Ben Litalien Finding Impact

FIP 50: Social Franchising Series 3/4: What Everyone’s getting Wrong about Social Franchising, with Ben Litalien

We’re going deep into the commercial side of franchising in this episode with Ben Litalien, seasoned franchise expert in the commercial world, having taught at Georgetown on franchising for close to 12 years, started his own franchise consulting firm called FranchiseWell, with clients such as IKEA, Snap-on Tools, Subway, Direct Energy, and The UPS Store. He did his doctorate on social franchise so it’s great to get his perspective from a long commercial experience now applied to the social sector.

On this episode, you’ll learn:

  • Why it’s important to learn franchising by studying how to use the franchising model, not by studying others’ model that uses franchising elements, since you only get part of the full franchise model.
  • Instead reverse engineer the architecture needed to achieve the desired goals. For many entrepreneurs, its reduced monitoring costs. It’s having a predictable result without having to be there beside the franchisee everyday.
  • One of the biggest failures of franchises, both in commercial and social franchising models, is HR – they bring on franchisees who don’t know how to hire, manage and fire employees.
  • A second big point of failure is they sell franchises to people who don’t have a good sphere of influence within the territory they’re operating in.
  • About architecture of the franchise structure, such as development agents that might take a territory who sell franchises to individuals.
  • Demand for a product isn’t enough for it to be franchisable. There needs to be sufficient profit so royalties can flow up to sustain the franchise structure.
  • Whether charging royalties is a must-have for social franchises and whether it can be avoided.
  • How to keep the relationship “sticky”, between franchisee and franchisor, so they keep paying royalties, including how to protect the value of the brand.
  • This includes how the franchisor creates an expectation about what the customer receives, so it’s an absolute must to be able to remotely enforce those standards.
  • How the right economic model is different for each country, which needs to be grounded in the economics of that country and the operating conditions imposed by the government.
  • What a potential franchisee should be looking at when assessing whether investing in a franchise is right for them.

Links to resources:

Connect with Ben:

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FIP 49: Social Franchising Series 2/4: Social Micro-franchising with Beth Meadows

Beth Meadows is a psychologist turned entrepreneur. She built a travel franchise that grew  to over 250 locations in just 5 years, which was purchased by an American Express affiliate before the age of the internet. She’s still in the travel business, as part of the internet of things, but she has turned her focus to using her commercial successes and failures to help the BOP. Beth is passionate about the franchise model, and specifically micro-franchising at the BOP, because it provides opportunities for entrepreneurial, hard-working people, regardless of their wealth status, to earn meaningful incomes and live dignified lives.

In today’s episode, we learn several lessons from Beth, including:

  • How she started Mercado Fresco, her franchise in Nicaragua, including the research and inspiration behind the concept, starting with the insight that 80% of the income of those living under $2/day was allocated to food purchases.
  • The importance of knowing your market and customer, and why that foundation is necessary before building your social business.
  • A dive into their early-stage set-up, including their social mission, product mix, business case, quality control oversight, and the number of locations at launch.
  • Early-stage risks and how they were mitigated by taking time to know the customer base, product testing, and maintaining close and constant communication with franchisees.
  • How continuous feedback loops between the franchisor and franchisee were established early-on, and what types of information was exchanged and collected.
  • How they standardized among franchisees and what it took to monitor compliance, as well as when and how standards were designed.
  • The uniqueness of branding and franchising at the BOP in their community, and how Mercado Fresco markets itself.
  • Franchisee screening and onboarding: what the process entails, who is deemed a good fit, and what types of training is involved.
  • Mercado Fresco’s consignment model, which was designed for franchisees who have low educational attainment and little access to capital. We learn the approximate investment capital required for each franchisee to open and how that effects franchisor cash flow.
  • Growing to 100 stores in a few years, we learn how their franchise business has changed and what milestones they have reached with respect to how this reduces their business challenges.
  • Key indicators for you to consider whether your social enterprise may be poised for franchising: namely the existence of established, detailed, documented processes; and good legal advice and contract arrangements between franchisor and franchisee.
  • What’s next for Mercado Fresco: a new micro-consignment model that provides daycare and shorter work days for women who cannot operate home-based brick-and-mortars.
  • What Mercado Fresco’s advisory and consultant ecosystem looks like, from commercial franchising professionals with the likes of Subway and Chic-fil-a, to academic institutions and MBA students.

