Promoting small enterprises in Central America by changing business cultures and appropiate technology

Promoting small enterprises in Central America by changing business cultures and appropiate technology

El Salvador
Organization type: 
for profit
$250,000 - $500,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Small Enterprises are at the heart of a healthy economy, a major source of sustainable income and employment opportunities. However in most developing countries, small enterprises are a critical underserved and underdeveloped segment competing with the low cost informal sector and with big companies. It is clearly not a fair competition with small enterprises underserved and with comparative disadvantages in access to financial services, market information, training facilities and technology. It is our goal to put the products and services of small enterprises at the center of business and consumer decision making and hence creating more stable employments opportunities for thousands of people.

About Project

Problem: What problem is this project trying to address?

At this stage the project is focused mainly on San Salvador, the capital of El Salvador, and its surroundings. With a growing population of more than 1.5 million habitants (a quarter of the national population), and with the political, economic and social consequences of a history of civil war, natural disasters and years of neoliberal public policies, there is a tremendous income inequality and a dramatic deficit of employment opportunities in the metropolitan area of San Salvador. This resulted in a sharp increase of the informal sector, high migration of unqualified and even qualified labor force, and an overwhelming state of crime and insecurity. Today San Salvador and its surroundings have the highest indicators of crime in the country and within Latin America. El Salvador is the country hardest hit by the economic recession from which it has not recovered yet. Moreover, while Latin America attracted the major flow of worldwide direct investment in 2010, in El Salvador it dropped by 80% due to political and economical uncertainty and crime. This affected particularly the area of San Salvador which is the area of mayor economic development. However, the metropolitan area of San Salvador is a very relationship oriented, entrepreneurial and open culture that easily connects with engagement and innovation efforts. In the absence of public support it is characterized by an incipient but growing cooperation and social networking between small businesses and organizations serving them. As a consequence new business cultures based on social responsibility and environment are slowly taking off. Machismo survives in a culture where traditional gender roles remain. However, women are increasingly becoming professionals and this is gradually carrying over into the business world. Finally the project promotes as well tens of tourism facilities within the country guaranteeing sustainable employment opportunities for the impoverished local communities.

Solution: What is the proposed solution? Please be specific!

While other agencies organize trade fairs, we bring small business together and connect them directly in a permanent and sustainable way with each other and with consumers by sharing appropriate market information and using an internal payment unit. In contrast with other commercial networks that focus exclusively on merchandising discounts or sales offers and compete for existing purchasing power, we create additional purchasing power through the internal payment unit. This internal purchasing power guarantees solidarity and reciprocity since it can only be spent within the network. In contrast to traditional expensive financial services for small enterprises and consumers, we set loans and credits out to members in internal units without the need for external cash or liquidity which eliminates most financial costs. The additional purchasing power created is backed by the spare capacity of the participating businesses. Thirdly, the platform takes advantage of cheap communication services based on the Internet and SMS to connect members, share information, facilitate payments and account administration. As such it is the first Latin American Business and Consumer network with payments between members by celphone (SMS). Finally, we strongly believe that commercial ties can have important spillovers for good social relations and vice versa. We coach our small enterprises and invest in social networking of members using internet or special events in order to bring people together.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

We developed a unique methodology to promote the products and services of small enterprises with high potential for replication and impact. At the heart of the project lays the consolidation and continuous fomenting of a vast network of small enterprises that suffer from (spare) production capacity. The products and services are then promoted within the network of small enterprises and consumers. This is done through an interactive webpage, social networks on the Internet, messaging (e-mail and sms campaigns) and a call center specialized in market intelligence and coaching of small businesses. Besides promotions and discounts, businesses and consumer members purchase within the network by innovative financial services. Businesses acquire goods and services paying them off gradually by selling their own goods / services to other members. Consumers pay off through interest free credit lines. All this is made possible through the creating and administration of an internal digital payment unit, transferrable only between member accounts by sms or netbanking. The units can only be cashed for products and services at participating businesses which guaranties that the created additional purchasing power stays within the network. As such the small enterprises gain access to a new market of businesses and consumers for whom they become a preferential market option due to the commercial and financial advantages. They increase market shares and improve liquidity since they use their spare production capacity as a means of payment for purchasing goods and services within the network.
About You
About You
First Name


Last Name

de beer

About Your Organization
Organization Name


Organization Country

, SS

Country where this project is creating social impact

, SS

How long has your organization been operating?

