Consultor de Negocios

For nearly three months now, I have been working in rural Peru as an economic development consultant promoting entrepreneurship.  I’m assigned to a specific component of a USAID-funded development project, the inaugural business case competition Idea Tu Empresa (“Your Business Idea”), which has the goal of identifying high-potential entrepreneurs for goods and services primarily related to cocoa and coffee.  From an initial pool of roughly 200 ideas submitted, a whittling-down process which included hundreds of hours of business training for participants ultimately led to ~20 finalists who are being assisted by Technoserve consultants such as myself with the implementation of their business plans.

By now I’ve become quite familiar with the many cultural quirks and attributes that are an impediment to the success of many would-be businesspeople here.  Chronic tardiness (“la hora Peruana“, as it’s joked about here); unresponsiveness to emails or phone calls (unless those calls are of a frivolous nature and interrupt a meeting, in which case, it is seen as mandatory to take said call without a hint of self-consciousness); not doing something that was promised; and a general passivity / lack of urgency which one would normally find surprising from people trying to create their own livelihoods.  Within my own organization in-country too, I’ve had to deal with inefficiency, muddled or missing oversight, interminable and unproductive staff meetings, and petty annoyances like a shortage of fans to get through these hot jungle days.  Luckily for me, I had heard beforehand about similar trying experiences from friends who have worked for NGOs in other countries, so I knew going in how to set my expectations.

The good news is that, on most days, all of those challenges are more than offset by my pleasure at being my own boss, trying to figure out for myself what initiatives to pursue and how best to help my clients, and feeling genuine pride when I’m able to achieve results and have a tangible impact here.  So yes, although it takes hard work mixed with occasional pushing and prodding, progress can be achieved!  To do so effectively, I’ve had to take to heart several lessons — and undoubtedly will continue to learn more in the months ahead.

What’s More Dangerous Than a Businessman With a Spreadsheet?

One obvious theme would be tailoring your assistance to the level of your audience.  The initial pool of participants in this year’s first-ever ITE competition spanned the spectrum from successful regional businesses to farmers to stay-at-home moms.  In some cases, not enough of a premium was placed on feasibility (e.g. the handicapped sexagenarian, with a mortgage and three young kids, being expected to invest thousands in a speculative long-term proposal) and commitment (admittedly harder to judge, but 3 of my initial 5 clients dropped out early on).  Further, within a week of my arrival, it was obvious to see that while perhaps a quarter of the group was sophisticated enough to benefit from being trained on NPV analysis and complex financial models, it was useless for the rest.  Which explains how one of my clients could breezily project doing S/. 100,000 in sales in her first year of operations — never mind that her current sales and capabilities, even with some improvements, suggest a more realistic target would be S/. 5,000.

More basic instruction was needed for these types.  It certainly was a bit jarring to realize in November, after I’d spent some time getting to know my clients and their businesses, that both of my chocolate-making clients — Yliana, a bakes-at-home single mother of an infant, and Warmitech, an incorporated collective of cacao farmers — had no formal understanding of their monthly revenues and costs, and as a result, no idea whether their businesses were profitable or not!  For such a large operation, too, Warmitech had no inventory for all of their many inputs other than some informal scrawling in a notebook.  Addressing these issues via workable computer-based solutions, conducting trainings, and ensuring these solutions would actually be used took up much of my past several weeks.

For Yliana I made an Excel-based template to track all sales and costs for the business, with automatic reports generated on monthly profitability, popularity of product lines and flavors, and cost analysis.  It was important to create this system with her — using a whiteboard to sketch out and design the tables — and to keep things as simple as possible: drop-down menus with choices to select, to minimize typing and potential errors; a simple and clean, color-coded design; and a minimal file size.  To my great gratification, she took to using this system immediately, and to-date continues to keep a daily or near-daily updated version of her business’s finances.  Furthermore, a couple weeks ago, the new CFO of Technoserve, George Schutter (an absolutely awesome guy — former Marine major who served in Iraq before later becoming a Peace Corps administrator) visited us and got a chance to see Yliana’s operations and her basic accounting system.  He liked it so much, he asked me to send him a copy, suggesting that this could be a useful template to implement worldwide!

Difficult to Swallow (Costs, Not Chocolate)

There have been practical considerations to consider, too, cost of course being foremost.  One of my early highlights was developing a snazzy product catalog for Yliana, complete with pro-quality photos touched up neatly in Photoshop.  It looked great and she loved it.  The only problem was that professional color printing here is ridiculously expensive (one double-sided page cost over USD 1!), and so she couldn’t afford to run off a stack of them.  Until we ultimately reach a final version which I can print off in Lima for cheaper in bulk and mule back here to Tarapoto, I’m relying on a buddy soon visiting me from the States to bring a run he printed off at work!

Cost has affected my advice to my clients when it comes to the more “formal” aspects of running a business here, which has at times placed me at odds with the goals of our organization. For example, I’ve accepted an aspiring tour operator’s decision to hold off on officially registering his business — and paying the related fees and taxes — until he is much closer to ready to commence his operations.  For my chocolate makers, it was prudent to tell them not to bother registering their brand names, as the cost to do so is high, while the legal protection is not needed until they have become much more successful.

How to Make It in Perú

Tougher to wrestle with for my chocolate sellers has been the acquisition of a Registro Sanitario (Health Certificate).  This document is required for all food producers (save those whose products will be consumed within 48 hours of creation, e.g. fresh bread) in order to be permitted to sell in supermarkets and other “official” channels.  Until a business has that, they can only sell to private clients via direct order or participate in public fairs.  Obviously then, getting a Registro Sanitario is a huge potential boost to a business’s sales.  The problem is that in practice here, it basically operates as a government money grab, with the cost of attaining one (and a different Registro is nominally required for each product and flavor a busines sells) prohibitive to most small-businesses, and never mind the questionable enforcement and validity.  (Production site is apparently not checked, and the analysis of products for bacteria is conducted on whatever samples the aspirant sends to an endorsed lab — I reckon they don’t even know if what you send is your own product!)

In what may be my potentially biggest triumph since getting here, last week Technoserve was able to link my entrepreneurs up with a source of funding to receive their first Registros Sanitarios.  My clients compiled their samples and they have been sent off to Lima for analysis.  I am now waiting with fingers crossed in the hopes that Yliana did not sneeze all over her bombones, and that the Warmitech women didn’t let any stray hair fall in their chocotejas.  We should hear back shortly after Christmas — wish us luck!

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