Importance of common sense economics for self-employed women
Since I now work with several groups, I was invited to teach the basics of Economics to a group of self employed women. All the participants were engaged in some small economic activity, but were not full time businesswomen. This article is related to the first-hand experience of the program.
Introduction
It interesting to note how development can catch up with women in Tamil Nadu. Women participation in economic activity is increasing day after day. I was much surprised at how this kind of innovation happens at the local level. The housewives need only some little motivation. I was asked to take up only simple concepts and relate only to common sense examples. No elaborate theories. I was clear with the requirement. The NGO representative promised to help in follow up of new ideas.
What seemed very clear was that ideas keep coming one after one. For instance, three women were busy in preparing sweets and distributing it only to bankers on the last working day of the week. It was an assured market. Each banker would buy at least six packets. Three other women started a new catering business. Their innovation was centered around the taste of the side dishes. They made losses for six months. But when the news of their good taste and consistency spread, they were able to see some profit and each earned around Rs. 6500 per month. They provided only morning breakfast in a narrow by-lane of the town.
Since the introduction already provided me some insight, I just concentrated on a)Basics of Economics b)How to create demand and what it exactly means c)Nature of markets d)Why Economics of Scale is so important and e)Beating inflation through systematic saving.Basics of Economics
Without going into the big details, I simply explained how any economy and all economics is nothing but a dynamic interplay of three different variables: investment, supply, and demand. They were asked to refer to their own situation. It became clear that the very strong Chit Fund movement, spread over six small towns, is the main source of their small capital amounts, that never exceeded Rs. 30,000 in most cases. The next was the concept of Demand. I just took up the case of the regular targeting of bankers. One lady mentioned that the housemaid who worked in one of their houses introduced the bank officer, who was very keen to take home some sweets every week. It so happened that the bankers would sell the packets to their friends, but not for a profit. I made the three women understand how they were able to compete with the numerous bakeries around. They understood that their consistency created the assured market and another aspect was the hygiene, since the sweets were prepared in the garden of a rich banker, who volunteered to help them with the space and infrastructure. The women were able to understand the concept of supply. There was excess supply of sweets in the local area, but only those with good quality good sold.How to create Demand
Two women used their mopeds and sold unbranded women inner wear in the surrounding villages. The articles were purchased in bulk from Chennai. There was a good profit margin, as the women travelled only by EMU trains to Chennai. Their husbands would get the big lots from the nearest pick up point on their motor cycles. The bulk textiles were brought to the small town in lorries owned by a relative that took bulk vegetables to Chennai and came back empty. Since they had a tie-up with certain other suppliers, the transport cost was not much for any business person. The relatively much lesser cost of transportation helped them to easily sell their stuff. The wholesalers gave them a credit of 80 days, since they knew the credit worthiness of the women. The women had already created a demand. The key was the magic phrase "Chennai material". Since there was a big craze among rural women for anything that came from the big metro city, the demand was excellent.
I also taught them the basics of Customer Relationship Management. I taught them how to make small notes on the birthdays of the family members. They would then surprise them with a toffee or a small gift and so on. I also requested them to voluntarily take part in their local temple festival. The women promised to do just that and check if the demand picked up. I just explained how the demand can go up when human relationships are good. The women also promised to give me a feedback during the next session.Nature of markets
This became very easy. Every market would either be stagnant or would expand, depending on demand. This is also related to incomes and when incomes are down, the spending will also be less. At least ten of the women had seen the 2008 crisis. They were not into business then, but they remembered the good old days. All the participants were still young, and a few were graduates. The good thing was that they understood how markets operate. Even the bankers expected one small packet of sweets for free during Pingal. This was given to maintain good relationships.
The new learning was for all women to try to enter the gated community of a huge PSU. There was a consistent demand for good stitched material, particularly churidars. When I offered to provide guidance as to how to approach the right officials for entry into the Township, the women started to understand the value of diversification. Three women were already tailors. They saw this new opportunity. The NGO was asked to coordinate for further action.Why Economics of Scale is so important
The NGO official chipped in with some information about a bulk marketing opportunity of organic fertilizers. The women needed to just talk to the numerous farmers. The product is from Erode and they had requested the NGO to help in bulk marketing. Since the women knew the local farmers so well, I was able to explain to them how they could look into this opportunity. I was able to explain the concept so quickly. It was a good input from the NGO. The concept related to each of the three women who showed interest, making a minimum of Rs. 25000 each, if they could help in forging relationships with farmers. This concept was also explained as to how the women engaged in the catering business could also attract the crowd that prayed at three temples nearby. Even if 200 of those who visited these temples to pray could buy evening snacks, and thus the Economies of Scale will really help.Beating inflation through systematic saving
As expected, none of the women were aware of the Post office Scheme for Senior citizens. After all, each of them had senior citizens at home. They only knew the post office RD. I clearly explained the FD scheme and the PPF scheme. I also explained to them how inflation could become a big headache in the years to come. So, the women need additional income. Conclusion
It was a great experience to teach basics of Economics to women engaged in small businesses. Some suggestions discussed above seemed to excite them. Since they are now a bit more informed, hopefully, they will move on to lead better lives. Further programs will help them understand the concepts of economics and how they are related to their business.
