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Wednesday, February 13, 2013

Eight Meters Squared: A Colombian startup aims to help small producers at the BoP

By Alan Wagenberg

Photos courtesy of 8M2

Editor's Note: This post was originally published on NextBillion en Espanol

In Colombia, a number of organizations and populations in vulnerable situations have been capacitated to develop productive projects thanks to the support of international cooperation, social responsibility initiatives, and government efforts. With that being said, it isn’t unusual to find indigenous communities with the latest German machinery but no money to buy raw materials; or chefs instructed in the art of high gastronomy without access to adequate ingredients. This is because many of these initiatives lack a business strategy and a vision that can connect supply with demand.

According to the Presidential International Cooperation agency of Colombia, $2.8 billion in international aid money is currently being allocated for 2,560 projects. Of this amount, only three percent goes toward strengthening productivity and competition. As a result, many of these projects fail because they stop generating profits for beneficiaries (through the purchase of raw materials, inventory, labor, etc.) when their products don’t sell. That’s why the Eight Meters Squared (8M2) project, which seeks to support vulnerable communities and small producers in marketing their products, arose.

What is 8M2?

8M2 looks to make the largest positive social and economic impact with the smallest possible space (eight meters squared to be exact). How?

  • Using a locality of eight meters squared so that vulnerable communities and small producers can market their products
  • Investing part of the profits in our providers and/or in capacitation programs (eg, product design)
  • Seeking to be the most transparent undertaking in Colombia by making public all financial statements, costs, profits, margins, impact, supplier lists, etc.
  • Developing a model of governability that promotes the participation of our stakeholders
  • Creating and supporting events and experiences in and from our locality so that people of Bogota, Colombia take more pride in their city

We have a plan that aims to transfer knowledge. To do that, we connect designers with communities. These designers carry out workshops so that communities improve the quality of their products and are more innovative and productive.

We’ve worked with networks like Colombia Green Network to identify new communities that are interested in working with us. We also look to engage volunteers to help with specific tasks like sales, marketing, etc..

8m2 workshop

Every community is different, and some are more empowering and open to change than others. Our work is based on this understanding to achieve points of agreement and mutual adaptability. Community traditions also have to be respected, and their cultures should not be put in jeopardy by imposing ideas. For example, we work with the Recycler’s Association of Bogota, which is very well organized and is doing a great job of marketing itself. We’re working to help them develop newer and more aesthetic products to reach a market with a higher purchasing power.

(Left: an 8M2 workshop on measuring impact.)

In the case of the Wuannan Indians, we’re helping them develop products that respect their traditions, but that can be produced profitably and sold at a price the consumer is comfortable paying. In an analysis we conducted for one of their crafts, a werregue bracelet, we found the Wuannan Indians lose 14,500 pesos for every bracelet they sell.

The greatest challenge is to ensure that products are rapidly marketable, because we want the project to be financially sustainable. This ideal forces us to find and sell more elaborate products of high quality, which tend to be developed by communities that, although small, don't necessarily need our help. So while we continue to grow, we need to be able to concentrate on and help the organizations that need us most.

One thing we’ve learned is how to sell from our home. We’re currently located in the center of Bogota, but are limited in promoting local visits because of mobility problems in the city. We’ve recently developed themed gift baskets, which were sold by catalog by the end of the year. This allowed us to also sell to businesses.

Transparency Policy of 8M2

For 8M2, it’s important to evaluate whether we’re generating value for communities that look to benefit from our services. That’s why we developed a model that allows us to maintain an open conversation with our interest groups (providers, buyers, advisers) so that we’ll know if we’re having a positive impact among these communities.

Another objective of 8M2 is to become a national model with respect to organizational transparency, thus demonstrating that an organization can be economically profitable while having a positive impact on society at the same time.

To that end, 8M2 has been working on different processes and activities. Among them are:

  • Price policy: Publicly breaking down the composition of products and their prices (margins, costs, percent going to suppliers, etc.)
  • Communication Policy: Through our blog , the initiative communicates project information, including financial statements, lists of suppliers, learning, etc.
  • Public meetings: Managerial meetings are open to the public. Workshops featuring experts are held to discuss specific themes like impact measurement.

Challenges and Projections

We’ve worked for just over three months and, like any new project, have had plenty of difficulties in establishing certain processes. With that being said, none of us had previous experience in retailing, and our mistakes were made in the handling and storage of inventory. For now our approach to this project has been to learn by doing, and based on the lessons we learn, to formalize the project and structure our strategy.

The four of us at 8M2 currently also have other jobs. To be financially stable and grow as an organization, we need somebody to work full time. To do so, we’ll be looking for funds to finance the operation for at least six months.

We also need to develop partnerships that are interested in promoting the Concord Market Square (8M2’s current location), for this point of sale to increase sale volume. Unfortunately, the market places in Colombia are half-abandoned and have little commerce. However, we truly believe that these are areas with plenty of potential that can be used to organize cultural events integrating the many spheres of society.

In 2013, we hope to develop a strategy and marketing plan for the next three years while finalizing our social indicators, both environmentally and economically. We‘re also hoping to improve our billing and inventory system, expand our points of sale, participate in trade shows, develop new products with communities, strengthen the production process (production, quality, costs, etc.) and organize trade shows in the Concord Market Square.

For more information on Eight Meters Squared (in Spanish), visit their website and Facebook page.

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    William Davidson Institute
  • Sponsoring Partner

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