We will learn how to identify appropriate selling channels for rural enterprises and make the most out of them.

Where?

Advantages and disadvantages

The Unit provides an Introduction to E-commerce and types of e-commerce, as well as the business opportunities in e-commerce.

At the end of this module you will be able to learn:

• The definitions of e-commerce, Electronic DataInterchange, Electronic Funds Transfer.
• The types of e-commerce.
• The new business opportunity in e-commerce

E-commerce consists of buying and selling of products or services using electronic systems such as the Internet and other computer networks.
Electronic commerce is commonly known as e-commerce or eCommerce.

• What is EDI?
• What is EFT?

Electronic Data Interchange: Electronic Funds Transfer:

Advantages of E-commerce

The advantages of e-commerce are:

• Faster buying/selling procedure, as well as easy to find products.
• Buying/selling 24/7.
• Low operational costs and better quality of services.
• Easy to start and manage a business.
• No need to set-up physical company.
• Customers can easily select products from different providers without moving around physically.

Disadvantages of E-commerce

The disadvantages of E-commerce are:

• There is no guarantee of product quality.
• There are many hackers who look for opportunities, and thus an e-commerce site, service, payment gateways, all are always prone to attack.

Types of E-commerce

There are four different types of E-commerce:

• B2B (Business-to-Business):
  • B2B can be open to all interested parties, or limited to specific, pre-qualified participants (private electronic market).
    Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers.
• B2C (Business-to-Consumer):

  • Businesses selling to the general public, typically through catalogues, utilising shopping cart software. B2C is the direct trade between the company and consumers.It provides direct selling through onlinechannels.If you want to sell goods and services to the customer you design the supplier’s website so that anybody can purchase any products directly from it.

• C2B (Consumer-to-Business):

  • A consumer posts his project with a set budget online and within hours companies review the consumers requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. C2B empowers consumers around the world by providing the meeting ground and platform for such transactions

• C2C (Consumer-to-Consumer):

  • It facilitates the online transaction of goods or services between two people. There is no visible intermediary involved, but the parties cannot carry out the transactions without the platform which is provided by the online market maker such as eBay.

The Business Opportunity in E-commerce

New products and services

Electronic technologies significantly add to organizational agility and lead to new services valued by customers. In many cases, information and knowledge are becoming the new products or services of the future. Businesses are also able to source new materials, technologies or techniques and venture into markets previously outside the scope of business operations. Joint ventures are increasingly possible through e-technologies providing businesses with new opportunities and potential areas for growth.

To access a new market, a business should consider the following 10 steps:

1. Consider the language of the country, ensuring navigation and important information is translated to suit.

2. Prepare website keywords and search engine listings to suit the language.

3. Product instructions or manuals must also be translated to suit.

4. Some products may require approval by the country’s authorities.

5. Check out VAT/GST and other tax issues.

6. Establish an after-sales and repair service reasonably close to the new market.

7. Establish a toll-free number directed to either your own business or a branch or a partnering business close by.

8. Promote the website within the new market area using the appropriate strategies, eg email, reciprocal links with local prominent website services and portals, newspapers, magazines, TV/Radio etc.

9. Specify where legal issues are to be dealt with.

10. Determine a suitable currency for exchange

Intellectual and human capital

Email and website technologies support business, procurement, production, administration, warehousing, payment, delivery, support and feedback systems. Together, these provide whole new opportunities for a business to capture, research and leverage so much information about its customers and transactions, that exponential growth in intellectual capital is emerging as a major business benefit and addition to the balance sheet.

Systems that are “smart” and informed by business trends can improve the quality and uniformity of decision making ensuring businesses operate more effectively if staff leave or are away.

In this unit, we will learn about implementation of the business plan in  managing micro-enterprises and the process of their monitoring and correcting.