Resources

Connect to Beth

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

FIP 48: Social Franchising Series 1/4: Social Franchising 101 with Bill Maddocks

Bill Maddocks is University of New Hampshire’s Director of Social Sector Franchise Initiative, Director of Sustainable Microfinance and Development Program and Community and Economic Development Advisor for UNH Cooperative Extension. Bill has been involved in the economic justice movement for 3 decades, and for 7 years he led the Microenterprise and Development Institute at the School of Community Economic Development at Southern New Hampshire University, which had a training program in Africa and the United States.

Kicking off our 3-part series on Social Franchising, Bill takes us through “Social Franchising 101” where he sets the landscape for us to dive deeper in the following two podcasts. On this episode we discuss:

  • How to define social franchise, which is similar to a commercial franchise, but differentiates itself by providing goods or services that improve social outcomes.
  • Core components of a commercial franchise that provides the bedrock for social franchising, namely operational systems, a defined brand, and franchisee ownership over their franchise.
  • A brief overview of the challenges posed by building a franchise model in emerging markets compared to established markets ones by highlighting institutional and market differences.
  • The social franchise entry-point: microfranchising and microconsignment. These models require less up-front investment than a full franchise, offer more procedural flexibility, and minimal ownership stake.
  • How social franchising is on the rise among revenue-generating social enterprises as a replication model and in particular, an attempt to shift from subsidized, charity-based structures to profitable social businesses.
  • How to assess your social enterprise’s readiness for social franchising and whether it is the appropriate replication model for you based on established procedures and brand development, market fitness, pricing, and your internal capacity to share knowledge and train others. We hear about a Malawian agro-veterinarian retail business and its journey through franchising.
  • When to start planning to replicate using the franchising model. Hint: early birds get the worm!
  • Alternative replication models, including licensing and joint ventures, and how they are similar and different from franchising.
  • Insights into UNH’s social franchising accelerator program, where the public can learn from the 7 month journey of 5 social enterprises as they confront and overcome the challenges of building their social franchises.

Resources

Connect to Bill

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

FIP 47: Most Downloaded Episode of 2017

Howdy from the Kenyan coast! I’m taking some time off this week, so I thought I’d treat you to the Most Downloaded Episode of 2017.

I hope you enjoy the holiday – or the quiet if you’re not 😉 – and take some time to define what you want to achieve in social enterprise in 2018. We’ll be with you along the way!

What you’ll learn by listening (original notes from this episode):

  • About the decision to carry out a randomized controlled trial and how it didn’t stop them continually iterating the model.
  • How extremely positive results of a large randomized controlled trial caused them to pivot from seeking 100% cost recovery to “a low cost way to save lives”.
  • How going digital has enabled real-time reporting of key performance indicators whilst giving government officials accurate data on what community health workers are actually doing.
  • How their ‘Fast Start Program’ has become key to getting new community health workers excited and motivated to achieve their Impact KPIs (key performance indicators). Peer-to-peer coaching has had more impactful results.
  • Kenya was just selling the high-impact products to get to breakeven. RCT results and develolution was just starting to establish (health devolved to counties but no one meant what that would mean). Tried community health model, pushing on an open door.
  • “Motivating community health workers is recognition, status, being part of a larger family.”
  • Living Goods’ government engagement strategy, and how it differed from Uganda to Kenya, and some specific tactics  used to cement a mutually beneficial partnership.
Useful links from this episode:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

Steve Andrews Finding Impact

FIP 46: Tackling Unit Economics with Steve Andrews

This week’s Finding Impact Podcast (FIP) features, Steve Andrews, Founder and CEO of NewLight Africa. After spending years in the solar industry, Steve found himself asking what else did his customers need? Since 2010 Steve has been hard at work bringing life-enhancing products to rural people across Africa. Frustrated by the challenges of scaling up through the existing (non-profit) model, Steve is pursuing a for-profit model with a strong focus on marketing and solid distribution network, in order to rapidly scale-up impact. With around 600 million people living without electricity in sub Saharan Africa alone, and the off-grid population outgrowing grid expansion, there is an enormous opportunity to create a sustainable business whilst creating incredible social and environmental benefits.

