Informal Sector (95 % URT, 2008). Typical small scale businesses include: street vendors, shop sales workers, and crafts men. Majority of people work in petty cash

businesses in which they can buy only the food of the day. Although the poverty rate is

only the half of the country average, Ilala residents do not have savings for retirement,

medical expenses, life insurance, or plan for sending children to school.

Agriculture activities are based on small and large scale crop farming mostly using poor

hand equipments. GDP per capita for Dar-Es-Salaam is to be USD 437 with 35% of the

population earning an average low income of USD 24 per month (URT - Dar-Es-Salaam

City Profile, 2004).

From Gongolamboto EEA will expand their business later to Chanika with 23,000 and

Kinyerezi with 5,800 resident, and the forth area in Ilala will be Kivukoni with an

estimated population of 50,000.1

Dakawa is a small village that is located along the Morogoro Dodoma highway. The village is found in Mvomero district which is among the six districts of Morogoro region.

The regions country size is about 73.000 km2 with a total population size of 1.7 Million

people. Morogoro GDP is 5.39%, so that the region ranked eighth out of 21 regions

(URT, 2006). The per capita GDP of Morogoro Region is USD 311. The relatively well

growing economy is reflected in a surplus of 4.1 % in-migration (Morogoro Regional

Commissioners Office, 2006).

The total human population in the Mvomero district was estimated to be 280,475 people

in 2006 (URT, 2007), and this accounts for a population density of 37.9 persons/km2.

This is relatively low as compared to the average of the Mainland. About 40% of the

population is in the reproductive age (15-44 year old). Mvomeros urbanization level is very low. Only 11.5% of the district population is living in urban areas (Morogoro

Regional Commissioners Office, 2006). The main industry of the labor force depends on

agriculture (90%).

1 Kivukoni has a special status, because of its high population density and the fact that 15 MFIs including

NMB have their offices and branches within this ward. Half of the underserved micro-entrepreneurs in the

four target areas are living and working in Kivukoni. The microfinance market is a growing sector and

attracts more competitors. Because of a relatively proper infrastructure and their high population density,

Kivukoni is one of the most attractive markets in the Dar-Es-Salaam Region - foremost for commercial

Banks that can easily expand their business to this ward. This is a significant market risk for new players

with minimum initial infrastructure like a start up. That is why EEAs implementation plan puts Kivukoni in forth priority.

The major economic activity in Mvomero district is crop farming, employing 81% of the

total labor force. But only 2.1% of the crop farming production is sold (National Sample

Census of Agriculture 2002/2003). Banana, cassava and maize are among the major food

crops grown in the District. Sugarcane, coconut and sesame are among the major cash

crops. Coconut and sesame are sold generally by the smallholders. Due to the rainfall

seasons between November and May, half of the crop selling farmers store crops for three

to six months. There is a high variation of the price within the region that indicates

inefficiencies of the crop marketing system. For instance, the price for sesame varies by

Tsh 500 between Kilosa and Morogoro District. Other occupations that employ a

significant number of the labor force include livestock, crafts, small business, street

vendors, professional jobs and other elementary occupations.

Smallholders are the main keepers for chicken, cattle, goats, and dairy cattle in Mvomero.

The largest proportion of all livestock kept is chicken (55.5%), followed by cattle (22.6%)

and goats (18.6%). The proportion of dairy cross cows accounts for approximately 50%

of dairy products in the region. Dakawa village, which is situated in the Mvomero

District, is 40 km away from Morogoro Municipal. There are about 7,000 residing in

Dakawa. Despite the fact that Dakawa is more than two times larger than the average of

the villages in Mvomero District, the distribution of occupation of the labor force and the

industry is comparable with the district figures.

Special market opportunities in Dakawa The Rural Livelihood Development Company (RLDC) is engaged to boost organic cotton

farming in the Morogoro Region. RLDC is a NGO funded by the government of Tanzania

in cooperation with Swiss Government through Swisscontact. RLDC is looking for

Microfinance Institutions (MFI) extending micro-credit schemes to small-holder farmers

so that they can afford to purchase agricultural inputs and improve efficiency in

marketing agricultural produce. For that purpose, EEA will customize their loan product

program to meet the specific needs of agricultural small scale business. For instance, a

loan product with a grace period and weather insurance could be an appropriate option.

2.3. Clients Customer profile is based on survey results explored by Finscope, a comprehensive national household survey focused on the financial services needs and usage across the

entire South and Southern African population (Finscope, 2007). The TRIODOS Bank highlighted following characteristics of the potential microfinance clients:

Population 57% of the adult population is less than 34 years, and mainly rural-based (72%). In

addition, there are approximately 14 Million people under 16 years.

Financial access A large segment (54% overall; 45% of urban, 57% of rural) of the adult population has no

access at all to financial services, either formal or informal (overall, 9% have a formal

bank account (11% men, 5% women, 16% urban, 4% rural), 2% have access to semi-

formal finance [NGOs, Saving And Credit Co-Operative Societies SACCOs] and 35% have access to informal finance like ROSCAs/ASCAs and moneylenders these

categories are mutually exclusive). Only 20% of the population has access to formal bank

in a 1 hour walking distance.

Financial literacy This is generally low, and lower still for women and for people living in rural areas (92%

of the population has heard of loans, but 84% do not understand how interest rates work,

or collateral, guarantors, opening an account etc.; 27% have never heard of a savings

account). Beyond loans and savings, financial literacy is close to nil (e.g. on insurance,

Automatic Teller Machines). Nevertheless, 82% of the total population indicated that they

would like to know how to open an account in a financial institution. This indicates a

huge need for more as well as better communication regarding financial services with the

larger population.

Sources of income Only 4% of the population is employed in the formal sector. Most people make a living

from agriculture, either by selling food crops (36%), cash crops (12%), cattle/livestock

produce (9%), or livestock (11%). Others run an informal small business (28%), not

(directly) related to agriculture. A large majority of people (61%) go without cash income

at times. Many (28%) depend on getting money from family and friends.

Use of credit and loan facilities Of those that borrow, most (38%) turn to family and friends. An additional 33% get loans

from kiosks, 23% borrow in-kind (e.g. livestock). Only 4% said that they have a loan

from a bank (5% of men, 1% of women). SACCOs and MFIs (Microfinance Institutions)

serve only a small percentage of all borrowers (9% and 6% respectively).

Use of savings facilities Most people with money do not save it with a bank or financial institution. Of those who

save, four out of ten favor saving in-kind (even more so in rural areas) and three out of

ten say they keep money in a secret hiding place (similar for urban and rural). Another

interesting aspect is that of the people with a bank account (9%), many save with or

borrow from informal providers (48%), SACCOs (26%) or MFIs (15%) (Regarding

money lenders and market risk section 5.1 Competitor).

3. BUSINESS ENVIRONMENT ANALYSIS

The context in which EEA operates was explored by an environmental analysis that

gauges how foreseeable external challenges will affect their capacity to achieve their

3.1. Competitors

The deregulation of the financial sector (in 1991) resulted in the privatization of the

National Bank of Commerce (NBC) and the Cooperative and Rural Development Bank

(CRDB), which were the dominant providers of rural finance. These institutions

decreased their participation in rural finance (Khijjah, 2004; Semboja, 2004;

Reweyemamu, et al., 2003). Several private banks were established but the majority of

them operate only in urban areas. In 2006, only 5% of the rural population had access to

bank services (Finscope, 2007). Although National Microfinance Bank aims to offer

micro-credits to micro-clients, from the month of January 2004, it allocated only 0.2 % of

loans to small scale farmers.

Access to credit seems to be a problem that equally affects rural farmers in all regions of

Tanzania. As indicated by Sarris et al. (2006), in 2004 more than 80% of the rural

households faced difficulties in accessing seasonal credits for purchasing agricultural

The extension of institutional finance to rural areas has been included among

developmental initiatives taken by the government and the development agencies to

eradicate poverty. Since the deregulation of the financial sector and the enactment of the

Cooperatives Act of 1991, there has been an increasing number of MFIs. In 2005, there were about 1,899 MFIs. Although, SACCOs are the dominant MFIs, and as 69 % of them

are from rural areas, only 2 % of the rural population has access to their services. The

limited capacities of MFIs are among the reasons why they have not managed to solve the problem of credit inaccessibility in rural areas (Randhawa and Gallardo, 2003). The

majority of the rural population still depends on informal sources of financial services

(Finscope, 2007), which are sometimes not reliable enough to make a significant impact

on income improvement and asset accumulation.

A summary of all relevant MFIs in Tanzania was provided by PRIDE Tanzania (PRIDE,

2007). Hereafter, besides PRIDE, the most influential NGOs are FINCA (Tanzania),

Small Enterprise Development Agency (SEDA) and Presidential Trust for Self-Reliance

(PTF). Smaller NGOs are YOSEFO, SELFINA, Small Industries Development

Organization (SIDO), Poverty Africa, Tanzania Gatsby Trust, the Zanzibar based Women

Development Trust Fund and Mfuko. Some minor institutions known as community

based organizations (CBOs) are dealing throughout the country. The following Banks are

providing financial solutions to the poor: Tanzania Postal Bank, CRDB Bank, the

National Microfinance Bank (NMB), Akiba Commercial Bank (ACB) and a few

Community/regional banks (namely Mwanga Community Bank, Dar-Es-Salaam

Community Bank, Mufindi Community bank, Kilimanjaro Cooperative Bank, Mbinga

Community Bank and Kagera Cooperative Bank).

The indicated total estimated demand for microloans is about eight million. Commercial

banks and Community banks together share 50,000 customers, while NGOs account for

220,000 customers. The rest are served by SACCOs, and many much more minor social

organizations with limited resources for their microfinance activities. The largest single

player in the NGO category with a market share of 29% is PRIDE, which is mainly due to

commercial and trade customers as classified by Abiah Kaaya, Director of SELF (Small

Entrepreneurs Loan Facility), a government microfinance wholesale fund. This

information is supported by the Bank of Tanzanias records (BOT, 2007).