At the end of this module you will be able to:

• Implement the business plan in one micro-enterprise
• To recognise mistakes in the business plan
• To make corrections in the business plan

Implementation of business plan

The business plans should be accepted by the managers as a tool for dealing with situations connected to the distribution of funds, implementation of new products, procurement of new equipment, hiring of employees, managing the costs and many other things connected with the successful operation of the company.

The making of a business plan by the management of the company is very important. But, plans are made to control all processes in the company and to take corrective action if some of the processes are stopped.

Continuously monitoring of the operation and comparing with what is written in the business plan is the best way to stay on the road to success.

Comparing of these two things, actual outcome vs predicted outcome, should be implemented at the end of every month or some other period which has measurable results.

When managers make a business plan it should be made very realistic and according to realistic predictions of the development of the business.

Mistakes in business plans

Mistakes can be made during the time the plans are drawn up. These will cause problems during the period of implementation and monitoring.

Some of the mistakes can perpetuate, if not picked up during the preparation of business plan. Because of that, managers occasionally should review and make corrections to the plans.

In some cases business can develop slower or faster than the plan envisages. This can be caused by big tremors and changes of the market or smaller variations in market conditions. In these cases corrections to the business plans are inevitable.

Corrections in business plans

Corrections to the business plan should be small and should correlate with the newsituation existing in the marketplace.

If the results achieved vary greatly in comparison to the data in the plan, then the business plan is incorrect and it is likely that in its construction there have been significant mistakes or wrong information used. In that case is better to make new business plan, which is more realistic and compatible with the situation prevailing in the company and the external conditions.

The Unit provides an Introduction to the definitions and the basic techniques of cost reduction.

At the end of this module you will be able to:

• Know the definitions of cost reduction and cost control and their differences
• Apply the basic techniques of cost reduction
• Be aware of non conventional approaches

Definition

Cost Reduction can be effected by either of the following ways:

• By reduction in unit cost of production:

This is usually brought about by elimination of wasteful and non-essential elements in the design of products and from techniques and practices carried out.

 (Any reduction in costs due to changes in Government policy like reduction in taxes or duties or due to price agreements do not come into the area of cost reduction as these are not real and permanent reductions in costs).

• By increasing productivity:

This refers to increases in the volume of output with the expenditure remaining the same. But this should not be achieved at the cost of the characteristics and quality of the product.

Areas of cost reduction

Cost control: Definition

Cost control is concerned with keeping the expenditure within acceptable limits. Its major assumption is that costs are in control unless costs exceed budget or standard by an excessive amount.

Difference between cost control and cost reduction

Cost control is effected through budgeting & standard costing:

• Budgeting:

A budget may be defined as a comprehensive and coordinated plan of action, expressed in monetary terms. It is prepared and approved prior to the budget period and may show income, expenditure and capital to be employed to attain the objective.

• Standard costing:

In this, standards are set and actual outcomes are compared with the standard. Corrective measures are undertaken for any discrepancy found between the standard and “actuals”.

Techniques of cost reduction

1. VALUE ANALYSIS: Value analysis is the identification of unnecessary cost  i.e. cost that neither provides quality, nor use, nor life, nor appearance, nor customer satisfaction. Thus value analysis attacks costs at production stage.
2. ECONOMIC BATCH QUANTITY (EBQ): EBQ is that point where carrying costs equals set up cost approximately. At this point the total cost will also be minimum.
3. ECONOMIC ORDER QUANTITY (EOQ): EOQ is the quantity fixed at a point where total cost of ordering and the cost of carrying the inventory will be minimum.

Activity Based Cost management (ABC)

ABC assumes that resource-consuming activities cause costs. Its aim is to directly control the activities that cause costs, rather than cost. By managing activities that cause costs, costs will be managed in the long run.

Cost causing activities – designing, engineering, manufacturing, marketing, etc

Just-in-time approach: (JIT)

The aims of JIT are to produce the required items, at the required quality and in the required quantities, at the precise time they are required.

JIT helps in cost reduction by –

b. zero inventory,

c. zero defects,

d. zero breakdowns,

e. single batch ordering.

