I developed an Excel spreadsheet to facilitate the assessment of microloan applications. Meeting with Gertrude to teach her how the spreadsheet works and to evaluate the first batch of loans with her was a pleasure. Gertrude is the financial manager at Jacaranda Creations, a very bright and wise woman. She had some knowledge of using the computer as well as Excel, but it was a privilege to be part of helping enhance her skills.
We talked through how the spreadsheet worked and what Gertrude would need to do with each application. We also talked about how to evaluate the viability of a given application and how to adjust each application if necessary. Adjustments may be needed if, for example, the applicant overestimates the retail price of the product they wish to offer or if the applicant underestimates the cost of materials. The multi-cultural committee will evaluate those costs to be certain they are all viable.
When evaluating the first few applications, I was dismayed at how little money it takes to help start a business and how long it takes to pay that money back. Mostly, though, I was less than surprised to find that selling the most common of products fails to meet profitability benchmarks. Selling charcoal, for example using the prices common to the marketplace, results in a financial loss. Gertrude and I asked one another how it was possible that our benchmarks weren’t met and yet hundreds of thousands of people were selling this charcoal alongside the road.
We agreed to meet and talk with some vendors to understand if they really do make a profit or if they end up in debt and can’t get out…thus remaining charcoal vendors into the distant future. Oh how this simple principle would help so many…even if they set a profitable prices across all vendors in the market that would be better than selling at a loss. Sigh, how to help a whole country overcome…