There are about 1,600 mainly rural based SACCOs in the whole country serving an

estimated client population of about 130,000, most of whom are savers. According to

PRIDE, it is important to note that cooperative institutions in Tanzania have had a very bad history as most were associated with financial mismanagement to the extent that they

lost peoples trust and confidence. The cooperative based financial institutions therefore, could not make any meaningful impact in the lives of their members as they operated at

very small scales due to funding constraints. Some improvements have occurred since the government has been implementing a special program to resuscitate the cooperative based financial institutions (PRIDE, 2007). It takes time, however, before significant impacts are shown.

Other suspicious providers of financial solutions to the poor are moneylenders. According

to the Finscope study, 35% of the Tanzanian adult population has access only to informal

financial services. Some studies have emphasized the need to consider the use and the

amount of credit offered to the clients when evaluating the impact of the MFIs on poverty

reduction. It was found that the higher the amount of a loan or the frequency of

borrowing, the higher the labor productivity (Hossain and Diaz, 1999) and the household

welfare of the recipients. However, the amount of credit, which for the case of the MFIs

increases with the frequency of borrowing, may not necessarily lead to poverty reduction.

This is so because some poor borrowers continue borrowing from MFIs to repay loans

from moneylenders, and hence are trapped into the debt vicious cycle (Chavan and Ramakumar, 2002). This is an indication of increased vulnerability and poverty.

Microfinance Institutions in Tanzania with a special focus on Dar-Es-Salaam and

Morogoro Regions (BOT, 2005)

Bank NGO Financial Service

Association

SACCOs Community Based

Tanzania Mainland 8 53 1 105 1601 45 1813

Zanzibar 0 4 0 0 82 86

Total 8 57 1 105 1683 45 1899

Dar-Es-Salaam/ Ilala

(Gongolamboto)

4 4 1 60 0 69

Morogoro/ Mvomero

0 0 0 1 10 0 11

Average per Region in

Tanzania Mainland

2,65 5,25 80,0 2,25 90,65

3.2.Opportunities and Threats

Gongolamboto (Dar-Es-Salaam Region/ Ilala District).

The Ilala District has fewer MFIs than the average number per region in Tanzania

Mainland. The designated target areas around Gongolamboto are remarkable underserved.

In total, there are 17 MFIs in the district serving 144,153 clients (BOT, 2007). The total

demand of the adult populations who have no access to financial services is 720,000 (that

is 45 % out of the region adult population of 1.6 Million people, according to the

Finscope study).

There are 94,000 people living in Gongolamboto, and the other three target areas. Of that,

28,000 of the adult population do not have any access to financial services (4,500 in

Gongolamboto, 6,900 in Chanika, 1,600 in Kinyerezi and 15,000 in Kivukoni). The

remaining 38,000 people who have access to a financial institution are served by 15

SACCOs and one NGO, as well as the National Microfinance Bank (one of few

commercial Banks who are involved in the microfinance business) putting together a

market share of about 10%. The NMB has a market share of 39 %, mainly in the

populated Kivokuni, where they have a large branch.

Based on these facts, the estimated demand of micro-entrepreneurs who are currently out

of the scope of reliable financial institutions is at least 10,000. They represent the most

vulnerable and poor people in the target areas that will, prospectively, not be served by

NBM because of missing collaterals. Initially using the Grameen Bank model of

microfinance, EEAs strengths are serving the most vulnerable and poor people who will

not served by financial institutions.

Dakawa (Morogoro Region/Mvomero District)

Apart from being excluded from the formal financial sector, Morogoro has fewer MFIs

than the average number per region in Tanzania Mainland. Mvomero District with their

280,000 residents hosted only one SACCO who serves 260 people within the whole

district (Morogoro, 2007). The adult population of Dakawa, which is situated in

Mvomero, is about 4.600 people and they are totally underserved by financial institutions.

SACCOs supplement their share of capital by borrowing from the formal financial sector.

The limited number of commercial banks in Morogoro/Mvomero might result in a limited

amount of money available to lend to SACCOs members in this district. To avoid these struggles, EEA needs sufficient capital to extend their business to Dakawa. That might be

possible in the year 2013 at the earliest. The main issues serving financial demand in the

rural areas are poor infrastructure and low population density. Dakawa is located along

the Morogoro - Dodoma highway. Market access for small scale farmers and small

traders is given in both direction, Dodoma and Morogoro Municipality. The branch will

be open in Morogoro Municipality which is a 45 minute drive to Dakawa. Located in the

regional capital, EEA will be able to replicate their lending program to other rural areas.

Out of the 4,600 people, who have no access to financial institutions, the demand for

microcredit is estimated at 1,200 micro-entrepreneurs. EEA expects to lend to more than

80 % of these smallholders within two years, from 2013 to 2014. After that, EEA intends

to replicate their program to other wards in Mvomero District.

4. CORRABORATION AND PARTNERSHIP

4.1. Global Network

Global Advisory Boards (GAB)

Shaping a vision is an ongoing effort, necessitating the oversight of the EEA Global

Advisory Board. In his role as the chair of the EEA Global Advisory Board, Jerry

Twombly works in collaboration with co-chairpersons in each individual country who

coordinate the linkage of EEA with individuals, organizations, businesses, and institutions

in their respective countries, currently the USA, Germany, and Spain (see the list of

Global Advisory Board in the Appendix).

4.2. Cooperating Partnerships EEA relies on a wide-ranging web of partners across the globe that are committed to a

common purpose and are willing to invest resources - money, time and talents - to ensure

its success.

Tanzanian Government

Locally and country-wide, EEA is joining the efforts of the Tanzanian local and central

government, especially with the department of Poverty Eradication and Economic

Growth, to serve grassroots people specifically, by helping to implement the policies so

that we serve the interests of the citizens, the less advantaged groups, and underserved

areas according to government vision.

Bank of Tanzania

The Bank of Tanzania is the implementing agency responsible for coordinating and

monitoring the flow of funds on behalf of EEA donors. The Tanzania Investment Center

and other relevant government ministries will ensure that the people of Tanzania are

served according to the vision and agenda of the Tanzanian government.

Grameen Bank

Grameen Bank, based in Bangladesh, has great interest in collaborating with EEA to

replicate its micro lending model in Tanzania. Grameen Bank is the premier international

banking model for the poor, with more than 7.5 million borrowers in 65 countries around

the globe, mostly in the developing world. Grameen Bank will offer consultancy during

the development, implementation, and monitoring of a micro credit program in Tanzania,

and providing direct or indirect technical support during the pilot phase of EEA micro

credit programming.

GEXSI LLP is a consultancy firm in London and Berlin that provides professional

development investment services. Their aim is to mediate social investments in low-

income regions around the world, with a goal of the alleviation of poverty.

Genisis Institute

Genisis Institute is a leading European social business agency in Berlin that works as a

think tank, providing social solutions within an economic and business framework.

In the effort to avoid duplication of services, and to acknowledge the need for a multi-

dimensioned approach to achieve success, EEA continues to build relationships with

existing national and international organizations and bi-lateral development donors. Also,

financial institutions in the country, specifically the Tanzania Investment Bank, and Self

Project, National Economic Empowerment Council etc. have shown great interest in

EEAs programming.

4.3. Regulatory Policies The following regulatory policies play an important part in shaping EEAs institutional environment:

National Policies The National Microfinance Policy (NMP), enacted by the government in May 2000 and

incorporated in the Banking and Financial Institutions Act 2006, aims to enable the

increasing microfinance industry to become more sustainable and reliable. With this

policy, the government was relieved of its responsibility as the key player in delivering

financial solutions to the poor. Since then the formal private sector has been the main

provider of microfinance services. Those are required to apply these financial principles

in running their business. Beside to the NMP following other policies are in place:

The National Strategy for Growth and Reduction of Poverty (known as MKUKUTA). These strategies are executed by the department of Poverty

Reduction and Economic Growth. Their targets are as followed:

o Increasing economic growth o Reduction of income poverty o Improving the quality of life o Social well-being o Strengthening governance and accountability

Small and Medium Enterprises Development Policy, Ministry of Industry and Trade (2002)

National Land Policy (1995)

Legal Framework

A distinguished licensing system is in place to regulate financial institutions based on

minimum capital requirements:

Minimum Capital Requirements2

Financial Institution In Tsh In USD

Commercial Bank 5 Billion 3.743.916

Regional Unit Commercial Bank 200 50 Million 149.756 37.439

Non-Bank Financial Institution 100 50 Million 74.878 37.439

Micro Finance Company 800 Million (national) 599.026

2 Remark: Until end of 2007, no microfinance company had yet been licensed. The NGOs PRIDE and

FINCA are currently in a transformation process that will be finalized probably by the end of 2009.

200 Million (1 branch) 149.756

Financial Cooperative 800 Million in savings and

In addition, following regulatory and supervisory frameworks are established in which

EAA will adhere to:

The Bank of Tanzania Act (2006)

The Banking and Financial Institutions Act (2006)

The Companies Ordinance (1993)

The Microfinance Companies and Microcredit Activities Regulations (2005), that regulate microfinance activities under the supervision of the Bank of Tanzania,

with special respect to financial reporting, product design, risk management,

controlling, pricing, etc.

Capital Adequacy Regulations (2001)

Banking and Financial Institutions Regulations (1997)

Regulations for: liquidity management, risk management, internal control and audit

4.4. Transformation into a Microfinance Company (MFC) The institution is considering formalization when it passes the capital requirement from

BOT. The board evaluates the opportunities and risks associate with the different options

available. In the hope of attracting a significant flow of client savings and domestic and

international debt and equity funds, EEA is considering changing their legal status to that

of a formally licensed financial intermediary in year 2012, initially with one branch and

progressing to two in the future.

The Financial Committee (see section 5.4), which works under the governing board,

evaluates the costs that are likely to result in the context of banking regulatory structure.