Though the above goals are unlikely to be achieved, it represent targets and create a climate for continuous improvement and excellence.

Total Quality Management: (TQM)

TQM works on the philosophy that all business functions are involved in a process of continuous quality improvement.

TQM reduces cost by producing the products correctly the first time rather than wasting resources making substandard items and incurring additional expenditure on inspection, rework and scrapping.

It helps organisations to achieve their quality goals by providing reports and measures that will improve quality.

TQM targets a customer-oriented process of continuous improvement that focuses on delivering products or services of consistent high quality in a timely fashion.

Non-Conventional Approach

• Material Cost
• Manpower Cost
• Cost Management Initiatives
  • –Selling and Distribution
• Funding Cost

Non-Conventional Approach (Contd)

• Material cost – Cost reductions through
  • E-sourcing
    • Discovery of new sources
    • Competitive pressures
    • Rationalisation of suppliers
  • Thrust on Value Engineering
    • Re-Visiting Designs
    • Application oriented engineering
  • Product Life Cycle Management

Non-Conventional Approach (Contd.)

• Manpower Cost
  • Right-sizing of Employees – VRS Schemes
  • Optimum utilisation of Manpower
    • Transition from Machine engagement time to Man-Engagement time.
  • Productivity-linked wage settlements
  • Adopting new concepts
    • MOST
    • CELL Layout

This unit aims to take you through the steps involved in bringing your idea to fruition and find potential EU funding.

At the end of this module you will be able to:

• Analyse your idea
• Analyse the competition
• Learn from your analyses and plan how to bring it to fruition
• Find potential funding sources in the EU

First you have to ask you some questions:

• What’s your idea?
• Does it already exist / has it already been done?
• Is it based on an identified need?
• Who is your customer?
• What research do you need to do?
• Do you need partners or collaborators?
• Do you need matching funding?
• What resources are available to you?

Analyse the idea

• Determine potential of your idea
• Compile list of questions you need to answer
• Create a plan for answering them through
  • Research
  • SWOT Analysis

RESEARCH can be used to identifypotential customers / market

• competition among these customers / this marketplace
• usefulness & positioning of product/service
• the feasibility of your idea

SWOT ANALYSIS

Internal and external analysis of

• strengths, weaknesses, opportunities & potential threats to your product/service

Analysis: Research

Research such as

• Web searches
• Relevant industry associations
• Local library
• Contacting potential customers : by mail/email, face-to-face, using a survey
• Talking to relevant resource/support organisations

SWOT Analysis

Competitive Analysis

• Assess your competition
• Understand what your competition is doing
• Become a customer of your competition
• Identify how you can do it better/differently
• Identify what sets you apart and attracts customers
• Identify your unique selling point
• Identify your target market

Learning

• Your Research / SWOT Analysis will give a good indication of where you need to go next with your idea
• It should
  • Further inform or validate your idea
  • Determine if you should go ahead with your idea
  • Re-define or re-focus your idea
  • Explore various angles for your idea
  • Change your idea

Plan

• Build the right team with strong track record
• Company structure – governance, compliance, financial management capacity
• Create a business plan & financial model
• Clear market strategy, including product, pricing & distribution strategy
• Demonstrate that consumers willing to pay for product/service
• Viability – Potential for growth & increase in revenue

Bringing idea to funding application

• Research EU funding programmes and what programme is most relevant to your idea – eg.https://europa.eu/european-union/about-eu/funding-grants_en
• Explore the types of projects that have already been funded – eg. http://ec.europa.eu/programmes/erasmus-plus/projects/eplus-projects-compendium/
• Read criteria of each funding programme to check if relevant and your eligibility

Bringing Idea to Funding Application

• Do I have enough time – deadline, timeline, schedule, resources, partners. Be sure to take enough time for a thorough analysis and the planning phase
• What support do I need to develop my idea into a proposal?  What support is available? Eg……
• What kind of matching funding might I need?  Where can I access this?
• Do I need partners – relevant partner searches?  Eg.  ESF Partner search on ec.europa.eu/esf/transnationality/partners-search
• Or use your current personal/professional networks to identify relevant or potential partner organisations.

