Business Partnerships
It is most unlikely that you, as a conservation practitioner working in a community-based conservation organization or project, will have the skills and contacts needed to support sustainable enterprise development. Of course, you will be able to contribute your expertise and knowhow, but you must build partnerships with others to be successful.
Most local businesses have a need to partner with others for capacity building, financing, access to markets, etc., but are not able to do so due to lack of resources or time to assess opportunities. Supporting these businesses to identify and work with partners can have a significant benefit. Partners may include other businesses, government programs, NGOs, local training institutions, impact investors, and donors.
Key partners may include:
Local government, who often have the best knowledge of local conditions, and who may also have strong existing relationships with community stakeholders, including local government initiatives for micro and medium sized businesses
Regional and national government, who may have a mandate to generate inclusive employment and livelihood opportunities to alleviate poverty and reduce inequalities
Local and national NGOs and civil society organizations, operating in a variety of sectors relevant to sustainable livelihoods, such as women’s cooperatives, youth employment, education, small business organizations, and nature conservation
International NGOs and their local branches, especially those engaged in development activities, such as CARE, Christian Aid, Oxfam, Solidaridad, or World Vision
International foundations, especially those who increasingly are engaging directly on the ground such as the Bill & Melinda Gates Foundation, Gordon and Betty Moore Foundation, and the Rockefeller Foundation
Bilateral development assistance agencies, including AFD, Danida, DFID, DGIS, EC, JICA, Norad, SDS, SIDA, and USAID
Regional development banks including ADB, AfDB, CAF, EIB, GEF, IDB, IsDB, EBRD, and NDB
Multilateral development banks and agencies including the GCF, FAO, IFC, IFAD, World Bank, UNDP
The first step is to identify which potential partners, such as those on this list, are active locally. Seek out partners that complement your strengths and enhance your capacity to set up a successful sustainable business initiative. For example, your team may have strengths in marine protected areas, but you may lack expertise in stakeholder consultations or business planning and financing.
You will not be able to develop your organization’s approach to sustainable business until you fully understand what approaches and tools there are for supporting business and what role your organization is best positioned to play in supporting the community’s vision.
Capacity Building and Technical Support Topics
There will likely be a need for capacity building through targeted training, apprenticeships, mentoring, or coaching. A key outcome of the SWOT analysis is to identify weaknesses within the community which need to be addressed. It is unlikely that communities will have the internal capacity to address their weaknesses and challenges or they most likely would have already done so. Hence, support from you and your partners will be needed. Also, your interventions – some short term and others long term – will be needed to build the capacity of the community to support and promote sustainable business development.
You will not be able to develop your own organization’s approach to sustainable livelihoods until you fully understand what approaches and tools there are for supporting businesses and what role your organization is best positioned to play in supporting them and the community’s vision.
Some of the key approaches and tools for supporting businesses including:
Business Management Skills
Structuring Businesses
Business Planning
Value Chain Analysis
Marketing Strategy Development
Assessing Financial Feasibility
Finance Considerations
Aligning with Sustainability Goals
Business Management Skills
Many questions need to be considered for businesses you want to support to ensure management competency. These include:
Does the business have the skills and management expertise needed to be successful?
Do they understand the risks facing their business and do have a strategy to manage them?
Is the business well-governed, ensuring responsible business practices?
Is the business able to integrate key sustainability factors – e.g., the sustainable use of natural resources and climate considerations – into a profitable business model?
Can proposed business play a role in enhancing inclusion and social objectives?
You will probably need to collaborate with partners to support local business with the development of the following core business management skills:
Leadership – The ability to inspire others through encourage and reward, through entrusting responsibility, and through open communication and knowledge sharing
Relationship building – The ability to build solid relationships with key stakeholders in the business including investors, customers, suppliers, regulators, and employees
Problem solving – Being able to troubleshoot effectively when inevitable problems arise by handling situations and making decisions under pressure
Marketing and sales – Knowing your market, having a strategy to reach this market, and turn this into sales by listening to your customers and serving their needs
Project management – Mapping out the tasks that need to be done and tracking performance
Time management – Making plans, prioritizing tasks, and tracking the time spent by you and your employees
Outsourcing – Knowing when and where to bring in the skills and expertise needed
Financial management – Putting an accounting system in place, keeping records, managing cash flow, preparing for large expenditures like quarterly rent or tax payments
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Structuring Businesses
Many local businesses may require assistance in designing and implementing a structure which will enable them to be resilient and grow. A business may be informal or formal. Very small businesses are often informal, which means that they are not registered as a business, frequently do not pay taxes, and cannot legally employ others. While this means that they may be easy to start up and can be flexible, this kind of structure can have significant disadvantages. You may find that a critical part of your support for sustainable livelihoods is to help informal businesses become formal through registering as required and setting up accepted practices for accounting and hiring.