The Financial Committee will incur both up-front and ongoing costs, and these costs are

likely to be substantial. The evaluation will entail costly feasibility studies of the

alternatives and extensive consultations with lawyers and accountants. Registering as a

formal financial institution involves legal and filing fees. Once EEA attains a formal

status, the regulations governing the licensed financial intermediaries will lead to greater

professionalization, for example, through conformity to more rigorous standards of

provisioning and asset valuation. Regulations may also impose significant constraints,

restricting the hours and days of operation, requiring advance approval for opening new

branches, and setting requirements relating to the compensation, hiring, and termination

of employees. A microfinance institution that changes its status will generally face

significant additional supervisory requirements, such as an internal audit department and

expanded reporting. For that purpose, EEA is considering hiring an internal auditor and

an additional accountant in 2012.

Significant capital reserve requirements are necessary, for example, Tsh 200,000, in the

transformation year and Tsh 800,000 when EEA will open a second branch in Dakawa

under legal status. Most significantly, EEA operates as a tax exempt nongovernmental

organization but will lose that status and have to begin paying taxes on its earnings when

they become a formal limited institution.

5. INSTITUTIONAL ASSESSMENT EEA is still in a start up phase and has no historical data to be assessed. The following

institutional capacity model is carried out of the market study and the environmental

analysis. It is a five year projection plan, considering the EEA milestone transforming to a

microfinance company in 2012, to be allowed to collect savings for the purpose of

becoming self sustained at the end of the projected period.

5.1. Credit and Savings Program Defining EEAs Financial Products At the end of 2008, EEA started a pilot program and offered a single loan product,

Solidarity Small Business Loan, and had no voluntary savings products. The institution

required all borrowers to maintain monthly compulsory savings, which is treated as part

of the loan product. According to the pilot results, EEA intends to follow up with this

loan type but plans to introduce new loan product in year four when they extend their

business to Dakawa. The product should be customized based on the needs of agricultural

small scale businesses. Because of the late introduction and the very low financial impact,

it is not designed as an individual product in the existent business plan.

EEA intends to convert to a nonbank financial institution in year three, which will make it

eligible to collect savings deposits. Its management expects to offer two voluntary

savings products: a voluntary savings account, called Passbook Savings that replaces the current compulsory savings, and a range of term deposits to be modeled as a single

product called Fixed Deposits.

Setting EEAs Loan Amounts and Repayment Conditions At the beginning of 2010, EEA will offer a single loan product in Gongolamboto, Dar-Es-

Salaam Region, Ilala District. Clients are required to form groups of five, and each client

will receive a loan amount based on their need. In accordance to the Grameen Bank

model, EEA decided not to require group guarantee. That means that no group member

will cosign for the others. All loans require biweekly payments. EEA will not offer a

grace period on repayments. Contractual loan terms varied between 8 and 12 months, it is

projected that in general clients took an extra month to fully repay their loans.

Loan Cycle Average Amount

Amount year 2

Effective Term

First 200.000 300.000 9

Second 300.000 450.000 9

Third 450.000 600.000 11

Fourth 600.000 750.000 11

720.000 1.000.000 13

Average loan amounts are expected to increase annually by the rate of inflation. Initial

annual client retention rate is to be estimated at 80%, and will increase gradually up to

90% from year three to five.

Defining EEAs Compulsory Savings Requirements EEA require clients to save 20 % of their requested loan amount before disbursement.

The primarily purpose of compulsory savings is to cover any default risk. These savings

will be held at the Corporative Rural Development Bank (CRDB). Because of the fact

that EEA didnt pass the capital requirement of the Bank of Tanzania as of yet, the company is not legally allowed to hold savings deposits. When EEA converts to a

nonbank financial institution in the third year of its strategic plan, it intends to eliminate

the compulsory savings requirement. In month 25, EEA will replace compulsory savings

with their voluntary Passbook Savings product and their Fixed Deposits.

Setting EEAs Pricing Structure EEA charges 30% annual interest using flat balance calculations. EEA also charges an

upfront commission fee of 3% on all loans at the time of disbursement. All lending has

been transacted in local currency, with no indexing to external values. The management

decided to take a lower interest rate than the market average, which would attract more

customers at the beginning and is in accordance to the Poverty Reduction Strategy of the

Tanzanian government. If the profitability projections turn out to be unacceptable, it will

re-price the loan product again.

Setting the General Parameters for EEAs Compulsory Savings Products The compulsory savings pay the depositors interest at 12.5%. The clients do not have an

individual saving account. EEA collects the savings from their clients and deposits it as

accumulated amount on their business account at the CRDB Bank. EEA pays out the

interest (minus a commission of 2%) when the loan is fully repaid or in year three when

their clients open voluntary saving accounts. Access to the compulsory savings is blocked

while the client has an outstanding loan and can be seized by EEA if the client fails to

repay the loan. The funds are not otherwise available for EEAs use.

Defining EEAs Voluntary Savings Products

Starting in year three, EEA plans to begin offering two voluntary savings products.

Passbook Savings will pay interest ranging between 2% and 6%, depending on the

deposit amount, with an average rate expected to be at 4%. Fixed Deposits will pay

interest ranging between 7% and 10%, depending on the term, with the average rate

expected to be 8%. These prices are above the current market rates (BOT, 2007).

EEA decided that a specific percentage rate of any savings deposits be placed in short-

term reserve deposits, to handle ongoing depositors withdrawing, with the rest available

for on-lending at the institutions discretion. EEAs management expects to establish a reserve of 40% of Passbook Savings and 25 % of Fixed Deposits.

5.2. EEAs Marketing Channel EEAs Initial Balances EEA projects that it will have 200 active clients at the end of 2009, all with Solidarity

Small Business Loans. Referencing EEAs balance sheet, it is determined that EEA will have a gross outstanding balance for its single loan product of Tsh 40,000,000 at the

beginning of the five-year projection.

Projecting EEAs Active Loans EEAs market study showed that the institution has the potential to grow from 200 to 9,000 clients in the current market area Gongolamboto by the end of its five-year plan. In

addition, EEA intends to open a second branch office, in Dakawa, in January of 2013.

This branch is expected to expand to 1,000 clients by the end of 2014, bringing the total

number of clients to 10,000.

The projection models multiple branches using a consolidated approach. It had chosen to

project credit activity by the number of active clients rather than by the number of new

clients each month to calculate a reasonable cycle time for each segment.

EEAs Projected Number of Active Loans (2010 - 2014)

Branch Initial 2010 2011 2012 2013 2014

Gongolamboto 200 1.200 3.000 5000 7.000 9.000

Dakawa 0 700 1.000

Total 200 1.200 3.000 4.500 7.700 10.000

growth rate

16,1% 7,9% 4,3% 3,7% 2,2%

EEAs Projected Term Loan Portfolio

500.000.000

1.000.000.000

1.500.000.000

2.000.000.000

2.500.000.000

3.000.000.000

1 7 13 19 25 31 37 43 49 55 61

Portfolio by cycle (real)

First cycle Second cycle Third cycle Fourth cycle Fifth cycle Sixth and future

EEAs Projected Term Loan Income

100.000.000

120.000.000

140.000.000

1 7 13 19 25 31 37 43 49 55

Term Loan Credit Income (real)

Interest, init port Interest, rate change Interest, current rate Upfront Fee 1

Upfront Fee 2 Ongoing Fee Indexing

Analyzing EEAs Customer Retention Rates Confident that the Grameen Bank model and the special trained staff will address their

clients needs, EEAs management expects a relatively high customer retention rate from 80% up to 90%. The management reviewed their loan-demand projections. They saw that

EEA will need to attract about 12,290 new clients in the next five years to reach its

expansion targets, and that only 2,290 of these clients will drop out during the five years.

Therefore, high client retention will need to be a primary goal in the coming years.

Projecting EEAs Compulsory and Voluntary Savings At the end of 2009, EEAs borrowers would have Tsh 8,000,000 of compulsory savings on deposit at CRDB - an amount projected to grow to Tsh 225,120,000 by the end of year

two. When EEA begins offering voluntary savings in their branch in Gongolamboto in

the first quarter of year three (after terminating the compulsory savings requirement in

month 37), management estimates that 60% of borrowers will transfer a significant

portion of their compulsory savings to the new voluntary savings accounts, either to a

passbook or to a deposit saving account. For the passbook saving account, management

estimates an initial average balance of Tsh 40,000,000 that will grow to about Tsh

221,000 at the end of year five. The same applies to the Term Deposit. The initial average

balance is estimated significantly higher and accounts for Tsh 300,000 increasing to Tsh

467,000 at the end of year five. The number of savers is predicted to be significantly

lower. This is because of the fact that customers take time to save sufficient capital

reaching the minimum deposit requirements of a Fixed Deposit account. In addition, the

savers will have limited access to their capital for an agreed time period.

As client confidence and awareness increase, the percentage of borrowers with voluntary

savings is projected to increase up to 80% in year five. In addition, EEA expects non-

borrowers to open Passbook Savings and Term Deposits accounts, starting in year three

as well. For Passbook Savings, EEA estimates 100 new accounts a month during the first

half of year three and then a 5% monthly increase in accounts from the beginning of the

second half of the year until the end of the five year plan. For Term Deposits, the initial

number of savers is estimated at 10% of the borrowers in year three, increasing slightly

with 1% in year four and 2% in year five.

