Mamelodi Extension 17

After 3 years of waiting it has finally happened!

Comrade Ida and Comrade Rubin from the street committees at Extension 17 have called me to a meeting and told us they are ready to start the community development of their area.

I asked Nobel Prize candidate, Veronica Khoza to help me and together we spent about 2 hours in conference with the various leaders of the community.

Priority is to establsih a feeding scheme for the plus minus 50 households in Extension 17 who are child-led homes.

Sunstyle has agreed to work-up a costings sheet, the street committee members will do some research into the actual numbers needing food on a daily basis.

Veronica was counselling that we set-up a co-operative at street level; the old street-co-operative something like I set-up for street children over 10 years ago!

We will then work up to establsihing a community Trust fund for the area.

this is really great news! At last this community is ready for action!

Business Gym

Last night I ended the blog asking what value can twosnhip business have that's worth selling on a nano stake-holder's exchange.

I came across this piece written by Ronnie Matjie, one of our collaborators about Roma recording Studio. Ronnie is using the Business Gym model descriobed in the Susntyle website:


Roma Music Production

Money

He spend money on paying for recording studio for the artist he have under his company
He also pays for the out covers of the cassettes and cd’s and for the printing of the cassettes and cd’s.
He also pays for the bar codes for cassettes and cd’s.
He spend money on petrol in order to organize and distribute and promote their music.
he pays for rent for his offices including electricity and water and phones and etc.

MACHINES

Recording studio is the main machine
He must have enough artists
Cars are most important to distribute their music to the music warehouses.
After every sixty two days their cars goes for service.

MATERIAL

Artists
Cassetes
Cd’s
Petrol
Stationery
Office equipment
Cassetes and cd’s out covers
etc

MARKET

Advertising by placing posters on the streets and in town and everywhere.
He organize promotions everyweekend in order for the albums to be bought.
He sells the albums to the music warehouses such as reliable,jetmart,Dakota,musica and ect.
He plays his artist’s albums on tv and radio stations.
he makes sure that he have good artists who are singing musiv which people can love.
Mostly their customers are music warehouses and shops who are also selling cassettes and cd’s and hawkers who are selling cassettes and cd’s.

MANAGEMENT

He is the managing director of the business(in order to manage every task from everyone to make sure the job is done).
he have people who are responsible for marketing and sales.
He have people who are good in selecting artists whose their albums can sell a lot or who people can love their music.
He have people who are distributing cassettes and cd’s in order to be on time always so that they cannot disappoint their customers.

HUMAN RESOURCES

Everyone is responsible for his/her job.
Every employee submit a monthly report to his office so that he can check and make sure the job is done.

MY BUSINESS

He wanna see his business have it’s own recording studio in order not to pay for studio when he wanna record his artists.
His vision is to see this business as a job creator to the community and have people who are good in business manegement so that they can manege this business and make sure the business is successful.

HOW CAN THIS BUSINESS FAIL(IN MY VISION)

There are a lot of music companies working the same as this so if they cannot have good competition with them the business will fail.
Always if they have some orders from their customers they must be on time for delivery in order not to disappoint them, otherwise they will loose their customers as they do not fulfill their promises to them.
The main important thing is that they must have artists who people can love their music because if not people will not buy their music and so that music warehouses will not buy a lot of staff from them as their products are not moving.

So where's the value in an operation such as this?

It operates in township environment, it is very very close to the ground, it is extremely cheap to operate and it has very real social development and common good outcomes. How may we create a sustainable funding base for operations such as Roma using a stake-holder's exchange?

Nanostake-holder exchange

So Prof. Blignaaut sent me a very nice reply this afternoon;

"I do not think something like a full cost accounting practitioner exists formally. A person who was (and actually still is) working on the subject for her PhD and who have started a network to this extent is Maryna Mohr-Swart (cc'ed into this).

But have a look also at this website also - facinating concept!!! http://www.sasix.co.za/

If Maryna is not able to help, or whatever the case, please come back and we try again!"

Ok so I look-up the sasix website and it's a really interesting system that allows Noprofits to raise funds by selling "shares" to donors. Once the shares have all been sold the project begins.

I also found Ashoka Fellow, Dr. Darin Gunesekera from Sri Lanka who has set-up a stocke exchange market for real estate stock for inner city and slum dwellers who can put their land up for sale and get decent housing in exchange.

So now we need three things:
[1] an open-source software package to integrate Full Cost accounting into small and micro township businesses and Non-profits. (refer to Maryna and the Sohodojo gang of Timlyn and Jim)
[2] A system of legal bonding and exchange (refer to SASIX and Dr. Darin)
[3] A clear idea of what exactly will be "sold" on the exchange, valuable enough for investors to buy....