When supporting businesses, it will be important to have support from legal and business development advisors who will be able to provide guidance on the most appropriate structures for addressing environmental, social, and economic objectives.
Business Planning
The key to a successful business is a business plan. A business with a plan will know what to produce, how much to produce, how to source inputs, how to market products and generate sales, how to secure financing, how to be compliant with government regulations, and so on. Business planning can be complex and may well be beyond small community business capacities. A micro or small-business may initially focus on a less detailed business plan like the one below. Later, as it grows, evolves its business structure, and seeks additional financing, it may require a more sophisticated business plan.
A format for a micro or small startup business includes the following components:
Key partnerships – Identify the other businesses or services you plan to work with to run your business.
Key activities – List the ways your business will make and distribute its products.
Value proposition – Make a clear and compelling statement about the unique value your company brings to your community and to the broader market.
Customer relationships – Describe how you will interact with customers
Customer segments – Have a clear sense of who your business will serve, who the target market is
Channels – List the ways you will communicate with your customers, e.g., advertising, social media, etc.
Cost structure – List the most significant costs of running your business, e.g., wages, rent, etc.
Revenue streams – Explain how your company will make money, and how cash will be generated
Value Chain Analysis
In some situations, as part of the business planning exercise, it may be useful to conduct a value chain analysis. A value chain is the full set of activities that a business undertakes to produce its products and deliver them to a market. Looking at the whole value chain helps a business or community to:
see how their business might fit into a local market,
see how to plan inputs and production of products and services,
identify opportunities to grow their business by adding value at different points along the chain
identify where the greatest contribution can be made to the local community, including its environmental and social objectives. This can have important implications for sustainability as these values can include environmental and social objectives for the community.
Successful value chain analysis can include the following elements:
Identifying products and/or services.
Understanding the market – who might buy these products/services, where are they, what are their expectations and needs including quantity and quality, and what might be the right price, as well as knowing how the market will be reached.
Knowing the competition – who else is supplying these goods/services, and on what basis does the proposed business intend to compete. This will also feed into the marketing strategy.
Mapping and analyzing the product’s production chain, inputs, processes and necessary technologies, skills and activities needed, supply chain for inputs, environmental impacts of processes, etc.
Mapping and analyzing the delivery chain, for delivering the goods and services to customers, and ensuring that a sufficient infrastructure exists to get goods to market (what we call a secure route to market).
Identifying opportunities for using availability technology, such as smart phone applications, to help with obtaining inputs, marketing, or delivery; and
Using the value chain map to identify gaps and opportunities for further integration in the value chain.
Marketing Strategy Development
Increasingly, micro-, and small-sized businesses have access to low-cost internet-based platforms for marketing through computers and smartphones. Most entrepreneurs would benefit from expert advice on marketing. Here are some key topics to consider:
Target market – Describe your audience in detail – i.e., your market’s size, demographics, unique traits, and trends
Competitive advantage – Describe what gives your product or service an advantage – e.g., a better product, a lower price, an excellent customer experience, or an environmentally-friendly certification
Sales plan – Describe how you will sell your product or service – e.g., retail, wholesale, or your own online store
Marketing and sales goals – Describe your marketing and sales goals for the next year
Marketing action plan – Describe how you will achieve your goals, e.g., your marketing channels, pricing strategy, use promotions, and after-sales customer support,
Budget – Include a complete breakdown of the costs of your marketing plan
Measure and update your plan – Plan to compare your costs to the revenue it generates
Assessing Financial Feasibility
Assessing the financial feasibility of a business is a critical component of a business planning process. A business has no chance of being a catalyst for sustainable livelihoods or for being environmentally and socially responsible if it cannot be financially sustainable. A financial feasibility study assesses the economic viability of the business. A financial feasibility study, even for a micro or small-sized business, has three core elements:
Evaluating start up or expansion costs
Preparing profit and cash flow projections
Assessing financial risks
Calculating start up or expansion costs: The adage ‘you must spend money to make money’ captures the challenges facing most businesses. Businesses need to spend money on start up or expansion before they can start to make money. To cover costs, a business needs to raise funds. If these funds run out before revenues start to come in, the business will fail. Costs could include:
Licenses and permits
Legal and accounting fees to set up
Business planning and impact assessments
›Market research and advertising
Purchase price or lease deposit for land and buildings
Manufacturing equipment
Office furniture and supplies.