EEAs Projected Voluntary Savings (by amount of Deposits)

200.000.000

400.000.000

600.000.000

800.000.000

1.200.000.000

1.400.000.000

1.600.000.000

1.800.000.000

Amount of Deposits, by product (real)ALL Savings Products

Passbook Savings Fixed Deposits Compulsory Savings

5.3. Board and Management EEA embraces the organizational leadership model with a leadership team capable of

formulating and shaping a coherent vision combined with a management team skilled in

implementing and rejuvenating the vision over time. This team is comprised of an

Executive Director working closely with Governing Board chair, Advisory Board chairs,

advisors and members committed to constructing and executing the strategies. The

Managers are responsible for the implementation and management of the vision,

specifically in the areas of microfinance, education, social business, research, and

entrepreneurial education. The management of the corporation is vested in the Governing

Governing Board

Board members are nominated and appointed for staggered terms of three years. Board

members serve a maximum of three successive terms; initial terms would be for three,

six, on nine years. A full board meeting would occur annually in the month of April

supplemented by quarterly conference call meetings. Every third year the annual board

meeting take place in Tanzania. The board members represent groups deemed critical to

managing a microfinance organization, banking, legal, accounting, education, pastoral, business, organizational development, government, financial planning, and women are

well represented in the board. Three members come from Tanzania, in which one of them

represents MFI clients of the EEA. The Board delegates responsibilities for day-to-day

operations to the corporations Executive Director and Committees. The board receives no compensation other than reasonable expenses.

Dr. Jasson Kalugendo is the Founder and Executive Director of EEA. Born and raised in

Tanzania, he has worked internationally in Rwanda, Kenya, Tanzania, and the United

States. Most recently, Dr. Kalugendo formed and operated All Nations Ministry, a

program serving the spiritual, economic and social needs of a culturally, racially, and

economically diverse community, particularly children, teens, single moms, and victims

of crime living in Antioch, Tennessee. At the same time, Dr. Kalugendo served as parish

pastor for the Lutheran Church where he also managed the church bookshop and acted as

communications director, newsletter editor, strategic planner, and leadership trainer.

Dr. Kalugendo obtained his Doctoral Philosophy degree from Concordia Theological

Seminary, Indiana, USA where he devoted much of his time to studying the sociological

patterns of bonding and bridging social capital. He holds two degrees in public relations

and social communication from Daystar University, Nairobi, Kenya, also taking classes in

social work. Dr. Kalugendo has participated in strategic planning, leadership

development, and organizational management seminars.

Jerry Twombly is the Co-founder and President of EEA. He became intrigued with

national development practices in 1970 while working as a professor at Word of Life

Bible Institute at Schroon Lake, NY. In addition to his teaching experience, Jerry

Twombly has worked in public relations, student recruitment, and fund-raising. In 1973,

he returned to Grace Theological Seminary to pursue post-graduate studies where he

assumed a position in the development office in exchange for a salary and free tuition.

During nearly 40 years of working with Christian ministries and organizations in all 50

states of America, five of nine Canadian provinces, and several countries around the

world, Jerry Twombly assisted 3,500 clients to raise over USD 2 billion for programs and

Dirk Sander is a Social Business and Microfinance Consultant trained and examined by

Grameen Trust in Bangladesh. He has worked for 17 years in varied executive functions

for Citibank Germany. His most recent positions include a Credit and Risk Manager and a

Branch Manager. Dirk Sander coordinates EEAs German Advisory Board.

Vicente a Jose Boixareau coordinates the vision of EEA in Spain. Mr. Boixareau has a

MBA degree from CUNEF & Universidad Complutense, Madrid and is currently

pursuing a PhD in economics and finances. He is a researcher and lecturer on economics

at the CIIF International Centre for Financial Research and Finance Department, IESE

Business School Spain in Madrid, and has been a researcher with the Departments of

Finance in Germany, France, and Bangladesh.

National Advisory Board Tanzania

A National Advisory Board (NAB) in Tanzania provides oversight to local EEA

operations. The chairperson, Elias Mashasi, was an Executive Director with parastatal

organizations in Tanzania for 20 years and spent the last 10 years working with

International Labor Organization.

5.4. Roles and Responsibilities of the Board Management The Board may create committees as needed, such as community Relations, Cultural

Outreach, Research and Publication. There are two outstanding Committees: Executive

and Finance Committee. The Governing Board appoints all Committee chairs who must

be members of the Board.

The Executive Committee

The Executive Committee reviews the performance of the Executive Director. Except for

the power to amend the Articles of Incorporation and Bylaws, the Executive Committee

have all power and authority of the Governing Board in the intervals between meetings of

the Board of Directors, subject to the directors and control of the Board of Directors. The

Executive Director is responsible for hiring and supervising. The Executive Committee

shall serve as a vital committee and is responsible for developing a personnel policy.

Finance Committee

The Treasurer is chair of Finance Committee, which include three other Board members.

The Finance Committee is responsible for fiscal control, development and reviewing

expenditure procedures, and a fundraising action plan and organization annual budget.

The Board of Directors must approve the budget and all expenditures must be within the

budget. Any major change in the budget must be approved by the Board of Directors or

Executive Committee. The fiscal year shall be the Calendar year. Quarterly reports are

required to be submitted to the Governing Board showing income, expenditure and

pending income. The financial records of the Corporation are public information and shall

be made available to the Governing Board members and the public.

5.5. Institutional Resources and Capacity Defining EEAs Staffing Categories EEA refers to members of its field staff as Loan Officers. The company opted for salary and benefit adjustments at the beginning of each fiscal year, because EEA's board

generally grants an increase equal to the inflation rate. In addition to its loan officers,

EEA considers its Credit Supervisor, Bookkeeper and Operations Manager part of the Branch-related staffing. All other existing staff are considered Head Office staff. In

January 2013, when another branch office is to be opened, EEA will shift the operations

manager to the position of branch manager of the old branch and hire a branch manager

for the new one. So the job title includes both positions - "Operations/Branch Manager".

Also, a bookkeeper will work in the new branch. Starting in year three, when savings

products are introduced in Gongolamboto, that branch will add the following positions:

Teller and Security Guard. One year later, when a new branch is opened in Dakawa, additional Tellers and Security Guards will be hired. The credit supervisor will also be

hired in year four, when the second branch is to be opened. His role is to empower the

sales staff and to review the credit decisions. A large branch like Gongolamboto that will

need more than 40 employees should be supported by additional supervision functions.

For administrative-level staffing, EEA entered the following positions: Executive Director, General Manager, Chief Accountant, Assistant Accountant, MIS Supervisor, Internal Auditor, Human Resource Manager, Saving Director, Secretary, and Driver. (For detailed job specifications see attachment).

Defining EEAs Operational Expense Categories For Branch-related operational expense categories, the staff specifies Rent, Utilities, Transportation, General Office Expenses, Staff Training, Borrower Training, and Repairs, Maintenance and Insurance. For Head Office operational expense categories they enter Rent, Utilities,Transportation, General Office Expenses, Repairs, Maintenance, and Insurance, Professional Fees and Consultants, Board Expenses, and Staff Training.

Projecting EEAs Branch Resources and Capacity Projecting EEA's Branch-related Loan Loss Provisioning

EEA estimates that its portfolio, at risk for more than 30 days, will be 10%. It projects

write-offs of 2.2% of its portfolio and decided to use this write-off rate for all future

projections. The loan loss reserve, as of December 2009 on the balance sheet, is to be

estimated by Tsh 1,200,000.

Defining EEAs Branches EEA plans to open its first branch in Gongolamboto in third quarter of 2009, and

indicates that a second branch will open in the beginning of year four in Dakawa.

Setting the Links for EEAs Loan Officer Projections EEA's lending methodology (Grameen Model) permits experienced field staff to work

with a caseload of 350 clients. Loan officers generally take 12 months to move up to the

senior level and a full caseload. Beginning staff generally work with 25% of a full

caseload, secondary staff with 50%, and intermediate staff with 75%. EEA generally hires

new loan officers in groups of at least three in order to coordinate staff orientation and

training. At the beginning, EEA will have two loan officers, one of whom will have been

with EEA for 12 months (i.e., senior level), and one which will be newly hired.

Projecting EEAs Automated Branch-related Staffing Levels At the beginning, EEA intends to start with two loan officers, one bookkeeper and one

operations manager. To ensure efficiency and to serve with a high grade of safety and

quality, the company planned to hire:

one credit supervisor for every 12 loan officers, starting after a total of 12 loan officers are hired;

one branch manager and one bookkeeper for each branch that opens;

one teller for every branch that offers voluntary savings;

one security guard for each branch that offers savings, starting in year three.

The cost for each position - including salaries, benefits and payroll taxes - as of January

2010 is estimated in the following table. The model will automatically increase the

salaries by the inflation rate in the first month of each fiscal year.

Staff Position Monthly Salary (Benefits are included) / Tsh

Loan Officer, Entry level 333.875

Loan Officer, Intermediate level 420.200

Loan Officer, Senior level 534.200

Teller 467.425

Bookkeeper 593.000

Operations/Branch Manager 801.300

Credit Supervisor 1.200.000

Security Guard 267.100

Projecting EEAs Branch-related Other Operational Expenses To generate projections of EEA's Branch-related other operational expenses, the company

distinguished the Branch-expenses from administrative-expenses categories opting for

automated projections as they enter the following Links:

Category Expense Amount/ Tsh Inflation

Rent 659.250 per branch per month Monthly

Utilities 263.700 per branch per month Monthly

Transportation 65.000 per officer per month Monthly

General office expenses 135.000 per branch employee per

Repairs, maintenance,

659.250 per branch per month Monthly

Staff Training 70.000 per branch employee per month Monthly

Borrower Training 1000 per borrower per month Monthly

Misc. expenses (% or

8% of total branch other operational

Entering Initial Balances for EEAs Branch-related Fixed Assets EEA entered initial balance information for the following Branch-related fixed assets, as

of the end of 2009:

Asset Purchase Amount Remaining Life

Two computers 1.000.000 1

Assorted office furniture 750.000 3

Three employee furniture groupings 200.000 4

One Photocopy 2.000.000 1,5

One Money Detector 300.000 2

Two Motorcycles 3.900.000 2

Planning EEAs Fixed Asset Acquisitions at the Branch Level EEA decided to link each fixed asset category to a key output of the model in order to

automatically generate its fixed asset acquisition schedule. They estimate that a branch

office needs one computer for every four Branch staff. EEA plans to purchase one set of

general office furniture for each branch office. They linked employee furniture groupings

to the number of Branch staff, using a ratio of one unit of furniture for each Branch staff

person. For other assets categories they specify an MIS system to be introduced in year three.