Perhaps our collaborators at SANE with their Local Exchange Trading System may be thrown into the stew here...

Hmm

I guess I'm sharing this stuff on a blog because it displays how one social entrepreneur goes about thinking around a problem. Its messy, its fuzzy and who knows wher it goes...

Full Cost Accounting

Today I was told I'm running far to much ahead of the pack with Alex. proposal so I have taken a bit of break from it.

I instead applied my mind to the ongoing problem of creating a sustainable funding system for the Real economy and non-profit organizations. In the USA they seem to refre to these as Citizen base organizations.

I thought that stakeholder analysis, so much used in business ethics may be fruitfully applied here. Basically the idea that any enterprise should benefit its stakeholders rather than only its shareholders got me to thinking about how the stock exchange is a revenue-generating system based on ownership of stock or shares.

What if we established a Stakeholder Exchange?

NPO's and Real economy enterprises may then float their stakes on an exchange and sell these stakes to raise funds for specific projects. Stake holders would then be able to receive affirmation of their contributions in paper and be able to trade with this paper on the stakeholders exchange.

The underpinning accounting system would have to be far more Real than the current Generally Accepted accounting Practice (GAAP) and would probably have to be a Full Cost Accounting system.

I have found, thanks to one of our collaborators Davin Chown, a Professor of Economics at Pretoria University; Prof. Blignaut and asked him if there are any Fulle Cost accountants out there. Are there any software applications?

If we acn underpin this process using Full Cost Accounting, we could easily establsih the world's first stakeholder exchange in Pretoria by year-end...unless someone else has already done this...

Designing a transformative business for Alex.

It is clear that the millions allocated for the development of Alexandra Township, Johannesburg has not been well spent. We have been asked to propose a plan using the Sunstyle approach. We decided to implement the Business Gym as the operating system. We were told that 300 trainees were undergoing training; 100 in welding, 100 in catering and 100 in sewing.

This has led us to develop a set of assumptions based upon our experience in thsi field:

This list of assumptions underpin the models and proposal for the creation of business units in the Alexandria Development Project.

The Trainees

The three sets of trainees will not all pass their training course. There will be an average 15% drop-out rate over the training period. Thus the 100 welders will only be about 85 welders, the 100 caterers will only be about 85 caterers and the 100 seamstresses will only be 85 ready to set-up business. This means that only 255 individuals will complete the training in the three fields of Sewing, welding and catering.

The graduates will generally not have prior experience of running their own business. This means that few will know about business processes or systems.

The graduates will be technically minded and not have the aptitude for sales, marketing, communications or human relations. His means that these graduates will need support in such fields.

The graduates will be largely township youth and thus not have access or skills in negotiating business deals and relating to the formal market economy.

Most of the graduates will have very little personal capital or access to family members with capital to invest in business ideas.

Most of the graduates will have family ties to others living outside of Alexandria township, mostly in rural areas or non-formal peri-urban settlements.


Business opportunities

The business opportunities will involve the creation of an estimated 116 business units working as interdependent profit centres using the Business Gym as its operating system.

The welders will generally be able to work individually within the non-formal sector and may come together on a project basis to do large orders such as window frames for RDP developers. Large LP Gas suppliers such as Afrox may be interested in supplying gas at good rates to the welders and the welders may be able to secure a contract to manufacture gas cookers. There is also a market for the construction and sale of VESTO’s, an energy-saving wood burning stove and heater. An estimated 85 welding profit centres will be created.

The Sewing graduates will work best in profit centres of 15 to 20 individuals. They will be able to sew school uniforms for sale locally with the support of local schools, they will be able to sew bedding and curtains using favourable rates and terms offered from participating suppliers. There is also a market for Hotbags, an energy-saving cooking device known as a retained heat cooker. An estimated 6 sewing profit centres will be created.

The caterers will be best organized into profit centres of around 3 to 5 individuals. These profit centres will run small take-aways licenced under the African Burger system and based in local spaza shops to create a cash-flow stream and will offer catering for a variety of functions. The caterers will use hotbags and Vesto’s as well as LP gas to prepare food and act as demo-units for these energy-saving products. And estimated 25 profit centres will be created.

The skills-set required to run a successful business operation will be provided by Instant Muscle, a Sunstyle company run as a joint venture between various stakeholders.