Tips to help find the right funding programme

• Be clear about what you are looking for: Establish what your field of expertise and capabilities are. What type of project you would like to initiate or join?
• Align your proposal to EU’s priorities
• Make sure that your project idea is in line with your organisation’s overall strategy
• Scan open calls: The best way is often a keyword search. It’s worth trying a range of search terms to maximise results
• Get in touch with your national contact point: They can help you understand what is required and keep you up to speed on EU policy developments in your field. They may also know about relevant events like information days for particular calls for funding.

More Tips to help find the right funding programme

• Plan a timeline for your application: Calls for funding always have deadlines. Do you have enough time to take on the preparation of a competitive proposal?
• Subscribe to the RSS feed for relevant calls: The Horizon 2020 Participant Portal allows you to subscribe to RSS feeds for funding calls. This means you’ll be notified when relevant calls are published.
• Check if you can benefit from national subsidies: Your national contact point will be able to give information about whether there is any support available to help you make your project proposal.

Key to success

Apart from proper planning, what makes a project a success is that it:

• Addresses real problems
• With realistic objectives and activities
• Risks to the project outcome are properly evaluated and taken into account
• Your organisation has sufficient capacity to implement and manage the project and
• It leads to sustainable/long-term results

In this unit, we will learn about debt instruments of banks and terms of bank loans (maturity, interest rate, instalments)

At the end of this module you will be able to:

Bank loans as a financial instrument

Access to capital is often reported by micro-enterprises across Europe as a key constraint: as a result of the recent financial and economic crisis, almost every micro-enterprise needs fresh capital.

The most used financial instrument for micro-enterprises to sustain their business is a bank loan. This financial instrument is used all over the world and is the fastest way to get a fresh financial injection for realizing new projects or ideas.

The terms for using bank loans are very rigorous and because of that managers and the owners of companies should be very careful when using them. Every decision for using a bank loan should be made following a deep analysis from the manager’s side.

The analysis should indicate a strong justification for taking out a loan. These ought to demonstrate that the project or idea which is to be financed by the loan will be more cost-effective than the loan.

In general, micro-enterprises need financing for their current operations or to expand, for instance to develop new products, purchase of raw materials, upgrading or renovating equipment and machines, retrofitting or expanding premises, etc.

Bank loans are tailored to the specific purpose of the micro-enterprise and are divided into:

• loans for fixed assets
• loans for variable assets
• mixed loans (combination of fixed and variable)

These different types of loans have different terms of use. Most often, loans that are used to finance fixed assets are approved for a longer period. Contrary to that, loans for variable assets should have a shorter period.

Maturity of the loan, in essence, depends on many conditions such as: type of business, activity, market, products, etc. Interest rate is the “cost of money”, meaning the extra amount that the borrower needs to return to the lender (the bank).

In addition to the interest rate, micro-enterprises should be aware of other elements that contribute to the so called “cost of financing”.

There are many other costs such as: payment commission, administrative costs for collateral, maintenance costs of the loan, costs for early loan repayment, etc.

Also, the costs which do not originate directly from the loan should be taken in consideration. For example: the bank can give the company a smaller interest rate, but charge higher costs for bank payments from that company.

Because of that, managers should take into consideration, all costs associated with the loan (application, evaluation process, issuance of the loan, repayment, management fees, etc.)

Entrepreneurs should consider all the costs involved and associated with taking the loan to make informed and sound financial decisions.

Following the decision to take out a loan, managers of micro-enterprises should take in consideration many conditions when planning payment of the instalments.

The biggest impact when planning of payment instalments will be the effects of: sales of products, seasonality of the business,business cycle, period of procurement of raw materials, etc. Instalments can be organized depending on the business cycle.