Projecting EEAs Administrative Staffing Levels At the beginning of 2010, EEA's administrative staff will consist of an executive director,

a chief accountant, a secretary and a driver. In addition, the institution plans to hire an

MIS manager at the beginning of year three to supervise the new management

information system, a savings director in the third quarter of year two to prepare for the

new services to be offered in year three, and a human resources manager at the beginning

of year two to work with the growing number of staff. Starting in the third quarter of year

two, when EEA prepares to transform to Microfinance Company, they will hire a general

manager that will take over the executive responsibility for the formal microfinance

institution, and an Assistant Accountant. When EEA becomes a legal Microfinance

Company in year three, they will hire an internal auditor to ensure appropriate controlling

and reporting.

Projecting EEAs Administrative Salary and Benefits Expenses Just as for the Branch staff, the salaries of EEA's administrative staff is considered equal

to market rates. The staff estimated monthly salary and benefit costs for administrative

staff are as follows:

Executive Director 3,872.950

General Manager 3.205,200

Chief Accountant 1,068,400

Internal Auditor 800,000

Assistant Accountant 667,750

MIS Supervisor 1,068,400

Human Resources Manager 1,068,400

Secretary 534,200

Saving Director 1,068,000

Driver 267,100

Projecting EEAs Other Operational Expenses at the Administrative Level EEA prepared the following budget estimates for other operational expenses at the

administrative level:

Rent (Head Quarter Office) Subsidized by other partners

Utilities Tsh 500.000 per month Monthly

Transportation Tsh 35.000 per administrative employee

General office expenses Tsh 135.000 per administrative

employee per month

Repairs, maintenance, insurance Tsh 131.850 per month Monthly

Professional fees, consultants Tsh 1.000.000 per month Annually

Board Expenses Tsh 540.000 per month Monthly

Staff Training Tsh 150.000 per administrative

Miscellaneous expenses (% or

5 % of total administrative other

operational expenses

Developing EEAs Fixed Asset Acquisition Plan at the Administrative Level To begin the fixed asset analysis at the administrative level, EEA entered the following

information about the institution's existing assets:

Asset Purchase Amount/ Tsh Remaining Life/ years

Two Computers 2,000,000 1.5

One Assorted office furniture 1,500,000 4

Accumulated depreciation, total (1,642,000)

EEA budget for the purchase of six additional computers in months 13, 19, 25, 31, 37 and

49, whenever EEA expect to hire new administrative staff members (e.g. Human

Resource Manager is expected to be hired in the beginning of year two). They also

budgeted for the purchase of additional office furniture grouping in month 19, when

administrative staff accounts for more than five members. These purchases are in addition

to the automatic replacement of fully depreciated equipment that is projected by the

Analyzing EEAs Land and Buildings In 2009, EEA owned no land or buildings and had no plans to acquire any during the next

five years.

Analyzing EEAs Other Assets EEA's strategic plan identified an urgent need to upgrade the MIS system, and budgeted

Tsh 70,000,000 in month 13. The MIS is treated as an asset and amortized over a five-

year period.

Analyzing EEAs In-kind Subsidies Through partnership with other stakeholders, EEA receives free rent for their Head

Quarter office during the projected period. EEA estimates the value of this support at Tsh

8,016,000 for year one. With regards to the inflation, they project it will increase to Tsh

10,625,625 in year five. EEA entered these figures initially as their monthly equivalents

of Tsh 668,000 a month for year one. While this rent subvention is not an actual expense

for EEA, it is factored into the financial profitability calculations.

EEAs Projected Expenses

Expenses (real)

Br.Staff Other Br. Exp H.O. Exp. Depreciation Loan Loss Cost Funds Adjustments

EEAs Projected Total Income and Expenses

160.000.000

Income and Expenses (real)

Total Income Expenses

5.6. Risk Management and Controlling EEA identified following main risk categories: credit, liquidity, and operational Risks.

Credit Risk

Credit risk is defined as a potential loss that is indicated when a borrower fails to repay a

loan. EEAs risk prevention and collection strategy depend on the reason for the imminent default: unwillingness or financial distress. Group lending methodology

up-front compulsory savings will decline EEAs credit risk. Biweekly collection procedures and trainings are parts of an early risk recognition system based on ongoing

customer evaluation provided by the loan officers. Different approval levels (group

member loan officer branch manager credit supervisor) should ensure a high quality loan application process. A borrower who is in financial distress and is willing to repay

their loans will be transferred to a flexible loan. A flexible loan reduces the installment

size and extends the maturity depending on the customer payment ability. In 2012, when

EEA will be legalized as Microfinance Company, an internal auditor will be hired to

implement a risk management system following the Basel II requirements and the

national banking regulators.

Liquidity Risk Liquidity risk management will be done by the Finance Committee which ensures that

funding commitments and deposits withdrawal can be met on time. For that purpose,

EEA has considered a sufficient liquidity margin in their model (section 5.7 Financing

3 Group lending approach provides moral support and social network but not a financial support to an

individual member.

Operational Risk

Operational risk is a main issue for a start up in finance with their limited resources.

Employees who are overloaded, undertrained or underpaid are the primary driving force

behind errors, fraud and mismanagement. EEA decided to serve and educate their

employees from the beginning in a competitive manner. This serves to increase their

identification with the company. To ensure proper operational procedures, reasonable

controlling systems will be developed from the beginning and will be managed by the

Executive Committee. An operational margin is implemented in the model to handle any

operational losses and liquidity gaps (see section 5.7 Financing Strategy).

5.7. Financing Strategy Identifying EEAs Sources of Financing Management prepared the following summary of EEA's financing sources. EEA has the

following grant commitments and pledges:

World Vision has pledged Tsh 3,300,000 unrestricted.

Better Place. The internet grant collection platform has provided Tsh 691,000, unrestricted.

Individual Investors. They have pledged Tsh 13,350,000.

EEA also has initiated discussions to commitments for grants from the following

organizations:

GLS Treuhand (Foundation). GLS Treuhand is a foundation of a German Social Bank who promotes small projects in poverty eradication activities worldwide.

The foundation managed a small grant portfolio of three million US dollars. EEA

estimates a grant commitment of about Tsh 75,000,000, starting in month seven,

2010, restricted for initially operational costs.

SELF (Small Entrepreneurs Loan Facility). SELF is a Tanzanian wholesale fund and has additional grant funds available to subsidize microfinance institutions

technology and equipment. It normally provides small grants subjected to office

equipment. EEA estimates an initially grant of Tsh 13,350,000, restricted for other

GTZ (Society of Technical Cooperation). The German GTZ is an international cooperation enterprise for sustainable development with worldwide operations.

GTZ promotes complex reforms and change processes, often working under

difficult conditions. Its corporate objective is to improve peoples living conditions on a sustainable basis. EEA expect a grant of Tsh 70,000,000 to

purchase and introduce a MIS System at the beginning of year two.

EEA needs to receive portfolio restricted loans, and estimates for the third quarter in 2009

a initial loan of about Tsh 40,000,000 at zero percent to expand their pilot program to 200

borrowers in Gongolamboto. It is reflected at the initial outstanding amount, at the

beginning of the projection period.

EEA restricted the use of savings to loan portfolio financing. The management

established a liquidity margin for portfolio of 25% of monthly loan disbursements, and a

liquidity margin for operations of 33% of monthly cash expenses. EEA is expecting an

initial market rate cost of funds of 20%. This is a precaution estimate. Some commercial

Banks in Tanzania offers lower interest rates. This rate is expected to decrease down to

16% when the company becomes a formal financial institution and has sufficient means

in year three. EEA considers any interest rate that is at least 85% of this value to be

market rate.

Projecting EEAs Financing Flows Loans

EEA modeled the institution's financing strategy by entering all confirmed and likely

financing receipts and repayments. All loan payments are entered as negative numbers:

Unidentified sources. The initial loan amount of Tsh 40,000,000 that is need to serve 200 clients in third quarter 2009 will be repaid in October 2010. A new fund

of Tsh 150,000,000 with a supposed maturity of two years is expected in January

2011 and entered in the model. EEA will make monthly payments.

Oikocredit. EEA is scheduled to receive its first disbursement of Tsh 200,000,000 in January, 2011 with a supposed maturity of three years. EEA will make monthly

payments. No new funds are expected.

Vision Microfinance Fund. EEA has started the discussion with Leopold Seiler, Portfolio manager, and expects a fund of 100,000,000 in January 2011, with a

supposed maturity of two years. EEA will make monthly payments. No new funds

are expected.

SELF. EEA would negotiate a onetime disbursement of Tsh 50,000,000 with a supposed maturity of two years in January, 2011. EEA will make monthly

EEA anticipates experiencing a funding shortfall in the beginning of 2010. The following

years also show shortfalls, with the exception of year five. In addition to the indicated

fund sources, EEA is forced to request unrestricted grants for:

Year one: Tsh 280,000,000 Year two: Tsh 190,000,000 Year three: Tsh 180,000,000 Year four: Tsh 200,000,000

EEA management philosophy is to gain self sufficiency within five years. For that

purpose, the management restricts the fundraising portion with a declining percentage of

100% in year one down to 55%, in year two, 50% in year three and 30% in year four. In

2014, EEA does not expect to require any more grants.

In year four, EEA plans to open a new branch in Dakawa. Under the National

Microfinance Policy, EEA is requested to raise capital amounting to Tsh 800,000,000 to

become a nationwide operating Microfinance Company. To increase their equity and to

strengthen their customer retention, EEA will introduce a compulsory membership model,

where each new borrower will pay Tsh 13,255 with an annual distribution of dividends,

starting in year three. Projection shows that additional equity funding sources are needed.

