ii

IMPROVE YOUR

BUSINESS

BBBAAASSSIIICCCSSS

PRACTICAL MANAGEMENT

FOR SMALL BUSINESS

Greening

SIYB START

AND

IMPROVE

YOUR BUSINESS

SIYB START

INTERNATIONAL LABOUR

OFFICE

iii

Greening

The original publication was developed by the ILO SYB Regional Office in Harare, Zimbabwe and has been revised by the ILO Youth

Entrepreneurship Facility (YEF)

Written by Marek Harsdorff

INTERNATIONAL LABOUR OFFICE

Improve

Your Business

Basics

IMPROVE YOUR

BUSINESS

BBBAAASSSIII

CCCSSS MPROVE

YOUR

BUSINESS

BBBAAASSSIII

CCCSSS

iv

© Copyright International Labour Organisation 1994

First Published 1994

Second revised edition 1995

Third Impression 1997

Fourth Impression 2013

ISBN:

Publications of the International Labour Organisation enjoy copyright under Protocol 2 of the Universal Copyright Convention. For reproduction, adaptation or translation, application should be made to ILO Publications, International Labour Office, CH-1211

Geneva 22, Switzerland. The ILO welcomes such applications.

The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of the materials therein, do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or its authorities, concerning the delimitation of its frontiers. The responsibility for

opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and

commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not sign of disapproval.

About the Start and Improve Your Business Programmes

The Start and Improve Your Business programme (SIYB is a small business training programme

developed by the International Labour Organization (ILO) and is being implemented in over 100

countries worldwide. It is an entrepreneurship and management training programme for potential start-

ups and existing small businesses.

The ILO implements the IYB programme through certified trainers who are developed by ILO licensed

Master trainers. Licensed Master Trainers are responsible for developing capacity of partner institutions

and trainers to effectively conduct SIYB training as well as quality control and programme coordination.

The trained SIYB trainers intern train potential and existing enterprises in SIYB packages. The ILO plays

a critical role of identifying and disseminating best practices, monitoring activities of the Master Trainers,

developing additional Master Trainers, establishing performance benchmarks, quality control and

providing technical advice on the implementation of the SIYB programmes.

About Improve Your Business Basics

The Improve Your Business (IYB) is a management training programme for owners and managers of

small businesses. It introduces basic principles of good business management in a simple and practical

way. The IYB programme aims to make small businesses more viable, and so contribute to the creation

of more jobs.

IYB originates from a programme developed by the Swedish Employer's Confederation for Swedish

small-scale entrepreneurs. Later, the methods and materials were adapted by the International Labour

Organisation (ILO) to meet the needs of people running small businesses in developing countries.

The material consists of separate manuals, each one providing information and exercises around a topic.

The manuals use an active, problem-centred learning approach to small business management through,

for example, short cases and cartoons.

v

ACKNOWLEDGEMENTS

This revised addition of the Improve Your Business Buying Manual was developed by the

International Labour Organisation Youth Entrepreneurship Facility (YEF) for Eastern Africa. The

manual has been revised with a view to making it more appealing to youth entrepreneurs and

address the needs of the young entrepreneurs in the region.

The revision of the Start Your Business Manual and Business Plan benefited from the contribution

of a number of technical experts. Specifically, the technical input and guidance of Julius Mutio and

Jealous Chirove and Merten Sievers enriched the revised manual.

YEF recognises the contribution of Master Trainers from East Africa who provided the feedback on

specific content and examples to be changed in the manual. The contribution of Sibongile Sibanda

in updating and revising the manual is acknowledged.

The contribution of xxx in the layout and design of the manual and of xxx in the development of the

illustrations is appreciated.

vi

HOW TO USE THE IYB BASICS

In this manual you will find:

Stories about businesses. Compare these examples with your own business. Learn from

the stories new ways to improve your own business.

Practical exercises. Do the exercises in each manual to find out how much you have

learnt.

Action plans. Fill in and use the action plan you will find near the end of every manual.

Useful business words. Look up the meanings of business words in this section at the

end of every manual.

Different types of boxes. Each type of box shows you one kind of information. These

boxes help you use the information link content to other IYB manuals

EXERCISE

When you see this hand, the box gives exercises for you to do or questions for you to answer

ANSWERS

When you see this tick, answers are given. Remember to work out your own answers before you

read the answers in the manual.

When you see this arrow, the box tells you where to find more information in the other manuals.

For example: IYB BASICS: MARKETING tells you more about understanding your customers.

When you see this question mark, the box asks you questions about your own business. For

example: Do you use any advertising for your business? What kind of advertising do you use?