1‐5 years

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What stage is your project in?

Operating for 1‐5 years

Share the story of the founder and what inspired the founder to start this project

They are 2 founders of the project: Luis Castillo, Salvadorian and Koen De Beer from Belgium.
Luis Castillo is a former refugee from the Salvadorian civil war and when returning to his country he dedicated his whole working life to the creation of sustainable and innovative services for vulnerable populations in El Salvador by fomenting inclusive social enterprises. He is founder of the Salvadorian foundation FUSAI (Fundación Salvadoreña de Apoyo Integral) and president of INTEGRAL the largest microfinance organization of the country and region. Luis is very active in promoting local development programs through governmental, non governmental and private sector networking.
Koen De Beer was raised in a small Belgian village. After graduating he dedicated his professional career to vulnerable populations, in particular the innovation of financial and commercial services for small businesses, peasants and communities in Latin America where he has lived now for almost 15 years.
Both met in 2004 when Luis Castillo was searching for innovative and sustainable services to constantly strengthen small enterprises in El Salvador and with Koen De Beer inspired by the existence of business networks worldwide that aimed to reduce spare capacity of members. They decided to analyze the best practices of successful business networks and to create a unique methodology based on an internal payment system that could connect thousands of small businesses and consumers in El Salvador and other countries.

Social Impact
Please describe how your project has been successful and how that success is measured

In 3 years, while the country suffered from a severe economic recession, we have connected more than 250 small enterprises with more than 12 thousand business transactions which indirectly created more job security for almost 2 thousand of employees.
In 2010 the network increased business operations by 135 %. Forty percent of member businesses had lost access to traditional financial services but have maintained - and several even expanded - their operations through interest free credit in internal units within the business network.
We have gradually changed the culture of doing business and the way of purchasing goods and services giving preference to small enterprises based more on values of reciprocity and solidarity. After only 3 years and due to our innovative and more dynamic methodology we have already largely bypassed the average number of transactions per member of most other business networks in Latin America.
The social activities that aimed to connect businesses, employees and consumers have been extremely successful and of great social network value. Moreover small business gave an important value to the professional and moral support of a highly committed team. As a consequence and documented by the periodic “member satisfaction surveys” the overall qualification rate has risen up to even 80%.

How many people have been impacted by your project?


How many people could be impacted by your project in the next three years?


How will your project evolve over the next three years?

We will expand geographically and diversify the network, reaching more than 750 small enterprises.
We will connect more than 5000 consumers to the business network, most of them employees of the enterprises members, offering them interest free financial services for consumption, education and health services within the network.
We are working to connect the business network with other networks and organizations who will serve them with technical assistance and training, particularly for social corporate responsibility.
Finally, we will actively share our experience and methodology with other business networks, organizations, local and national governments to further contribute the development of small businesses in the region and worldwide.

What barriers might hinder the success of your project and how do you plan to overcome them?

Business networks become only sustainable in the long run due to important economies of scale. Though all enterprises participating are paying a membership and a transaction fee, financial sustainability will be reached in 2013 according to the business plan, five years after the initial setup.
The project is now searching for the additional and remaining funding that requires the massification phase which has now taken place. It is expected this can be realized through organizations and institutional or private investors committed to small enterprises and to social corporate responsibility.
The growth of the business and consumer network will raise as well new challenges for constantly connecting members and maintaining communication channels efficient. Communication tools based on the Internet, Social Communication Networks and Mobile Services, must be further innovated in order to improve the productivity of staff, to support new services and to remain effective and cost efficient. Member Committees are being created order to involve the entrepreneurs more in the management and direction of the network and improve communication, institutional sustainability and commitment.