The following equity funds and banks meet the EEA principles and would be appropriate

shareholders:

Dexia Micro-Credit Fund (DMCF). A commercial investment fund with a special respect to social impacts. Focus on

micro-entrepreneurs in emerging markets.

Vision Microfinance Fund. A fund with a double bottom line strategy, to maximize the risk return profile for

the benefit of the investor and to strengthen the social impacts for micro, small

and medium enterprises in emerging and least developed economies.

Impulse Microfinance Investment (IMI). Similar to VMF, IMI manages their portfolios with a bottom line strategy. It

invests in financial markets in developing countries and channels private

investment funds to the microfinance industry.

PAX Bank. A German church bank with high amount of interest to develop the microfinance

National Economic Empowerment Council (NEEC)

EEA expects to gain from each investor Tsh 70,000,000 in year three. After increasing

EEAs capital, the revised graphs below show that EEA will achieve full financial sustainability from month 43, ending by year five at 143% in operational, and 131% in

financing sufficiency.

EEAs Projected Sustainability

Operational and Financial Sustainability

Oper. Sust. Fin. Sust.

Investment Strategy

EEA will not establish any long-term investments during the first five years. EEA will

earn 3% interest on cash deposits. It earns 5% on short-term investments, 12.5% on

savings reserves and would earn 12.5% on long-term investments if it had any. All rates

are based on current market rates. EEA will generate nearly Tsh 173,000,000 (round up)

in investment income over the five-year period.

6. FINANCIAL PROJECTIONS

Financial projection plan was made with a Microsoft Excel spreadsheet developed by the Consultative Group to Assist the Poorest (CGAP) and Women's World Banking (WWB).

1. List of Global Advisory Board

U.S. Advisory Board

Initial US Advisory Board members, working under the chairmanship of Jerry

Twombly, include:

Pastor Mike Wekelund, New Life Lutheran Church, 15-years experience as Latin America missionary. He also runs his own business.

Reverend Randy Mutter, Pastor of Adams United Methodist Church, formerly a Construction Manager, CLK Multifamily Management

Dr. Harry Gates, chaplain coordinator at Skyline Medical Center, pastor to Nashville Cowboy Church and Ranch House, and Vanderbilt University MBA

graduate in Economics

Tom Bolt, Retired, former Financial Planner Ben Baggett, self-employed, Appraiser

German Advisory Board

Initial Germany Advisory Board members, working under the co-chairmanship of Dirk

Sander include:

Dr. Maritta Koch-Weser, former director of World bank, now CEO of Gexsi Dr. Sven Remer, Program Executive, Institute of Social Banking, GLS Treuhand Stephan Siegel, Risk & Scoring Manager for American Express, formerly Head of

Credit Scoring, Citibank Germany

Heike Uhl, International Auditor & Consultant: Fabel, Werner & Schnittke GmbH, started several projects in Africa, speaks Swahili

Nicola Tofaute, Start up Consultant for women and currently project leader literacy program for German Adult Education Association (DVV)

Dr. Denitsa Vigenina, Risk Manager for Citibank in several countries, Involved in a microfinancing in London, currently Manager of Business Strategies for SEB

Banking Group

Ulrich Merkes, a freelancer and a former manager of Deloitte, Currently works for Swisscontact

Shoe Sussan Katende, advocate at a Tanzanian law firm MLC, prior employee of United Nations High Commissioner for Refugees -Tanzania. UNHCR;

Deogratias Mutalemwa, Development Economist with extensive experience in government affairs, rural development, public policy, and development lending

operations, including nearly 20 years in the Ministry for Finance for the

Government of Tanzania, 10 years as director of International Cooperation and

Co-financing for the African Development Bank in Belgium, and, since retirement

in 1997, senior research fellow and coordinator for the Tanzania Participatory

Poverty Assessment;

Revelian Shemelelwa, Masters of Science in Agribusiness, consultant in microfinance and social business research, planning, marketing and management;

Paul Simon, CPA, deputy for the Treasury Department of an Evangelical Lutheran Church in the North Western Diocese of Tanzania.

2. Job Descriptions

3. Characteristics of the Target Audience

This project focuses on the poor, especially women. Why women? Women and children

are the most vulnerable. Furthermore, they often run the risk of attack and abuseone woman informed an EEA interviewer that she had been raped and humiliated when she

arrived at the dump before other women. Women will take any opportunity to help their

families survive even if it means being involved in activities that could potentially

humiliate them. Women often are left to reclaim discarded items in exchange for small

change. For example, the only recourse available to one poor women EEA interviewed,

was collecting plastic bottles at the dump, an area rampant with contagious disease. The

bottles were then sold for mere change. Even after spending the whole day collecting,

washing, and selling the bottles, the women earn less than $1 a day. Young girls work as

maids or are pressed into service as sex-workers, while boys are often involved in child

labor and petty criminal activity.

Designation Experience and skills

Minimum of 7 years working in community development, financial institutions,

organizational leadership and planning with at least Masters degree of higher

Microfinance

Minimum of 5 years working in community development, financial institutions,

Marketing with at least Masters level in social science, finance, or economics

Minimum of 5 years working Accounting field. CPA holder or its equivalent.

Minimum of 2 years experience working in accounting activities

Possess at least Advanced Diploma or Degree in Accountancy and Finance.

Minimum of 5 years experience working in Human Resources Activities.

Possess at least Postgraduate or Maters degree in Human resource and Public Administration.

Internal Auditor Minimum of 5 years experience working in audit departments in Financial

institutions. Possess at least advanced Diploma or Degree in Accounting &

Controlling

MIS Supervisor Minimum of 3 years experience working in IT Activities in Financial institutions.

Possess at least Diploma in Computer Science or Information Technology.

Minimum of 5 years experience working in operation/field Activities in

social/Financial institutions. Possess at least advanced Diploma or Degree in

Social Science/ Administration.

Credit/Loan

Possess at least advanced Diploma or Degree in Social

Science/Administration.Possess at least advanced Diploma or Degree in Social

Science and Accountancy

Drivers Form IV/VI certificate with Class C Driving Licence.

Security Guard

Form IV/VI certificate and attended military training

Secretary Must have a Diploma or Advanced Diploma in Secretary and Computer Studies

from a recognized institution.

Must have at least 2 years experience as secretary & Data Clerk

Must posses knowledge in computer a application such as Microsoft Excel, Microsoft Word, Microsoft Access, Microsoft Power Point.

The majority of women, unlike men, interviewed by EEA in Dar-es-Salaam discussed

how painful it is for them to send their children to school each day with only the meal in

their bellies and no shoes on their feet. The experience EEA obtain through the

community reveals that a men often hide money from their families for their own desires.

Even if his family might be struggling, a man may spend money in other areas that fulfills

his own desires, without considering familys needs. Therefore, women need to be empowered so that they can transform their families.

A second audience category is the poor (especially farmers and young people) who

cannot receive loans from other financial institutions or grantors - such as an employee.

These people live on less $1 a day. It is not necessarily that the poor do not want to do

something to improve their lives. Economic and cultural structures have caused them to

develop a mindset of EEA does not have a way out. Profit-motivated financial institutions are less inclined to help the poor because the poor lack collateral as well as

the experience of handling loans. Professor Muhammad Yunus, whose work focuses on

the poorest of the poor, argues back by saying that the poor pay back the loans. He has

found that the poor have their own plans, agendas, and business ideas, but they do not

have access to financial services.

The third group includes nursery, primary and secondary school teachers, nurses from

dispensaries, hospitals and other private sectors of employment as a means of boosting

self-employment among them. The goal is to encourage the passage of their newfound

education to the peop

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Sample Daycare Business Plan

Daycare Business Plan Template

Writing a business plan is a crucial step in starting a daycare. Not only does it provide structure and guidance for the future, but it also helps to create funding opportunities and attract potential investors. For aspiring daycare business owners, having access to a sample daycare business plan can be especially helpful in providing direction and gaining insight into how to draft their own daycare business plan.

Download our Ultimate Daycare Business Plan Template

Having a thorough business plan in place is critical for any successful daycare venture. It will serve as the foundation for your operations, setting out the goals and objectives that will help guide your decisions and actions. A well-written business plan can give you clarity on realistic financial projections and help you secure financing from lenders or investors. A daycare business plan example can be a great resource to draw upon when creating your own plan, making sure that all the key components are included in your document.

The daycare business plan sample below will give you an idea of what one should look like. It is not as comprehensive and successful in raising capital for your daycare as Growthink’s Ultimate Daycare Business Plan Template , but it can help you write a daycare business plan of your own.

Example – TinySteps Playhouse

Table of contents, executive summary, company overview, industry analysis, customer analysis, competitive analysis, marketing plan, operations plan, management team, financial plan.

At TinySteps Playhouse, we are committed to providing exceptional childcare services in the vibrant city of Denver, CO. Our daycare center is designed to offer a safe, educational, and nurturing environment for children ranging from infants to pre-kindergarteners. Our comprehensive curriculum is tailored to meet the developmental needs of each age group, fostering growth and learning through play. With a passionate and experienced team at the helm, TinySteps Playhouse is dedicated to supporting the families in our community by offering flexible care options that accommodate the diverse needs of modern families. Our location in Denver positions us perfectly to serve a growing demographic of parents seeking quality childcare solutions.

Our success at TinySteps Playhouse is anchored in our commitment to providing a nurturing environment that supports the holistic development of children. We have successfully established a reputation for quality care, thanks to our experienced and passionate team, comprehensive curriculum, and flexible childcare solutions. To date, we have achieved several milestones, including the successful launch of our center, consistent positive feedback from families, and a growing enrollment. Our dedication to fostering a supportive and engaging learning environment sets us apart and drives our continued success.