When you see this star, the box tells you something which is extra important for you to

remember. For example: The customer is the most important person for your business.

vii

Simba Forest Township Business Community

All the examples in the IYB Basics manuals come from Simba Forest Township adjacent to Simba

Forest. These are not real places but Simba’s small businesses have the same problems as real ones

do.

Business people in Simba share their problems and give advice to each other. They also work together

to improve the use of natural resources such as trees, soil, water and air. In the recent past they were

assisted by a local organisation come up with regulations on environmental management program such

as a waste management system and recycling.

They want their businesses and their community to grow, to create more jobs and become more

prosperous. As the community prospers, sales increase, businesses grow. Business people here are

thinking of starting their own business organisation.

The biggest mobile phone service provider has recently increase network coverage for the community.

As a result a number of internet cafes have been set up improving access to business information and

communication for business persons and their families.

viii

CONTENTS

9

Greening

WHAT IS GREENING?

Greening your business means that you:

Offer products and services that are environmentally friendly

Reduce energy, material and water consumption through high-efficiency strategies

Contribute to preserving or restoring environmental quality, protect ecosystems and

biodiversity

Operate in a way that solves, rather than causes environmental problems.

Minimize and avoid generation of waste and pollution

Offers products that are recycled.

Here are some examples:

Illustration 1: Recycled materials from Metal Fabricators

Metal Fabricators buys equipment that is highly energy efficient such as high energy efficient or gas welding equipment and tools. Instead of raw materials the buy recycled materials such as recycled metal sheets, nuts and bolts,

They use the high efficient equipment and the tools to make and sell products from recycled metal which have the same quality such as gutters, roofing sheets and feeders.

Illustration 2:

Beauty Hair Salon retrofit the salon to safe cooling and heating energy and eco-certified products that are 100% natural such as shampoo, oil sheen and hair tonic.

They use the same equipment to do hairdressing for customers but using less energy for cooling and heating and only eco-certified products that are not harming the environment and are better for your health.

Illustration: 3

Simba Electronics and Accessories buy goods such as photovoltaic (PV) electricity generating solar panels, solar lanterns, solar water heaters and energy star labelled computers and tvs with solar charges and solar batteries.

They resell the environmental friendly goods to their customers.

10

Accordingly all businesses could become Green Enterprises be it in manufacturing, service or

agriculture. To start a green or to green an enterprise two strategies can be pursued:

A business might provide a service or product which is environmentally friendly such Simba

electronics selling solar panels that are producing pollution free electricity. Such a business is

called a ‘Green product or service enterprise’. It refers to the outcome of your businesses.

Ultimately the product or service should be environmentally friendly.

Pursuing the strategy of ‘Greening an enterprise’ means making the process of any conventional

product and service green. Metal Fabricators or Beauty Hair focused on greening their process. It

implies using high-efficiency strategies which reduce energy, materials, and water consumption

and using eco-certified/100% natural products and recycled material in the process.

Both strategies can be pursued separately or at the same time.

Exercise 1

What is the difference between Green and greening?

Football shirt manufacturing

Process

Organize yourselves into two groups:

One will focus on green products (outputs).

One will focus on Greening the process.

Use the picture below and imagine you are the new owner of this factory.

Think of ways to ensure that this business produces both a green product and process.

Product.

70% Polyester 30% Cotton

Organic cotton, natural dying?

In order to assist your thought process, think about:

1. The manufacturing process, and the product, what are the potential effects on the

environment?

2. The assembly line, how can you improve efficiency?

3. How the core materials were created: how cotton is grown, how polyester is manufactured,

and how can the product become a green one?

11

IS GREENING IMPORTANT?

Like any business, green businesses seek to ensure that profits are maintained. Even

more so, as the reduction of inputs from energy, material and water through efficiency

strategies will increase profits. In addition, green businesses try to maximise the use of

natural renewable resources such as plants, wood, wind, sun, water and recycled

waste. Thereby a green business has positive environmental and social benefits in

addition to economic ones. Importantly, green businesses use resources in a sustainable

way meaning that in addition to making profits they care about the environmental impact of

their operations. This is important because your business does not work in isolation but

depend on people, other businesses and the natural environment. If you pollute and use

resources excessively in a non-sustainable manner you will harm not only other people

and other business but eventually your own one.

Metal business

Carpentry business:

Illustration : Employee and carpentry owner looking at the fully deforested Simba Forest

Worker asking owner: We cut the whole forest to supply our chair making, where should I now get the

wood from?

Owner (angry): No idea! Just get me the wood! Replant if there is none! Worker: Replanting takes 4-5 years, if we only had done so at the beginning of our operations….

