NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The entrepreneurial bandwagon is starting to feel a little full. Everyone from development experts to market research firms seems to be falling over themselves to hail the resourceful small-scale entrepreneur as a savior of poor communities everywhere. Even the uber-hip Trendwatching web site has gotten in on the act, calling minipreneurs an emerging consumer trend in a recent article. How much of this is hype, and how much has real potential?

First of all, minipreneurs aren?t new, so all the talk does feel a bit hyped-up. Microfinance organizations have been funding small-scale business ideas for 30-plus years, and it’s generally acknowledged that entrepreneurs can be a pretty good investment. They deliver development outcomes, too, by providing lower-cost goods and services while building local human and social capital. What are new are the tools and strategies available to help businesses get started and continue growing–and that’s where the real potential lies.

Trendwatching focuses more on A markets, describing how eBay, AdSense, CafePress, and other information technology tools enable customers to become businesspeople. That’s all well and good, but what gets me excited are social entrepreneurs and genuine BOP business models.

Eric Cantor, blogging over at the Acumen Fund, describes how three healthcare businesses have set up frameworks or franchise models and then let their agents/entrepreneurs do most of the on-the-ground work, with great success:

In Acumen Fund’s investment portfolio, Scojo Foundation, SHEF and Drishtee.com are three organizations that rely on enterprising individuals – Scojo’s Vision Entrepreneurs, SHEF’s Community Healthcare Workers (CHWs) and Drishtee’s Kiosk Operators – to leverage the platforms they provide. In serving low-income local markets, these companies, like the online leaders, find that it is challenging enough to build platforms for reliable, quality service delivery for critical health products. They therefore look to these enterprising people – who have a desire to help their communities and wish to make a livelihood out of doing it – to adapt the platform to the local context, provide sales and marketing to end users, and provide feedback and guidance as to improvements needed to the overall programs. These are the real minipreneurs, who shoulder much of the burden of proving these innovative pro-poor business models.

All three businesses work because they’ve developed guidelines–not rigid frameworks–that entrepreneurs have the freedom to adjust based on local conditions. Not only that, but the burden of success rests more with the local agent/minipreneur than it does the central organization–talk about incentives. By sharing costs and risk with local partners, the umbrella organizations gain financial flexibility while maintaining the agility necessary for success at the start-up stage. Not only that, but central franchisors focus on core business needs–suppliers, regulations, marketing–while the day-to-day customer relations business gets handled by franchisees.

Healthcare isn?t the only sector where minipreneurs or franchises experience success. Grameen Telecom works with village-level entrepreneurs to provide phone service in Bangladesh, Uganda, and now Rwanda. Millions of Shakti entrepreneurs work as agents for Hindustan Lever, selling consumer products at competitive prices. Dan Salcedo’s PeopLink puts technology in the hands of handicraft artisans, connecting them directly to their first-world buyers. And Smart Communications has a network of over 800,000 sari-sari street merchants who market cell phone minutes for as little as 2 cents per unit.

Each of these success stories has something in common–an innovative business model that empowers local entrepreneurs to adapt a set of flexible standards as they see fit. You can call it social entrepreneurship, minipreneurialism, or BOP business–or you could just call it effective. Regardless, these models are what holds the most promise for economic and social development in low-income countries, since they build business skills while developing needed goods and services.