Insurance
Electricity, water, internet
Wages
Preparing profit and cash flow projections: A business is unlikely to raise funds to start up or expand unless it can make a convincing case that it will be able to pay these back. Thus, the financial feasibility study needs to project expenses and revenues. Expenses include the costs of operations and production. The revenues come from the sale of goods and services. Project profitability is critical to knowing how much capital is needed to get the business up and running and to inform investors when they are likely to see a return on their investment.
Assessing financial risks: Businesses must also have long-term plans for growth to evaluate pros and cons. There must be planned resilience for addressing potential financial negative events. It is the responsibility of the governance structure of the business to ensure that management both can address these matters and does in fact pay sufficient attention to them. Most importantly, the business plan must be reviewed in terms of and synthesized with the environmental and social plans, to ensure sustainable resource use that will result in enhanced resilience and/or restoration, and the achievement of the desired social outcomes.
Financing considerations
Business financing can take many forms and is usually dependent on a combination of elements that reflect the different needs for a business. The are several sources for financing small and medium-sized business including:
Family and neighbors
Partnerships and joint ventures
Loans, including concession loans
Private equity
Donations and grants
Except for charitable financing, all forms of financing will have some cost – i.e., the amount invested will need to be repaid with a return. In general, the cost of securing financing – i.e., the rate of interest – will reflect the perceived risk associated with the business as well as the payback period. Higher risks and longer payback periods will increase the cost of financing.
As many coastal communities have insufficient access to financial capital, an important element of a sustainable livelihood strategy may be to explore ways to reduce financial risk in the community and thus increase the flow of capital at affordable rates. This can be further supported at the business level by exploring ways to mitigate risk and enable the business to reach profitability as soon as possible.
There are several international organizations interested in funding businesses, especially business forming part of a community-based sustainable livelihoods strategy. In addition to USAID, others, to name only a few, include the African Development Bank, the MacArthur Foundation, and Rufford Small Grants.
Aligning with sustainability goals
For local businesses to contribute to community-based sustainable livelihoods, they must be well-managed and address environmental and social dimensions of sustainability. For many micro and medium-sized businesses, acquiring the necessary management skills and addressing the environmental and social aspects of their businesses can be challenging. As a conservation practitioner, this is where you may be able to make a direct contribution to a community’s visions for sustainable livelihoods.
Promoting sustainable business: Throughout the business planning and development process, it is important to pay attention to the holistic objectives of a sustainable business. Sustainable business success must be pursued in the context of conserving coastal and marine ecosystems. Implementation of a sustainable livelihoods strategy must focus on ensuring economic sustainability and environmental and social goals.
Addressing challenges to community-based sustainability: Building small business management skills alone will not ensure sustainability. We need to support local businesses to be more responsible to the environment and to the community while ensuring that they can grow and prosper. This requires an understanding of why local business may not be addressing sustainability issues adequately helping to address these challenges.
Linking communities to the Sustainable Development Goals (SDGs): With widespread support and interest in the SDGs, there is increasing capacity to assist businesses to contribute to these goals by integrating environmental and social responsibility into their business practices. Sustainable livelihoods can be understood as the application of the global Sustainable Development Goals. As the SDGs are now widely used around the world by key stakeholders – it can be useful to use the SDGs to communicate a community’s sustainable livelihood initiatives and impacts to policymakers, regulators, donors, investors, customers, and local stakeholders.
For organizations and professionals interested in conserving coastal and marine areas, the usual entry point is SDG 14. Conserve and sustainably use the oceans, seas, and marine resources for sustainable development. SDG 14 can be related to other social, environmental, and economic goals such as:
SDG 1. End poverty in all its forms everywhere
SDG 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
SDG 5. Achieve gender equality and empower all women and girls
SDG 10. Reduce inequality within and among countries
SDG 12. Ensure sustainable consumption and production patterns
SDG 13. Take urgent action to combat climate change and its impacts
SDG 16. Promote peaceful and inclusive societies for sustainable development
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