Illustration: Same picture as above

Beauty Hair business owner: You destroyed the whole forest! Where should I now get my Sheea Oil from? This is my most used hairstyle oil I’ll loose all my clients!

Illustration: Deforested Simba Forest and heavy

rain washing away the soil

Local Farmer: Because you cut the forest the rain is washing away the soil of my field! I cannot plant anymore and my family will go hungry!

Illustration: Recycled materials from Metal Fabricators

Since I bought the efficient welding machine my energy cost are reduced by 1/3! Now that I am collecting and recycling my own wasted metal the cost for raw material went down. I even employed one more worker as I started a new metal recycling business!

12

Exercise 2

Think of what local green business exist in your town or village. If you have time after class

undertake a study visit and search for it and talk to the owner. This exercise or trip is

intended to assist in:

Challenging your ideas about your green business.

Providing unique insight into green business operations.

Helping you to formulate relevant questions to ask senior employees about the

advantages and challenges of operating a green business.

Company Key challenge Resource How it generates revenue

Zoomlion Ghana Limited Excessive sewage and

recyclable goods in the

streets of Accra.

Waste (Waste management) Domestic and industrial

waste collection and

recycling.

As all businesses are either directly or indirectly dependent on nature, there are many

advantages of starting a green business.

Lower overhead costs (gas/electricity) through the use of natural capital (water, soil,

air, energy).

The ability to increase profits through providing specialized products.

Greater employee productivity up to 15%, including greater health and retention as

natural materials are used that do not emit toxins.

Organize yourselves into groups of three or four and think of some green local businesses existent or

potential as well as their contributions to society and how they generate revenue. One example is given

below.

13

There are also environmental advantages of starting a green business.

1. Green businesses reduce the use of fossil fuels such as coal, oil and gas.

Burning coal, diesel and fuel oil releases pollutants into the air affecting human

health and contribute to environmental challenges such as climate change and acid

rain.

A green business reduces the use of finite resources and the reduction of

environmental degradation.

Exercise 3

What are the benefits of Green products and greening?

(Class discussion) Reflect on everything you have learned so far and brainstorm the ways in which

you can benefit from starting a green business compared to any other type of business

14

BECOMING A GREEN ENTREPRENEUR

To be a green entrepreneur, you need a sustainable idea that you are passionate

about.

Being a ‘green’ entrepreneur means going into uncharted territory, therefore you

must be analytical.

As a green entrepreneur, you are likely to create green jobs, which assist both

economic growth and environmental preservation.

Exercise 4

What are some of the essentials needed to succeed as a green entrepreneur?

Competency Description Score

Content knowledge It is important that you or your business partner has in-depth knowledge of the green

product or service that you are about to launch. Are there green incentives for your

business? What is the existing competition?

Problem solving Are you aware of the environmental problems in your area and have you ever thought

of innovative ways to solve them?

Resilience Reacting calmly to unexpected/stressful occurrences. Have you thought of how your

business will adapt to extreme weather?

Innovative To what extent is your business idea feasible, innovative and more importantly green?

High ethical

standards

A company that provides ‘green’ products or services should follow the triple bottom

line (people, planet, profits). Will these values be incorporated into your company

culture?

Analytical skills: Especially important in the ‘green’ sector, as this is a relatively new sector. This means

that you must be cautious. The potential for success and failure are equally balanced.

Have you thought of the different scenarios that may occur during your business

planning?

Support network: Can your work well with others and delegate tasks appropriately? This includes mentors, partners, significant others and other successful green

entrepreneurs. Do you know people whom you can bounce ideas off of and who will

support you?

On your own evaluate your competencies and rate yourself from 1 to 10 (10 being the strongest) on

your green entrepreneurial characteristics.

15

THE GREENING STRATEGY

Every business can engage in a greening strategy which is very simple and not much

different from record keeping. Only that in the greening strategy you keep record of your

inputs with the aim to increase resource efficiency. In addition you account for waste and

pollution so as to reduce the pollution intensity. Hence you track every resource that

comes in to your business and every output that comes out of your business.

Exercise 5

As a first step to your greening strategy, map all the production inputs you depend on.

Write down the monthly quantity and cost of those and the challenges related to those

inputs. Make a table similar to the one below and discuss in a small team the challenges

1.Production

inputs

2. Used for what

process?