The skills-set that Instant Muscle brings to this project includes:
Financial management
i. Debtors
ii. Creditors
iii. Bookkeeping & Auditing
iv. Insurance and risk management
v. Equity
vi. Planning and management accounting
Administration
i. Buying
ii. Stock control & storage
iii. Vehicle and Property Maintenance
iv. Filing and correspondence
v. Minute-taking and record-keeping
vi. Meetings and conferencing
vii. Formal compliance & registrations
viii. Copyright, licensing and legal services
Leadership & mentoring
i. Planning
ii. Mentoring leaders
iii. Evaluating outcomes
iv. Strategy
Creativity
i. Product development
ii. Service development
iii. Branding support
Sales management
i. Sales team management
Marketing
i. Branding
ii. Supply chain negotiations
Public Relations
i. Website
ii. Print media
iii. Other media
iv. Below the line marketing
Group communication
i. Quality circles
ii. Cross functional teamwork
Ethics
i. Ethics reviews
ii. Ethical consultations
iii. Environmental Impact surveys
Human Resource Management
i. Training
ii. Creation of job specifications
iii. Hiring and firing
iv. BEE compliance

Instant Muscle will operate as a Cost Centre in the group of companies and Co-operatives and will levy 12.5% of revenues generated to meet the costs of supplying these services.

The group will aim to become profitable and therefore self-sustaining within 36 months from start-up.

Instant Muscle will retain a proportion of its levy in a Community Trust for the further development of Alexandria including environmental and social development projects.
Financing will be designed to maximize the profit and income of each profit centre. To this end the Community Trust will be used to channel financing to each profit centre in the start-up phase. Each profit centre will then pay Instant Muscle its levy out of such financing.

We have now begun the process of working-out the business case for each type of profit centre and will finsih with the business plan for Instant Muscle.

Google

Well this shows the sexist assumptions I have about people. I assumed the journalist Hleziphi was a man! Well she is not and the more I read her work, the more excited i become that at last we may have the beginnings of a new type of journalism here. A business reporting that deals with the REAL economy rather than the gambling of the stock exchanges and the meanderings of mega-multi nationals. Hleziphi or Mary as she asked me to call her, is at the cusp of a truly interesting process.

Someone aksed me about the impact Ssunstyle has had. I really find this a difficult question to answer but I think Google may help us here.

In 2003, I googled the words "Spaza Shop" and got three hits. yesterday morning I googled the words "Spaza Shop" and got 33,500 hits!

Now either the google crawlers have finally got to S in their process or this phenomnon has begun to be part of the business culture, has begun to be "mainstream" whatever that may be.

The informal sector, the Real economy is not a replacement of the formal economy, it is a necessary alternate that always works alongside any formal system. In many ways it supports the formal economy and in many ways it acts as a "fixer" for all the blind alleys that the foermal economy creates.

Instant Muscle

remember the Alexander Project? We were asked to design a programme to set-up some 300 graduates in sewing, welding and catering in business. I mentioned it in an earlier blog.

Well this morning we worked on teh design of the programme. basically we have proposed a company which we call Instant Muscle who will offer these Profit centres a variety of skills and services and levy a charge to each profit centre based on their revenue.

I will post the proposal on the website as soon as it looks good enough and would appreciate any comments.

On the other front, I am arranging meet the journalist next week to discuss how we can create a new sub-genre of business jounalism focusing of township trade.

DNA

Well today I went to the National Health Laboratories in Jo'burg just below Constitution Hill and just next to Hillbrow. I met with a Heeren who took a mouth swab and will be checking my DNA.

Why?

Well I have traced my ancestors in ethiopia back 27 generations to 1275 and my ancestors in Europe back to 1312. Thats around 700 years and in geneological research that is a very respectable achievement. DNA is able to trace my family tree from the beginning in Africa some 200 000 years ago to around 50 generations ago, about 1500 years back. The only missing part then would be that small period of about 800 to 1000 years between....

Anyway the DNA can trace mty father's father's fathers line and my motehr's mother's motehr's line only. All my direct ancestors going back just 14 generations would include 16 383 individals!

It's truly amazing how we can do this now. In a decade or so the human genaome would be far better mapped and we will have wven more information about our genertic past.

Now on to Sunstyle matters, I found a number of articles on township business by a journalist doing pieces for Homeless Talk called Hleziphi Mudau. This guy is good!

Anyway he interviewd a few spaza shop owners in one of the townships we have been servicing called Diepsloot. The piece was ostensilbly about the foreigners who have taken-over a lot of the retail outlets in Diepsloot (and in many other townships). Anyway he reports that the spaza shop owners now work together an buy products in bulk and then sell at cheaper rates than others.