The childcare industry is witnessing significant growth, driven by increasing demand from working parents seeking reliable and quality daycare services. In Denver, CO, this trend is particularly pronounced, with a rising number of families requiring childcare solutions that offer both educational and emotional support. The industry’s expansion is further fueled by growing awareness of the importance of early childhood education, prompting parents to seek out establishments that provide more than just basic care. In response, daycare centers are evolving to offer comprehensive curriculums that encourage cognitive, social, and emotional development. This shift towards more holistic childcare services is reshaping the industry, making it an opportune time for TinySteps Playhouse to establish and expand its presence in Denver.

Our target customers at TinySteps Playhouse are working parents in Denver, CO, who value both the emotional and educational development of their children. These parents are looking for more than just a daycare; they seek a partner in nurturing their child’s growth. They are typically well-educated, middle to upper-middle-income earners who understand the importance of early childhood education and are willing to invest in quality childcare services. Our customer base values the flexible care options we provide, which cater to the diverse needs of modern families. By understanding and addressing the specific needs and preferences of this demographic, TinySteps Playhouse aims to become the go-to childcare solution in our community.

Top Competitors:

  • Happy Tots Daycare: Known for its large facility and wide range of extracurricular activities.
  • Little Scholars Childcare: Offers a strong educational program with certified teachers.
  • Sunshine Kids Academy: Praised for its outdoor play areas and emphasis on physical activity.

Our Competitive Advantages: TinySteps Playhouse stands out in the competitive landscape of Denver, CO, by offering a uniquely tailored curriculum that promotes holistic development. Our passionate and experienced team is dedicated to providing personalized attention to each child, ensuring their emotional, social, and educational needs are met. Furthermore, our flexible childcare solutions cater to the diverse needs of modern families, making us a preferred choice for parents in the area.

TinySteps Playhouse will implement a comprehensive promotional strategy to attract and retain customers in Denver, CO. Our approach includes a robust online marketing campaign leveraging social media platforms like Facebook, Instagram, and Twitter to connect with potential clients by sharing engaging content, testimonials, and educational tips. We will also employ SEO techniques and Google Ads to enhance our visibility online. Additionally, email marketing will keep us in direct contact with interested parents, sharing updates, events, and special promotions. Beyond digital efforts, we will engage in community outreach by partnering with local businesses and schools, sponsor events, and offer special promotions to establish ourselves as a trusted community member. Open houses and free trial days will allow parents and children to experience our daycare firsthand, building trust and demonstrating our high level of care. Word-of-mouth, encouraged through referral discounts, will further amplify our reach. Together, these strategies are designed to establish TinySteps Playhouse as the premier choice for daycare services in Denver.

Our operations at TinySteps Playhouse are centered around key processes that ensure the provision of high-quality childcare services. These include rigorous staff training, implementation of our comprehensive curriculum, and maintaining a safe and nurturing environment for the children. We have outlined several milestones to guide our growth, such as expanding our facility to accommodate more children, achieving specific enrollment goals, and obtaining additional certifications that reflect our commitment to excellence. These operational milestones are integral to our strategy for providing exceptional childcare and education services in Denver, CO.

The leadership at TinySteps Playhouse is comprised of individuals with extensive experience in early childhood education and business management. Our team includes a Director with over a decade of experience in childcare management, an Educational Coordinator who specializes in curriculum development, and a Business Manager skilled in operations and finance. Together, our management team brings a wealth of knowledge and passion for childcare, driving TinySteps Playhouse towards achieving its mission of providing outstanding childcare services in Denver, CO.

Welcome to TinySteps Playhouse, a new Day Care/Daycare that has recently opened its doors to serve our fellow residents in Denver, CO. As a local daycare center, we are acutely aware of the lack of high-quality daycare options within our community. With this in mind, we have stepped forward to fill this crucial gap, providing a nurturing and educational environment for the children in our care.

At TinySteps Playhouse, we offer a comprehensive range of services designed to meet the needs of busy families and their children. Our offerings include childcare, early education programs, nutritious meals and snacks, and ample opportunities for outdoor play and physical activities. We understand the importance of a balanced approach to child development, and our programs are crafted to foster growth, learning, and fun in a safe and welcoming environment.

Located in the heart of Denver, CO, TinySteps Playhouse is perfectly positioned to serve the local community. We are committed to becoming a cornerstone of support for Denver families, providing peace of mind to parents and caregivers while their children are in our care.

Our ability to succeed in this competitive market is grounded in several key factors. Firstly, our founder brings a wealth of experience from previously running a successful daycare, ensuring that TinySteps Playhouse is built on a foundation of proven practices and passion for child care. Additionally, we pride ourselves on offering superior childcare services compared to our competitors, supported by a team of highly experienced staff. This unique combination of experience, passion, and quality positions us to become the preferred choice for daycare services in Denver, CO.

Since our founding on January 5, 2024, as a S Corporation, we have achieved several significant milestones. We have developed our brand identity, including designing our logo and finalizing our company name, which resonates with our mission and values. Furthermore, we have secured an ideal location for our daycare, ensuring that we are accessible and convenient for the families we serve. These accomplishments serve as the foundation for our future growth and success, as we continue to build our reputation and expand our offerings to meet the needs of our community.

The Day Care/Daycare industry in the United States is a significant and growing market. Currently, the industry generates over $56 billion in revenue annually, with an average growth rate of 3.9% over the past five years. This indicates a strong demand for daycare services across the country, making it a lucrative industry for new businesses to enter.

One of the key trends in the Day Care/Daycare industry is the increasing number of working parents in the United States. With more parents entering the workforce, the demand for reliable and high-quality daycare services is on the rise. This trend bodes well for TinySteps Playhouse, as it positions itself to cater to the needs of busy families in Denver, CO. By offering convenient and flexible daycare options, TinySteps Playhouse is well-positioned to capitalize on this growing market.

Another trend in the Day Care/Daycare industry is the focus on early childhood education and development. Parents are increasingly looking for daycare providers that offer more than just basic childcare services, but also enriching educational experiences for their children. TinySteps Playhouse can differentiate itself in the market by emphasizing its educational curriculum and dedicated staff, attracting parents who prioritize their child’s learning and development. With the industry expected to continue growing in the coming years, TinySteps Playhouse has a promising future ahead.

Below is a description of our target customers and their core needs.

Target Customers

TinySteps Playhouse will target local residents primarily, focusing on families with young children in need of daycare services. The community within Denver has a significant portion of dual-income households where both parents work full-time jobs. This demographic is in dire need of reliable and nurturing childcare solutions, making them a primary customer segment for TinySteps Playhouse.

The daycare will also cater to single-parent families seeking a supportive and engaging environment for their children during work hours. Denver’s diverse population includes a notable number of single parents who require affordable, high-quality daycare services. By offering flexible hours and a curriculum that promotes early childhood development, TinySteps Playhouse will meet the specific needs of this customer group.

Moreover, TinySteps Playhouse will tailor its services to attract parents who prioritize educational content in their childcare selection. With an emphasis on learning and development, the daycare plans to integrate educational programs into its daily schedule. This approach will appeal to parents interested in providing their children with a head start in education, further broadening the daycare’s customer base.

Customer Needs

TinySteps Playhouse steps in to meet the critical need for high-quality daycare services that Denver parents desperately seek. Parents expect a safe, nurturing environment where their children can learn, play, and grow under the supervision of caring and professional staff. This establishment ensures that every child receives personalized attention, fostering a sense of belonging and security.

Moreover, TinySteps Playhouse recognizes the importance of convenience for working parents. It offers flexible hours to accommodate the varying schedules of Denver’s diverse workforce. By doing so, parents can maintain their professional responsibilities without compromising their child’s care and well-being.

In addition to basic caregiving, TinySteps Playhouse provides an educational curriculum designed to stimulate young minds and prepare them for future academic success. Parents can rest assured that their children are not only cared for but also engaged in meaningful learning activities. This comprehensive approach to daycare fulfills a critical need for developmental support beyond mere supervision.

TinySteps Playhouse’s competitors include the following companies:

Kiddie Academy of Denver-Boulevard One offers a comprehensive child care program that focuses on early childhood education and development. Their services include infant care, toddler care, preschool, and pre-kindergarten programs. The academy emphasizes a Life Essentials® curriculum, which supports the physical, emotional, intellectual, and social development of children. Price points vary based on the program and age of the child, but they generally fall within the mid to high range of daycare services in the Denver area. Kiddie Academy of Denver-Boulevard One operates primarily in the Boulevard One neighborhood of Denver, catering to families residing in or near this area. They target middle to upper-middle-class families looking for a blend of education and care for their children. A key strength of Kiddie Academy is its national reputation and standardized curriculum. However, its location-specific weakness may be its higher price point, which could be a barrier for some families.

Crestmoor Learning Center provides early childhood education with a focus on creating a nurturing and safe environment for children to learn and grow. Services include infant care, preschool programs, and after-school care for older children. The center adopts a personalized approach to learning, tailoring activities to the developmental needs of each child. Pricing information is typically customized based on the specific needs and schedule of the family, aligning with industry standards in the Denver area. Serving the Crestmoor neighborhood and surrounding areas, Crestmoor Learning Center appeals to families seeking a more intimate and personalized daycare experience. The center’s strengths lie in its community-focused approach and flexible scheduling options. However, its smaller size and limited capacity could be viewed as a weakness, potentially limiting availability for new enrollments.

The Learning Experience – Westminster operates in the broader Denver metro area, with a specific focus on the Westminster location. This center offers educational childcare programs for children ages six weeks to six years, including toddler care, preschool, and kindergarten prep. Their proprietary L.E.A.P. (Learning Experience Academic Program) curriculum is designed to promote cognitive, social, and physical development. While The Learning Experience – Westminster has a competitive pricing structure that aims to be accessible to a wide range of families, they also offer premium features such as a mobile app for parents. This center serves a diverse customer base, including families from various socioeconomic backgrounds. Their key strength is the blend of affordability and technology-enhanced services. A potential weakness is the reliance on a franchise model, which may result in variability in service quality across locations.