On this episode, Steve will show us the benefit of taking time to understand the unit economics surrounding your business. We’ll also learn more about:

  • The importance of listening to your customers and selling what they need in a way that works from them
  • Can community based models be scaled? Is there a limit to their growth?
  • What are the benefits to starting small with a focus on unit economics?
  • Does each decision you make impact the potential profitability for your company?
  • When is it okay to turn down opportunities that you feel may not be right for your business?
  • If you can build it and make it profitable in one county, you can do it in two and if you can do it in two….
  • How can a cookie cutter core model work for your business?
  • How to develop a financial model for scaling your social enterprise.
  • How do you choose your unit economics? (county, state, city, country?) what will be right for your business?
  • When does a change of direction become a distraction and how to keep simplicity at the forefront of your plan.
  • Are your KPIs ‘vanity measures’ or are they helping your business to grow?
  • When is your model tested and ready for the “replicate” button?
  • The importance of a realistic and generous margin for error

Links to Resources:

 

Connect to Steve:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

FIP 045: Product design and validation for the urban poor with Simon Dixon

In Nairobi alone, 1.4 million people live in informal housing settlements. The individual structures’ are built using meager resources, often poorly constructed, and are prone to fire. In 2015, Simon Dixon co-founded Kwangu-Kwako, a social enterprise that builds safer, healthier homes for families in informal settlements.

On this episode, Simon takes us through the ups and downs of Kwangu-Kwako’s journey to the sale of its first unit. We specifically talk about the following:

  •  How to get genuine feedback on your product.
  • The importance of diverse customer feedback at various stages of production.
  • How can you incentivize people to partner with you when you have very little to give?
  • When starting a business there is always risk involved. Can you capitalize on opportunities to pass some of this risk on to third parties?
  • The importance of attracting well respected and influential members of the community as you grow.
  • Getting referrals? This is often a sign that you’re doing something right.
  • Bridging the gap – You may have interest in your product, but what if customer’s can’t afford it? What next?
  • Why its important to celebrate the little milestones along the way – help to boost morale and keep people focused.
  • The importance of being agile – can you change focus when things aren’t going according to plan?

Resources:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

paygo fausto finding impact

FIP044: Product Prototyping with Fausto Marcigot

Fausto Marcigot is one of five Co-founders at PayGo Energy, a technology company enabling low-income households in Kenya to afford clean cooking fuel. Inspiration for the company came straight from Kenyan users – Fausto and his team were working on another project when they observed individuals buying just enough kerosene or charcoal for that day because they just didn’t have the cash flow to buy more. His team calculated the monthly expense and realized cooking gas would be cheaper and cleaner, but they needed to solve for the shortfall in cashflow, and so PayGo Energy was conceived.

On this episode, Fausto explains how they went from concept to company, with a focus on validating the idea, prototyping the product and accessing early-stage funding. We’ll dive into the following:

  • The role of familiarity in building new products and systems; specifically how experience with and exposure to the behavior of target users can inspire new applications to existing technologies.
  • How to validate a new technology product concept by using quick-and-dirty, high-touch testing methods and off-the-shelf products.
  • Why bootstrapping was necessary to start building their product, and how the co-founders leveraged their network to keep their momentum.
  • We touch on the emotional and personal challenges bootstrapping elicits.
  • Strategic fundraising for different stages of growth, from prize money for product prototyping to accessing seed money, and what else they considered during capital raises.
  • A walk through 5 iterations of the product, including software and hardware changes and which iterations were tested with users.
  • The role of public institutions, namely the Kenya Bureau of Standards (KEBS), whose purpose is to maintain health and safety standards of products sold in Kenya to ensure consumer protection. We explore the company’s relationship with KEBS and how they worked together to bring PayGo Energy’s product to market.

Resources:

Connect with Fausto:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

FIP 43: Bootstrapping with Audrey Cheng

Audrey Cheng is the Founder and CEO of Moringa School, where she is transforming higher education in Africa – starting with computer science. During her time at the venture capitalist firm, Savannah Fund, Audrey noticed a mismatch between the skills of job seekers and the needs of employers. Moringa School aims to close this skills gap by accelerating high-potential individuals across Africa to become world-class software engineers.