This is really good news because it shows the seminal work we hve been doing in the area has taken root and people are doing their own buying up the chain.

Hleziphi has picked-up a critical success story of the Sunstyle method!

Well thats my version at least and I'm sticking to it.

I've sent an e-mail to Hleziphi and asked for us to meet. Maybe he can do some other stories which show the Sunstyle approach and its success?

dentures

I have friend called Vasili who used to tell me about his grandad in Italy. His grandad used to pay local people in his village to wait at his front door each morning and greet him obsequiously when he emerged for his morning stroll. It made him feel good about himself.

Writing a blog is something similar except I pay Telkom instead.

Today I went to see my dentist, a very neat Bulgarian who gave me the options about my missing tooth. Its a front tooth and Andy (my wife) wants it back. I chose a denrure. so now its official i am going to get false teeth!

On the Sunstyle Front, The Alexandria Project are looking for me to design a hybrid value chain for three sets of entrepreneurs: 100 welders, 100 caterers and 100 seemstresses.

I have been asked to organize these 300 people living and working in Alex' into business units with supply chains and orders. Co-ops are expected and contarcst must be found.

With regard to the work we have been doing in Nellmapius on the creation of video rental stores; Joe the one entrepreneur phoned me today to say he had closed-up shop and is now some 120 Km away in Kwaggafontein and can we do stuff with him up there.

Sister is still keen but I keep missing her hubby who is crucial to any joint venture as my vignette on ressentiment explains.

Otherwise life goes on much as ever. tommorrow I go for my DNA test... but that story will have to wait till tommorrow

good night

Retail Development Bond

I recently read a news item about Daniel Bradlow, professor of Law at the Washington College of Law, American University.

He is trying to set-up an international bond issue as a fund-raising instrument for small and micro enterprises in Soutn Africa.

I have asked Bill Drayton and Meredith Lobel from Ashoka in Washington to meet with Professor Daniel Bradlow to see if we might be able to assist.

Wouldn't it be great if Sunstyle and other social entrepreneurs engaged in hybrid value chain projects could find investment through such a scheme?

Sunstyle could easily sell these bonds to its corporate clients and other investors keen to support this sector.

magnificence

talking of money...

today I finished a painting. Its a diptych, two panels 1,83 metres by 0.907 meters.

I have name it Magnificence.

I was thinking of the virtue described by St. Thomas Aquinas whom I belive is worth quoting still almost a millenium later;

"The function of magnificence, as has been stated, is to attempt the achievement of some great work. But in order that any great work may be suitably performed, a proportionate outlay is needed, for great works cannot be undertaken without considerable spending..... This is why Aristotle says, the magnicient man from an equal outlay will achieve a more magnificent result...The chief act of virtue is the inner choice, which virtue can have without wealth or rank, and so even a poor man can be magnificent...."

Is this not a fitting description of the virtue of a social entrepreneur? Can we say that social entrepreneurs are magnificent?

Cash

I was thinking last night about cash. Money; what we call in Tshelete. This is a thing that has no past, no memory. In consequence the use of it is all about the here and now. Credit is allbaout the future and debts are all about the past.

Cash lives purely for them moment and that is its value.

When we seek cash we are looking for value in the here and now. By agreeing to credit terms we are placing our trust, our faith in the future value of the things of life.

How might we create a value system that is less atomistic? A value system that incorporates past, present and future without having to rely merely on cash?

Techi-day

Today was a very techi-day for me.

I posted my first blog and registered the Sunstyle website with a variety of search engines.
I also visited fellow ashoka fellow, Veronica Khoza and set up her e-mail.

We heard from Marita at ashoka that she had resigned and will be moving to Cape Town. Marita helped us all feel at home at Ashoka and we wish her all the best. e will still be in touch as she is part of the Difference network.

A few weeks ago Sunstyle was asked to assist in the development of Alexandra township, north of Jo'burg. It is a presidential lead project and has not really got anywhere over the past 5 years.

Sunstyle has offered to do Local Economic Development interventions including co-op development, hybrid value chain development and the Business gym coaching, benchmarking and training.

We will keep you posted of developments.

It seems pretty certain that the research project on the Ethics of social entrepreneurship within the catholic tradition will be completed by January 2007. Marilise Smurthwaite from St. Augustine College is enthusaistic about the research.

Tommorrow Dug is going to a meeting with FEBDEV, a training company to see how we can put together a consortium to deliver training in Auxilliary Social Work. It has to be a sustainable project and that means everyone needs to earn an income in the process...

The start of my blog

So finally I get round to writing this blog... Lets hope it gets read!