I would like to share the story of an inspiring entrepreneur from Sindh, Pakistan. Ladha Ram started a pickle-making business in the 1990s. Before this, his family never knew if they would have enough to eat. Then one day a team from Tearfund’s partner SSEWA-Pak came to his village and encouraged Ladha Ram and his wife to join the new village savings group.
SSEWA-Pak provided skills training to the group members, and Ladha Ram learnt how to make pickles. He was so excited when he sold his first 10kg of pickles in the village. He reinvested his profits and gradually increased the quantities he made and sold.
He faced many challenges. It took time to develop the perfect pickle recipe, and he had to throw away many batches. At first he did not have proper storage facilities, and heavy rains damaged the pickles. Some shopkeepers refused to buy his pickles, because he was from a different religious group. However, he never gave up, and gradually overcame these obstacles. Last year he proudly reported that he sold 10,000kg of pickles. He now has a wide range of customers, including more than 100 shopkeepers.
Ladha Ram is an inspiration for those who want to do something extraordinary. His business continues to grow and flourish.
Ashraf Mall, Tearfund’s Country Representative for Pakistan
Question: 'How can I find the money to set up or expand my business?'
Answer: The first source of finance you should consider for your business is your own savings, or money you can raise by selling any spare items. The second source you should consider is your family and friends, and their savings. This is because the interest rates on small loans can be very high, and you could find this a considerable burden on your business through the first few months. Borrowing from family and friends can save you a significant amount of money.
Another alternative is savings and loans schemes. These are local groups of about 15–20 people, who each bring their savings together regularly. The group makes loans to its members, and the interest is kept by the group to increase the amount available to lend to other members. The schemes elect their own officers, make their own byelaws and set their own loan terms.
Banks are a difficult option because they are usually not geared up to deal with the small loans that you are likely to be considering. Microfinance organisations are the main alternative to family funding or savings and loan schemes. These organisations are set up to offer small loans and other financial services to people with low incomes. However, do check the interest rates and repayment terms to make sure they are reasonable. Visit www.microfinancegateway.org for information on microfinance organisations in your region.
Whichever source of funding you choose, your business plan will help you plan your income and how and when to make loan repayments.
Answer adapted from Setting up a biblically based business by Michael Clargo. See Resources page for details.
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