Tell us about your partnerships

We have a very strong institutional partnership with FUSAI (Fundación Salvadoreña de Apoyo Integral), an important national development organization committed to the promotion of innovative and sustainable services for vulnerable groups through social businesses and local development programs. FUSAI is the major shareholder and stands for the balance of social and financial goals.
We have a long term partnership with the Dutch nongovernmental organization STRO that provided us with financial assistance in the start-up phase and is now providing technical assistance for the open source transaction platform (Cyclos) and facilitates exchanges of experiences with other networks. Based on a very positive evaluation on behalf of the Dutch Government, STRO is highly committed in the search for further funding in order to further upscale the network.
Since the start up we have a partnership with a growing group of leading professionals committed to the development of small businesses in El Salvador and who have are investing and channeling time and resources into the network.
Since last year we are coordinating with INTEGRAL the leading microfinance organization of El Salvador and have a partnership with the most important business network of Brazil for technical and financial cooperation.

Explain your selections

The project is supported in the first place by individuals, mostly employees, and small businesses that are members of the network and contribute to its growth and sustainability paying a membership fee.

A group of leading professionals committed to the development of small enterprises in El Salvador supports the network either as members of the Board of Directors or as consultants, both on a voluntary basis.

The Foundations FUSAI and STRO are the main stakeholders since the beginning providing financial and technical assistance. During the last year, several other foundations, ngos and associations committed to the development of small enterprises have become new stakeholders through complementing services.

How do you plan to strengthen your project in the next three years?

It is our purpose not to increase membership and transaction fees nor charge interest rates for financial services in the coming years but instead improve revenues, which have been rising steadily in the first 3 years, by expanding and diversifying the network with new members. At the same time we will expand our promotion, communication and transaction tools between members in order to connect more efficiently demand with supply improving the transaction volume and hence increase income from the transaction fee.
Institutional sustainability and commitment will be a key to success. Small enterprises member of the network will be offered the opportunity to become shareholders with representation in the Board of Directors. Moreover, the support and commitment of highly qualified professionals will become even more essential for good management and direction of the network in the massification phase, connecting and affecting directly the livelihood of thousands of economic actors.
Strong institutional, financial and commercial partnerships with leading development organizations such as INTEGRAL (the leading microfinance organization in El Salvador), COMEDICA (representing more than 5 thousand professionals in the health sector) and others will open the network for new members and will make it possible to offer additional commercial and financial benefits to members.
Long term profits will be reinvested in the Business Network in order to improve and diversify services and outreach.

Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.


Lack of access to information and networks


Restricted access to new markets


Lack of efficiency

Please describe how your innovation specifically tackles the barriers listed above.

We identify permanently demand and supply, and connect businesses, making current employment more stable and generate new employment opportunities.
Thanks to the network, several small enterprises have become for the first time supplier of medium companies. On the other hand, by opening the network to consumers small enterprises gained access to a new attractive consumer market and the additional purchasing power created. We create as well business opportunities for young entrepreneurs in the start up phase or fallen angels which impacts favorably on employment opportunities.
By creating access to a new market we reduce the spare capacity of businesses and make them more efficient and more profitable, creating more favorable conditions for long term employment.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.



Enhanced existing impact through addition of complementary services


Influenced other organizations and institutions through the spread of best practices

Please describe which of your growth activities are current or planned for the immediate future.

We are already expanding geographic reach by incorporating small enterprises in the tourism sector throughout the country and other rural businesses within the production supply chain.
Steps have already been taking out to diversify services and benefits for members of the network, both businesses or employees. It is expected that at least 2 new commercial and / or financial services for members will be designed by the end of the year and for implementation in 2012.
Finally, we are very active in the promotion and free exchange of ideas, technologies and best practices of business and consumer networks throughout the continent. It is one of our goals for the next three years to connect existing business networks in Central America and foment the creation of others.

Do you collaborate with any of the following: (Check all that apply)

Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

A very constructive partnership with our main technology provider made it possible to create solutions at reach for small business, consumers, and other business networks.
We coordinate with universities for studying our impact on local development. These surveys have made it possible to fine tune our services and achieve more impact.
We collaborate with several NGOs and organizations committed to small enterprises or professional associations to complement services and share market information, efforts and resources.
Finally by supporting several nonprofit organizations (development opportunities for vulnerable women, HIV infected children, and children with cancer) we succeeded to promote actively social responsibility within the businesses and their employees.