projecteverest

Work Update

[WORK UPDATE]: SoCon Malawi - Validated Learning: Investigation of Small Business Owners - July 2018

Background

One of our monthly goals is to construct a consumer archetype for 3 different socioeconomic locations. Our initial focus group was women in the villages surrounding Blantyre but we found that progress validating this customer segment was slow due to the language barrier. We had some issues conducting surveys because we had a lot of reliance on translators who were frequently busy or did not want to operate in the poor weather conditions we have experienced. Because of this we decided to focus on our other customer segment which was the small business owners in the markets surrounding Blantyre.

Introduction

We decided to focus on the small business owners because they were more proficient in English which made it easier to gather validation data. They also had a higher level of financial and business education, which will make it easier to communicate some of the concepts that we find intuitive. I believe focusing on this customer segment will make implementing future experiments and their associated validation methods have a higher chance of success. This way we can have a smoother transition into our customer segments rather than immediately trying to test our fringe urban/ rural customer segment.

Customer segment assumptions 

 

Assumptions

Problems

Value proposition

Predominantly males

Lack of access to capital

Financial security

Age 25-35

Charged high interest rates

knowledge

Micro - small businesses

No collateral

empowerment

Low savings

Rel. high perfect competition

opportunity to grow business

Inconsistent income

Ineffective product differentiation

access to greater quality of life

Access to Brick phones (and use of telecom finance services)

Lack of financial/ business education

 

Fear of debt/ loan

   

 We came to these assumptions by having first hand experience in the market in our off hours in country and getting to know the market business owners on a personal basis.

How to validate these assumptions

We validate the assumptions above by confirming that they experience the problems listed and would appreciate the value proposition we could deliver.

Testing methods

Surveying is the most direct way to achieving validation of our customer segment, a link is provided below so you can see the specific questions used. We have left them as fairly broad/ open ended questions because we believe that conversation gives us a larger scope about understanding their problems and values.

Another method we are using is interviewing members of the credit/ risk department in the commercial banks around Blantyre. We can cross reference these two sources of information so we can say with accuracy that our assumptions are validated

Results (so far)

From our understanding the age range of small business owners matches our assumptions (median age being. 27.5) and are having a higher chance of being male (especially in Blantyre). Most businesses were stalls that had been operated for at least 2-5 years. We confirmed that this customer segment had a high usage of telecom financial services such as airtel or Mpamba but low implementation into their business operations with only an average of 3-4/10 customers opting to use it (most transactions being in cash). We gathered that market stall owners had little access to capital and that if they did have that access most would use it to improve their business, confirming the financial security, business growth and empowerment value proposition. We also discovered that the stigma against borrowing a loan was primarily due to high interest rates and this had a correlation to them having little to no collateral to offer banks (due to the high risk premium in an event of default). We also assessed that the small business owners in the markets had very limited financial education, most would not have any form of transactional record. This stigma and lack of professional business knowledge was confirmed in our interview with several bank managers.

Recommended actions for the future

I would suggest conducting more of these surveys or more in depth interviews to gain a clearer understanding/ analysis of the customer segment as our sample size was small from a professional statistical analysis standpoint. That being said, I believe working on the information gathered already would fine. Providing a consulting service to a target group of stall owners would give more insight into the exact gaps in their financial/ accounting education that is inhibiting them from getting access to capital and creating that stigma against debt.

edited on 28th January 2019, 10:01 by Ella Grier

Kurt Michl 6 months ago

I agree entirely with what you have written. I think is interesting to conduct further research in the markets, as there seems to be a lot of hidden information. As for providing a consulting service to a target group would also be interesting, because it may give us access to different aspects for which we cannot conduct survey. It may also be a good way to break into the scene. Once we can establish a position consultation, we can then use that to market other services such as micro-credit or education.

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Andrew Vild 6 months ago

Status label added: Work Update

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