Competitive Advantages

At TinySteps Playhouse, we pride ourselves on offering superior child care services that set us apart from our competitors. Our commitment to providing a nurturing and educational environment ensures that every child in our care receives the attention and support they need to grow and thrive. We understand the importance of early childhood development, and our programs are designed to stimulate learning and creativity in a safe and welcoming setting. Our approach is not just about watching over children; it’s about engaging them in activities that promote their social, emotional, and intellectual development.

Another significant competitive advantage we have is our team of highly experienced staff. Each member of our team brings a wealth of knowledge and expertise in child care, early childhood education, and child psychology. This experience allows us to create a supportive and enriching environment for the children we serve. Our staff’s dedication to continuous learning and improvement means that we are always at the forefront of best practices in child care. Parents can trust that their children are in capable and caring hands, receiving the best possible care and education. This level of service and expertise distinguishes us in the Denver area, making us a preferred choice for discerning parents.

Our marketing plan, included below, details our products/services, pricing and promotions plan.

Products and Services

TinySteps Playhouse offers a comprehensive suite of services designed to meet the needs of busy families while providing a nurturing and educational environment for children. At the core of its offerings is Childcare, a service that ensures children are cared for in a safe, engaging, and supportive setting. Parents can expect to pay an average of $250 per week for full-time childcare, which includes a range of activities aimed at promoting the physical, emotional, and cognitive development of children.

Understanding the importance of early education, TinySteps Playhouse provides Early Education Programs tailored to different age groups. These programs are designed to lay a strong foundation for lifelong learning by incorporating elements of play, discovery, and structured learning. The cost of these programs is included in the weekly childcare fee, ensuring that every child has access to quality early education without additional financial burden on the families.

Nutrition plays a crucial role in the development and well-being of children, which is why TinySteps Playhouse offers Nutritious Meals and Snacks as part of its services. These meals and snacks are prepared with children’s dietary needs in mind, ensuring they receive balanced and healthy food throughout the day. This service is also included in the weekly fee, providing peace of mind to parents that their children are not only cared for but also receive proper nutrition.

Recognizing the importance of physical activity in children’s growth, TinySteps Playhouse incorporates Outdoor Play and Physical Activities into its daily schedule. This ensures that children have ample opportunity to engage in physical exercise, enjoy fresh air, and develop their motor skills. Like the other services, this is included in the overall childcare fee, offering a comprehensive approach to child development and care.

In summary, TinySteps Playhouse stands out by offering an all-inclusive package that covers childcare, early education, nutritious meals, and physical activities. With a focus on holistic development and a commitment to providing high-quality services, TinySteps Playhouse is positioned as a premier choice for families seeking the best care and education for their children in Denver, CO.

Promotions Plan

TinySteps Playhouse will utilize a comprehensive promotional strategy to attract customers in Denver, CO. At the heart of this strategy lies a robust online marketing campaign. The daycare will leverage social media platforms, such as Facebook, Instagram, and Twitter, to connect with potential clients. Through these channels, TinySteps Playhouse will share engaging content, including day-to-day activities, testimonials from satisfied parents, and educational tips for children. This approach not only builds a community around the daycare but also showcases the quality and care provided. Furthermore, the daycare will implement search engine optimization (SEO) techniques to improve its visibility in search engine results. By targeting keywords related to daycare services in Denver, TinySteps Playhouse will attract parents actively searching for childcare options. Additionally, the daycare will use Google Ads to reach a wider audience, ensuring that parents searching for daycare services in the area encounter TinySteps Playhouse at the top of their search results. Email marketing will also play a crucial role in the promotional strategy. TinySteps Playhouse will collect email addresses from interested parents through its website and social media channels. The daycare will then send out regular newsletters featuring updates, events, and special promotions. This direct line of communication will keep TinySteps Playhouse top-of-mind for parents considering daycare options. Beyond online marketing, TinySteps Playhouse will engage in community outreach. The daycare will collaborate with local businesses and schools to sponsor events and offer special promotions. These partnerships will not only increase visibility but also establish TinySteps Playhouse as a trusted community member invested in the well-being of local families. To further attract customers, TinySteps Playhouse will host open houses and free trial days. These events will allow parents and children to experience the daycare firsthand, meet the staff, and see the facilities. Such experiences are invaluable in building trust and demonstrating the high level of care and education that TinySteps Playhouse provides. Word-of-mouth will also be a vital component of the promotional strategy. Satisfied parents are the best advocates for TinySteps Playhouse. The daycare will encourage referrals by offering discounts or special offers to families that bring new clients. This approach not only rewards current customers but also harnesses the power of personal recommendations. In conclusion, TinySteps Playhouse will deploy a multifaceted promotional strategy to attract customers. By combining online marketing, community outreach, and word-of-mouth, the daycare will establish a strong presence in Denver, CO. These efforts will ensure that TinySteps Playhouse becomes a preferred choice for parents seeking quality daycare services.

Our Operations Plan details:

  • The key day-to-day processes that our business performs to serve our customers
  • The key business milestones that our company expects to accomplish as we grow

Key Operational Processes

To ensure the success of TinySteps Playhouse, there are several key day-to-day operational processes that we will perform.

  • Opening Procedures: Staff arrive early to prepare the facility, ensuring that play areas are clean and safe, and that all necessary materials for the day’s activities are ready and accessible.
  • Health and Safety Checks: Conduct daily health checks of all children upon arrival to monitor for any signs of illness, and ensure that all play equipment and toys are sanitized and in good condition.
  • Attendance Tracking: Accurately record the arrival and departure times of children to maintain an up-to-date attendance log for safety and billing purposes.
  • Meal and Snack Preparation: Prepare and serve nutritious meals and snacks at scheduled times throughout the day, adhering to any dietary restrictions or allergies.
  • Educational Program Implementation: Execute planned educational activities and programs that stimulate cognitive, social, and physical development, adjusting as necessary to meet the needs of different age groups and individual children.
  • Continuous Supervision: Maintain constant supervision of children to ensure their safety and well-being, intervening as necessary to guide behavior and facilitate positive interactions among peers.
  • Communication with Parents: Provide regular updates to parents about their child’s day, including any notable achievements, behavior observations, and any incidents or accidents that occurred.
  • Cleaning and Maintenance: Perform regular cleaning of the facility throughout the day, with a deep clean at the end of the day, to maintain a hygienic environment. This includes laundering of any used fabrics and sanitizing toys and equipment.
  • Staff Coordination: Conduct briefings with staff at the start and end of each day to ensure everyone is informed about the day’s schedule, any special needs of children, and to discuss any issues that may have arisen.
  • Financial Management: Process payments from parents, manage billing inquiries, and ensure accurate financial records are kept for accounting purposes.
  • Professional Development: Encourage staff to engage in ongoing professional development and training opportunities to stay current with best practices in early childhood education and care.
  • Emergency Preparedness: Ensure that all staff are trained in emergency procedures and that emergency contacts for each child are readily accessible. Conduct regular drills for different types of emergencies.

TinySteps Playhouse expects to complete the following milestones in the coming months in order to ensure its success:

  • Securing a Suitable Location : Find and lease or purchase a facility in Denver, CO, that is safe, accessible, and compliant with state and local regulations for childcare services. This location should also offer potential for growth and expansion.
  • Obtaining Licenses and Permits : Complete all necessary state and local licensing requirements for operating a daycare. This includes passing health and safety inspections and obtaining a childcare license.
  • Building and Equipping the Facility : Renovate and equip the facility to meet the needs of children of various ages, including purchasing educational toys, furniture, outdoor play equipment, and safety features. Ensure that the environment is inviting, stimulating, and secure for children.
  • Hiring and Training Staff : Recruit, hire, and train qualified childcare providers who are passionate about child development. Staff training should focus on health and safety protocols, educational strategies, and emergency procedures to ensure a high-quality care environment.
  • Developing Curriculum and Activities : Design a comprehensive, age-appropriate curriculum that promotes physical, emotional, social, and cognitive development. Plan a variety of engaging activities and routines that cater to the interests and needs of children.
  • Launching Marketing and Enrollment Campaigns : Implement targeted marketing strategies to attract parents and guardians in Denver, CO. Develop an attractive website, engage in social media marketing, and host open house events to facilitate enrollment.
  • Launching Our Daycare : Officially open TinySteps Playhouse for business, welcoming children and their families. Ensure a smooth operation from the first day, with staff ready to provide high-quality care and education.
  • Monitoring and Improving Quality : Establish mechanisms for regular feedback from parents and staff to continuously monitor and improve the quality of care and education provided. Implement changes as necessary to meet the evolving needs of children and families.
  • Reaching $15,000/Month in Revenue : Through effective marketing, quality service, and word-of-mouth referrals, steadily increase enrollment to reach the milestone of $15,000 in monthly revenue. This financial stability is crucial for covering operating costs and planning for future growth.
  • Evaluating Expansion Opportunities : After establishing a successful operation in Denver, CO, assess the feasibility of expanding TinySteps Playhouse to additional locations or offering new services to meet the needs of the community and drive further growth.

TinySteps Playhouse management team, which includes the following members, has the experience and expertise to successfully execute on our business plan:

Mason Clark, President

Mason Clark, President, brings a wealth of experience and a proven track record of success to TinySteps Playhouse. With a strong background in early childhood education and management, Mason has previously steered a daycare center towards operational excellence and growth. His expertise lies in strategic planning, staff leadership, and implementing innovative programs that enhance the learning and development of young children. Mason’s ability to drive business success, coupled with his passion for creating nurturing and educational environments for children, positions him as a key asset in guiding TinySteps Playhouse towards achieving lasting success.

TinySteps Playhouse requires significant funding to reach our growth goals and fulfill our mission of providing top-tier childcare services in Denver, CO. Our financial plan outlines the need for investment in facility expansion, curriculum development, marketing efforts, and operational enhancements to support our increasing enrollment and ensure the highest level of care. By securing the necessary funding, we will be able to implement our strategic plan, achieve our operational milestones, and continue to serve the families in our community with excellence.

Financial Statements

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