Business in Haiti

In my last post I alluded to some of the business ideas that our students had.  Today I want to highlight a couple of the ideas.

Let me first preface this by saying that there is a lot of opportunity  to do things here in Haiti. Much of the basic infrastructure we expect in the States, such as roads and our “always on” power grid, are either missing or very broken in Haiti.  Of course people being people, many workarounds have been found (such as buying SUVs to drive in the city) and some newer technologies have come in to take the place of what’s existent (such as solar installations).

Many of these ideas require lots of capital which is something that our entrepreneurs are generally in short supply of.  This means that their businesses need to be VERY compelling, or have plans to start small and scale.  Even then funding can be difficult.  To get a competitive rate loan from a bank in Haiti you need to be officially registered (usually as a Sole Proprietorship) and you have to already be running the business so as to show at least 1 quarter’s of financial statements (or be an individual with a track record of successful business or come from a family with money or a track record).  Of course you could always take out a micro-finance loan but who wants to pay rates in excess of 40% per year on a $2000 loan?  Not me and not our businesses.  So we have your traditional network of family/friends to beg money from or this bank loan process.  Thankfully EGI (our NGO host) has plans in the works to setup an investment fund but for now these are the options.  As you can imagine, you can’t start many capital-intensive operations when you need 3 months of real statements to get it off the ground.  With that in mind, let’s look at two of our entrepreneurs.

First up for the examples is Paul.  Paul is already running a small-scale enterprise from his home and wants to expand (we’ve noticed that our “best” students are generally of this same vein).  He has an extra room and wants to do something that will not only be profitable for him but also help his countrymen by building some valuable computer skills to high school students.  A true “win-win” (sorry Professor Tenbrunsel).  To do so he’ll need 20 computers, a screen, some teaching materials, and various furniture pieces.  Adding it all up he’s looking at about $5,000 to get this off the ground.  As part of the training we’ve given instruction on doing market research and putting together pro-forma financial statements.  Paul is a professional accountant so he knew much of this but he’s done a great job with his market research, determining how many schools are around him, determining the tuition, and talking with the principles to build relationships for not only his existing business but this new venture as well.   He’s built 3 different versions of his pro-formas for different numbers of classes and is doing a sensitivity analysis for price. All in all he’s on his way and the investment amount is reasonable, especially since he has some money he can put into it.  He can choose to start small with smaller classes and scale or start in just one building and then grow to have multiple locations.

Our second example is Illioto who often misses or falls asleep in class because in addition to taking our class he’s doing his residency for pediatric surgery. His idea is to create a clinic and an affordable insurance to enable uninsured children/students (2-14) to have access to medical care.  His idea is grand: a hospital capable of servicing 200 children at a time with 50+ doctors, 75+ nurses, etc… for a target market of 300,000 children in the Port Au Prince area. This won’t come cheap either at $275,000.  However he has an idea to solicit funds from the doctors for the clinic such that they would draw a smaller salary but be equity owners of the clinic.  Since doctors make reasonable money here in Haiti it’s reasonable to think that he could get the $5,500 per person needed to launch this.  Again, this model is replicable and allows him to expand to other locations. While he still has a lot of work to do in order to determine the costs of such an operation, we like this innovative funding model a lot.

So we have two ideas of vastly different scale but with the potential to find the necessary capital and to also expand outside of the initial idea.  Each has the potential to benefit both the entrepreneur and the country at large.  In fact all of the students are pursuing ideas to that end.  It’s just part of the EGI ethos.

Howdy from Haiti

Hello Everyone!

It’s hard to believe Aldo and I have already been here in Haiti for 4 weeks. We arrived on May 22nd into Port Au Prince from Miami and were picked up at the airport by two of our main contacts with EGI, Stephen and Patrick. EGI is the “Economic Growth Initiative”, a non profit focused on helping to develop entrepreneurs here in Haiti. Stephen is one of the founders and now sits on the board of the organization. Patrick is a local businessman who has invested a lot of his time into helping to build Haiti through business. It reminds me a lot of the things we learned in Business on the Frontlines, a unique course Notre Dame offers that highlights the challenges and opportunities of doing business in under-developed countries.

Our “job” here in Haiti has two aspects. The first is teaching a business-plan bootcamp to a group of EGI participants, many of whom graduated from a charter school here in Haiti that Patrick helps run. The charter school accepts promising students from poor families who have shown academic promise in the country’s standardized tests taken between elementary school and secondary school. At the school they learn 4 languages: French, creole, Spanish, and English. It’s quite an amazing thing.

The bootcamp is run 3 nights a week for 2 hours. Aldo and I take turns teaching core business concepts. Week 1 was Accounting, week 2 Finance, week 3 we hit Marketing and week 4 we talked about Operations. The students are very eager to learn and we have had very good in-class participation. Accompanying the teaching we’ve also had them give briefs on local business news and perform SWOT analysis on local businesses to get them used to evaluating things through a business lens. Where are the opportunities, how might this be a threat to my business idea, etc…

Every student came in with a business idea, some of which have morphed over the course of the class. Our secondary job role is to act as consultants to help the students evaluate their specific business ideas in a 1-on-1 setting as well as working with other local business people on occasion. Student business ideas include internet cafes, a computer literacy lab, a reforestation project and a couple of farming operations. We’ve also had a chance to talk to a couple of guys who are farming Tilapia on a massive scale. There’s a lot of opportunity there because they want someone else to do the distribution so we’ve talked about a franchisee model involving some of the students. Nothing is concrete at this point, but it’s good to have some critical discussions about the businesses and help the students things flesh out.

We’re using some online software called Pitch Then Plan that is good for helping to flesh out business ideas. The basic premise is to work on the pitch part first, so you understand exactly what you want to do. Once you understand that and you can talk about it coherently and cohesively, you do all the grunt work to pull the numbers that show your idea is viable. Our students will most likely get only as far as the pitch and we’ll help them start with their numbers but they’ll be well prepared to go out and do the necessary research.

“So how’s Haiti”, you’re probably wondering, I wasn’t sure what to expect when we arrived. You hear lots of awful things about Haiti and I didn’t want to believe them. Most of the rubble from the earthquake has been removed though much remains to be done to rebuild. It’s tough to tell what was already in bad shape before the quake and what’s gotten worse after. The country needs a lot of infrastructure work. The roads are quite bad, most of them unpaved and there’s little accomodation for sewer management so when it rains things just flood. Our electrical access is fairly constant but only because of a plethora of generators and batteries in the areas we visit. Haiti’s public utility company has troubles keeping the power on all the time. Actually the government seems to be one of the biggest problems here but then again where isn’t it. Despite the troubles people here seem to be happy and for the most part industrious. I see people sitting around but they are sitting in front of goods for sale and there are always people milling about. Safety is still a concern so we’ve spent a lot of time at the guest house we’ve been staying at in a region of the city known as Delmas.

Well this is probably enough for a first post. I’ll be writing more to help catch you up on some of the details of our trip. See you soon!