These mean that instalments can be organized on a monthly or quarterly basis depending on the business cycle for that enterprise (regular or irregular instalment plan). Monthly instalment should not exceed 60 % of monthly income of the company.

Irrespective of the loan type and maturity, banks often require collateral to reduce the risk of the loan. Collateral-based lending is one of the main obstacles to access to finance, especially for micro-enterprises that typically have limited resources or fixed assets.

For smaller loans or loans that have a small risk the collateral can be secured in alternative ways (state guarantee funds, other company as guarantor, money deposit, etc.).

This unit aims to outline some strategies rural micro-enterprises can use to co-operate and collaborate.

At the end of this module you will be able to:

How can micro-enterprises collaborate to address issues or gaps

• What are the issues and challenges?
• What is the benefit of collaborating?
• What do you want to achieve?
• Any existing networks that can meet the needs?
• Potential for sub groups within existing networks?
• Any micro-enterprise support or resource organisations that can meet these needs?
• Type of collaborative structure that best meets your needs?

Why collaborate?

• The purpose of collaboration is to create a shared vision and joint strategies to address concerns that go beyond the agenda of the particular group’s members
• Models of collaboration 
  • http://www.midamericacphp.com/wp-content/uploads/2012/09/MODELS-OF-  COLLABORATION-BG.pdf

Issues outlined by rural micro-enterprises

• More networking events to enable people to meet each other, share ideas and be inspired by the creativity and innovative ways of others
• Importance of building networks in rural areas so that they can exchange information / services and learn from each other
• Training for clusters of similar companies
• Micro enterprises often need a cooperative umbrella under which to shelter and thrive

Comments from rural micro-enterprises

“Opportunity to build current network of skills:

• businesses to bring elements together and
• provide platform for them to meet and
• provide each other with services,
• learn from each other and network
• The sum of the whole would be substantially more than the sum of the parts and lead to economies of scale”
• We need networking skills and networking training
• Clustering of similar rural enterprise – to reduce cost in purchasing etc
• Transport opportunities for small service providers
• Distribution is a major problem for rural companies
• There are many empty shops here- there could be a gallery/craftshop of local goods to connect us to the customer
• Industry specific training topics could be offered as many of the training topics are too broad as they are trying to cover aspects for all different types of business

How can micro enterprises collaborate to address SME gaps

• Co-operative Transport and distribution?
• Collaborative marketing and promotion?
• Shared spaces – empty buildings – enterprise hubs
• Co-operative/clustering training
• Sector and industry specific collaboration / networks
• Co-operative purchasing (reduce costs if buy in bulk)
• Build networks to support and learn from each other
• Co-operation to enhance competitiveness

Co-operative Structures

• The Role of Co-operatives in Business http://study.com/academy/lesson/the-role-of-cooperatives-in-business.html
• Co-operative – A coalition of small enterprises that combine, coordinate, and manage their collective resources http://epubs.surrey.ac.uk/1967/1/fulltext.pdf P.3
• Many types of co-operatives such as user co-operatives, co-operative banks, business co-operatives, workers’ co-operatives (or producer co-operatives), and European co-operative society. Focus here on business related co-ops

Business Co-operatives

• agricultural co-operatives (farmers belong to the co-operative), 
• co-operative fisheries (made up of professional fishermen), 
• co-operatives of small business-owners (they organise services in common), 
• co-operatives of haulage contractors (the members are haulage contractors),
• co-operatives of retailers (independent shop owners are members of a group)

Producer Co-operatives

Multi-Stakeholder Co-operatives

• Multi-stakeholder co-operatives – comprise various stakeholders who have a shared objective and always include the employees and clients of the business. These are co-operative social enterprises, known as Scic(Société coopérative d’intérêt collectif or community-interest co-operative).   http://www.entreprises.coop/english-version/types-of-co-operatives.html
• More on Multi-Stakeholder Co-operatives  https://www.slideshare.net/Alistercrowe/cooperatives-and-rural-development-a-policy-framework

Business Networks

Business Networking

Training Networks