On this podcast, Audrey takes us through the origins of Moringa School and what it means to bootstrap your business without sacrificing results or deviating from you mission along the way. We’ll specifically cover:

  • What it means to bootstrap and the downfalls of chasing grants and investment too early in your business’ growth
  • How to use your current situation to identify gaps in the market, specifically, how to explore these gaps and challenge the status quo
  • How bootstrapping can appeal to investors down the road when you are ready to start scaling your business or social enterprise
  • The importance of being intentional with every dollar spent and every hire. Does every decision need to contribute to the bottom line? (Hint: yes)
  • Get people to “buy into” solving the problem with you (ie. Let’s change the face of education in Africa). Sell the vision.
  • How you hire matters – Part-time? Consultant? Internship program? What are the benefits of each?
  • Is bootstrapping easier for certain industries? Who can do it?
  • The importance of building traction before seeking outside funding or getting distracted by grants
  • Moringa School is growing! If you’d like to partner with Moringa and be a part of their exciting journey – Audrey wants to hear from you.

Resources:

Connect with Audrey:

 

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

 

FIP042: Franchising Social Enterprise with Randy Welsch

This week we learn how the franchise model has made its way to social entrepreneurs in the form of a clean water company, Jibu, with Randy Welsch, Jibu’s Co-founder. Decades of entrepreneurship and investment in small enterprises led Randy to partner with his son to launch a bottled water franchise – a far cry from the world of software and satellite technology, where Randy concentrated most of his professional career.

This podcast will shed light on how the franchise model is working for Jibu, and we’ll learn more about:

  • The origin story behind Jibu, a father-son social enterprise that delivers clean water to bottom-of-the-pyramid consumers in Africa by iterating on the franchise model. Randy touches on pre-Jibu learnings during his consultancy with WorldVision, in addition to the small, private investments he made, that proved critical to Jibu’s launch.
  • How externally-led interventions fail communities and why local ownership is a game-changing approach to tackling poverty.
  • Why you might want to ignore the nay-sayers and confront prejudice against people in emerging markets, which are all-too-common attitudes among “experts” and expatriates working and living in BOP markets.
  • The importance of failure, why franchisees need to be bought-in to this mindset, and why Randy and his son started with a “20 ways to fail” list, which rose above 300, but never stopped them.
  • How Jibu built strategies for identifying local entrepreneurs that fit with the franchise model.
  • The specifics of Jibu’s franchise model from the perspective of the franchisee, from the contents of a Jibu store to territory management and how they build a franchisee pipeline.
  • The difference in attitude, energy and creativity between being an employee and a business owner.
  • How franchising builds collaboration and community rather than competition.
  • The structure of Jibu’s franchise model, including the responsibilities of the franchisor and the franchisee, and how the model may change as the company prepares for new country expansion.

Links to resources

Connect to Randy:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!

 

 

FIP 41: World Toilet Day with Jack Sim

Jack Sim, Founder of the World Toilet Organization (WTO) has been a successful businessman for all of his adult life. After achieving financial success in his 40s, he felt a strong desire to give back to humanity.

Jack found that toilets were often neglected and grew concerned that the topic was draped in embarrassment and taboo. In 1998, he established the Restroom Association of Singapore (RAS) whose mission was to raise the standards of public toilets in Singapore and around the world.

Jack soon realized that there were other organizations worldwide like RAS, however, they lacked the channels to collaborate and share ideas. As a result, in 2001, Jack founded the World Toilet Organization (WTO), eventually earning himself the nickname Mr. Toilet.

On this podcast, we will cover:

  • Jack’s interest in tackling a problem that most people felt uncomfortable talking about and how he began to shift this taboo.
  • The origins of World Toilet Day (November 19) and how to be opportunistic when seeking partnerships.
  • The importance of relinquishing credit as a leader and remaining humble. Jack talks about creating a negative space that champions can sign up to eradicate, rather than focusing on being recognized for individual efforts.
  • How to get almost anything for free! While you don’t have resources, you do have a reputation and a story that businesses may want to align with.
  • How to leverage your story to bring attention to your cause. “If you don’t publish, you perish” Academics need to write, ask them how you can help! Helps bring credibility to your cause too.
  • The importance of being mission driven and removing individuals from the equation. “You are not the important thing, the mission is the important thing.”

Links to resources:

Connect with Jack:

What was your favourite lesson from this episode? Let me know on Twitter by clicking here!