Workshop on

Business Development Services (BDS)

for Microenterprises
(Bacolod City – May14, 2008)

DEVELOPING MICRO
BUSINESSES FOR THE
MARKET:
Myths and Realities

ROBERTO S. CLAUDIO SR.

Chairman – Toby’s Sports
Past President – Philippine Retailers Association
2007 Finalist – Entrepreneur of the Year
Myths and Realities About Microfinance

Common Pitfalls of Project

Implementation by Banks and
Social Services Agencies*

* UNDP Microstart Initiative – based on what has been

learned about the design of microenterprise projects
over the last 20 years.
Myth: Micro entrepreneurs need to be
cared for because they are poor.

Reality:
Micro entrepreneurs are
knowledgeable about the
economy. They often have
years of experience in their
trade working with dedication
and determination. Belief in the
intelligence and knowledge of
clients is critical.
Myth: Microenterprises are redundant
activities that should be replaced by larger
businesses employing many people.

Reality:
Microenterprises are viable.
Locally important activities that
should be upgraded. These
small-scale economic activities
are valid business activities to
be taken seriously.
Myth: Interest rates to the poor need to
be subsidized.

Reality:
Microfinance rates of interest
must reflect operating costs to
achieve sustainability.
Organizations making large
numbers of small loans will
have high transaction costs and
thus need to charge rates that
are higher than commercial
rates.
Myth: Credit alone is useless. It must
be packaged with training, marketing,
technology and other services.

Reality:
Although programs, which packaged credit
with other services, may seem ideal, they
require large subsidies and have proven to
be largely unsustainable. The minimalist
approach used by the Grameen Bank and
many others has shown that clients can
use credit in small amounts to start or
improve the profitability of
microenterprises. Providing marketing and
many other areas of services are valid, but
best managed separately.
Myth: The poor cannot be trusted with
credit. The consumption needs of the poor
are so pressing that any loan will fit its way
quickly to consumption.

Reality:
The high repayment rate of
millions of microfinance clients
is empirical proof that the poor
are creditworthy.
Myth: The poor are unable to save.

Reality:
The high rate of savings
reported by many microfinance
clients is empirical proof that the
poor are credit-worthy.
Myth: Poverty has a crippling effect
rendering the poor unable to improve
their condition.

Reality:
The remarkable
success of institutions lending
over 10 million clients around
the world, the vast majority of
whom are below the official
poverty line proves beyond
doubt the ability of the poor to
improve their lives with their
own ingenuity and drive.
Micro entrepreneurs to Big Business:

Results from many countries

demonstrate that very small-
scale farmers, traders and
artisans living in rural and urban
areas can put small loans to
good use. Extending small
amount of credit, along with
appropriate encouragement and
orientation leads to significant
increases in income, production
and employment.
IF MICROENTREPRENEURS HAVE
MYTHS AND REALITIES …..BIG
BUSINESS ALSO HAVE THEIR MYTHS
AND REALITIES TO SHARE WITH
MICROENTRENEURS.
Myth: Big Business do not want to
deal with microenterprises.

Reality:
Major retailers will help display
microenterprise products will not
purchase outright for a untested
products. They will ask you to
consign your product.
Myth: MOST microenterprise become
big business.

Reality:
Few of them become big
business. Most of them continue
to stay as microenterprise.

(Example: Walis ting-ting

making will forever remain a
microenterprise.)
Myth: Big business do not want to
share their know-how to
microenterprises.
Reality:
They will and they do, except if
you ask them to share formulas,
proprietary technology and
other trade secrets.

Microenterprises should be
ready to find these
opportunities.
ABOUT TO GO INTO
MICROBUSINESS
MENTORING

Overcome Procastination Immediately

How to Get out of Debt and Stay out

How to Choose the Right Business for
You

Are You Ready to Start Your Own
Business

No Previous Experience Required
(How to start a business if you've got no
experience, training or education in the
industry!)
ALREADY STARTED
MICROBUSINESS
MENTORING

Making Your Home Business Work

Characteristics of a Successful
Entrepreneur

It Takes Credit to Build Credit

Starting a New Business --
Actualizing Your Vision ( What are
you good at What do you enjoy
doing.)
MICROBUSINESS MOVING TO
SMALL/MEDIUM BUSINESS
MENTORING
1. Why Should You Have
a Business Plan?
2. Networking -- How, Why
and Where
3. How to Raise Capital to
Fund your Business
WANT TO GO BIG-TIME!

1. Understanding your
Channel of Distribution
2. How to Bar-code your
Products
3. Improving Inventory
Management Systems
4. Raising Equity
Myth: Big-business does not care.

Big Business care, we care I

care. That’s why we are here.

“SERVICE TO
HUMANITY IS THE
BEST WORK OF
LIFE.”
THANK YOU AND GOOD
AFTERNOON!

Workshop on
Business Development Services (BDS)
for Microenterprises
(Bacolod City – May14, 2008)