Using small businesses to raise funds and empower people

Income generationMicro Enterprise

Pigs at the Salvation Centre farm outside Asbest, Russia. Farming was the centre’s first enterprise. Photo: Kieran Dodds/Tearfund
Pigs at the Salvation Centre farm outside Asbest, Russia. Farming was the centre’s first enterprise. Photo: Kieran Dodds/Tearfund

by Galia Kutranova

Salvation Anti-Narcotic Centre provides Christian drug rehabilitation to men and women struggling with addiction. People come to Salvation Centre from all over Russia. The centre raises part of its funds through small businesses.

The Salvation Centre team has always been convinced that it is important to have different types of income and be as self-sufficient as possible. ‘We wanted to demonstrate to our donors that we can not only spend the money, but we can earn it too,’ says Konstantin Lyubimov, one of Salvation Centre’s directors. They also needed to keep supporting the centre – people don’t pay anything to stay there – while teaching work skills and a good work ethic. 

‘Addiction destroys people’s lives so they have to start again. They have to re-learn to take responsibility so they are better prepared for normal life’, says Konstantin. 

‘When I came to Salvation Centre I didn’t know how to cook anything at all, not even simple food like potatoes,’ says Katya, who came to the Salvation Centre for rehabilitation and is now the staff member responsible for the women’s programme. 

Building confidence through employment

After the first stage of rehabilitation, when the worst physical effects of addiction have been overcome, the second stage of rehabilitation at the Salvation Centre is ‘adaptation’ during which the graduates still live together in a Christian community but can work and earn money. This is where Salvation Centre’s businesses provide opportunity for employment. ‘In Russia, if you were a drug user, it stays on your record and people wouldn’t want to hire you or trust you with money or goods. But we understand what it takes to turn your life around and that people just need a second chance – because we were just like them!’ says Konstantin. He is a former drug user and prisoner.

Farming

Salvation Centre’s first enterprise was a livestock farm for milk and meat production that started with one cow and a few pigs ten years ago. ‘We started with very little,’ says Alexei, one of the leaders, who came to Salvation Centre for rehabilitation in 2002. The farm now has 15 cows, 40 pigs and 20 sheep. Part of the produce is used by the centre and part is sold. The annual turnover of the farm is around 660,000 Roubles (about US $20,000).

Building

Vitaly leads Salvation Centre’s team of builders. He was a builder before drugs consumed his life. Having recovered from addiction, he had a desire to get together a group of men to do refurbishment and building work. It became possible in 2009 and since then the annual turnover has reached 420,000 Roubles (US $13,000).

Cleaning

Another business is a cleaning company that provides window cleaning, external building cleaning, furniture and carpet cleaning, and regular internal cleaning. It was started in 2011 and two years later the company’s annual turnover reached 286,300 Roubles (US $9,000). ‘This idea didn’t require a heavy start-up capital and some people are just naturally good at cleaning! Now our main goals are to provide high quality service and sign contracts with permanent customers,’ said Alexei. 

Using a grant to start a new business

Through participating in the provincial government committee on HIV and drug policy, Salvation Centre heard about a government initiative to support small business development in the province. The government provided training on writing a business plan, market research and financial planning and followed it up with a small grant of US $5,000 to set up an enterprise. ‘We knew this was a great opportunity,’ said Konstantin. Salvation Centre took the following steps: 

  1. While looking for a good idea Konstantin consulted a local businessman, who suggested vending machines selling hot drinks as an increasingly popular business that had good potential. 
  2. The team did market research and identified several institutions where people spend time in queues, such as a local hospital. 
  3. They then used the grant and some more money that they borrowed interest-free from a local businessman to lease the vending machines and to purchase coffee, tea and hot chocolate. ‘We were blessed to find very good places to put the machines,’ says Konstantin. ‘For the vending business it was the most important factor.’ 
  4. They decided that the machines would be serviced by rehab graduates who are going through the ‘adaptation’ phase. 

The annual turnover of the company from when it started in 2010 is 800,000 Roubles (about US $24,000). 

Developing people’s skills

‘Every enterprise of ours was started when a person who was skilled at something such as building wanted to develop it further – we just gave them an opportunity to go for it,’ says Konstantin. ‘I think this is the key to success.’ 

‘It’s a lot of hard work but we definitely feel more confident in the future and see that God has blessed us,’ says Alexei.

Galia Kutranova, Tearfund Country Representative for Russia, interviewed staff at the Salvation Anti-Narcotic Centre. Salvation Centre was established in 1998. It is based in Asbest, a city in the Ural region of Russia with a population of about 70,000.



Using the profits 

  • the team leader/entrepreneur gets 5% as a bonus 
  • 10% goes back into the business
  • staff get salaries
  • the rest goes to support Salvation Centre

Tips for success



Marketing a product

If we are to market our product successfully, we need to consider ‘The Four Ps’:

Product  What is it we are selling? What are the benefits of the product? Is it good quality and well designed?

Price  What is a fair price for the product, so that people will buy it and we will more than cover our costs?

Place  
Where will we sell the product?

Promotion  How will we tell people about the product?

To research these issues, it is useful to talk to potential customers.


Income generation for local community organisations and NGOs

Before starting

To be successful with an income-generating project, we need: knowledge of similar, competing products on the market already
  • ability to respond quickly to market changes such as rising prices for goods or a new competing product.

 We should consider income generation as a fundraising option for our organisation only if: 
  • members of staff have good business experience 
  • our organisation has enough money to invest in the work
  • business training or advice is available.

Difficulties 

As an organisation, we could experience the following difficulties:
  • lack of commitment if staff do not personally benefit
  • time and energy of staff could be taken away from other areas of work
  • too much of the profit might be given to our organisation’s work and not enough put back into sustaining and developing the business.

External grants

Large donors do not often provide grants for income generation because it is risky and many income-generation projects have failed in the past. If organisations already have money that could be invested in income generation they should consider carefully the risks and benefits compared with spending the money elsewhere.

Social enterprise

It can be a good idea to choose income-generation projects when the benefits are greater than just the extra income. Projects that benefit people as well as making money are often called social enterprises. Salvation Centre businesses are social enterprises – they have helped former drug addicts to develop skills and confidence while earning an income. 

For a social enterprise to succeed, the people involved from day to day need to have passion and determination as well as skill in business, and they need to be motivated by the social objectives as much as by the income gained. When an income generation project serves the main purpose of an organisation it can increase impact without creating distraction.

Compiled by Helen Gaw based on material taken from ROOTS 6 – Fundraising, p56-63. Previous Footsteps on small businesses and accounting include Footsteps 11 on Record keeping, Footsteps 57 on Managing money, and Footsteps 35 and 80 on Micro-enterprise.