3. Quantity 4. Cost 5. Challenges related to

resource use

Water Cleaning, heating litres Water scarcity pollution

Energy Electricity, Fuel

Wood, Charcoal

KWh, litres, kg Expensive, import, no

access, shortage

Raw material Process Kg, litres Expensive, supply shortage

Land Agriculture, building,

industry,

Hectares, m2 No access, allocated to

other use

Building Housing, production

plant

M2 Expensive in maintenance

Machines and

appliances

Processing,

computers, ICT

number Low quality, repair, energy

consumption

Natural cultural

value

Marketing, scenery, - - Destruction of natural

beauty

Biodiversity product

development

- - Loss of diversity, degraded

soil

16

As a second step, look at the waste and pollution your business produces and discuss

challenges for yourself as well as for others dealing with your pollutions. See an example

of the table below.

Waste and pollution Quantity and cost Challenges related to waste &

pollution

Wastewater Pollution of fresh water affecting

e.g. other (fish) business

Liquid hazardous waste

Solid waste (paper,

metals, plastic, glass)

Pollution of environment

endangering human health

Machine, computer,

electronic waste

Emissions Climate Change

Organic waste

Odour Human health

Noise

Visible impairment Cultural value

Now that you have a good understanding of what goes in and what comes out of your

business, there are 3 efficiency strategies, the 3E, you could think of:

Changing your and your workers behaviour

Improving the building, appliances and machines

Substituting or changing machines and processes

17

Exercise 6 Look at the pictures.

1. What is wrong with the carpentry workers? And what should workers do?

..................................................................................................................................................

..................................................................................................................................................

..................................................................................................................................................

..........................................

2. What do you think Beauty Hair could do to reduce energy cost?

................................................................................................................................................................

................................................................................................................................................................

................................................................................................................................................................

................................................................................................................................................................ 3. What has changed in Metal business and how have the workers changed the process?

................................................................................................................................................................

................................................................................................................................................................

.............................................................................................................................................................

Answers at the end

Illustration : Carpentry business, workers are outside looking for wood while the circular saw is running

Manager (angry) : The machine is running!

Illustration: Beauty Hair, doors are open air

conditioning is leaking water and on! Water is

heated with an electric gyser!

Beauty Hair business owner: My energy bill is so high every month in summer, what can I do?

Illustration: Metal Factories

The big welding machine stands outside (label

100 watt). A new much smaller one (label 500

Watt) is inside but also not in use. The workers

are fixing the motor cycle with screws

18

Exercise 7

Have a look at the table below. Reproduce a similar table for your business, listing the

production inputs to the left and see what of the 3E you could do?

Production

inputs

(i) Behavioural change to

reduce inputs or improve

process?

(ii) Is there better

technology?

(iii) Possible

substitution or a

new way of

production?

What Investment

or action is

needed?

Water

Energy:

Raw material

Land

Building

Machines

Cultural

value

Bio diversity

THE GREEN BUSINESS IDEA

Being an entrepreneur and running a business means constantly adapting and searching

for new business ideas. Those ideas can be closely related to the existing business or can

19

be completely new ones. In order to come up with green business ideas think of your

customers’ needs in terms of ‘what product or service would they buy to improve their

health, reduce their energy and water cost and improve their wellbeing through reduced

pollution’.

Excer

Exercise 8

You can start by writing down the energy challenges your customers might face, what

water challenges they face and what environmental problems affect them. Also think of the

impact of waste and pollution, environmental degradation and climate change. Once you

have listed the challenges thing of innovative solutions to these problems which will satisfy

the need of your client.

Energy, water, pollution and

other environmental

challenges

What products or services

would alleviate the challenges

Illustration: Block making enterprise making

cement blocks.

Customer on a construction site thinking: If only the block making enterprise had compressed earth blocks, the cement is causing me respiratory illness, is expensive and badly insolating. And good earth clay is all over!

Illustration: Metal Factories in the background

A women customer cooking on a three stone fire

thinking: If only Metal Factories had a more

efficient cook stove, I would save time collecting

firewood and reducing expenditures for

charcoal!

20

Discuss in groups of 3-5 on the previous ideas and select one that you believe has

potential. These can be fairly simple ideas for potential green businesses in your local

area. Draw up a brief business plan:

Some questions to

consider:

Product/service

description:

What product or service does the business offer?

Potential market:

How big is the market likely to be? Who do you expect to buy

the product or service? Why does your product offer that

others do not?

Inputs needed:

Raw materials (if any), how big a workforce would be

needed? Will you need to have a large amount of capital to

start the business?

Why can your product or

service be considered

‘green’?

Is it using one of the four functions of nature in a sustainable

way?

Is it an innovative idea to increase energy or material

efficiency? Does the good or service protect the

environment?

Name of Green Business No 1:

Details:

21

Your greening strategy and green business idea needs to be fully evaluated to understand

whether your business will generate revenue, this can be conducted using a strategic

planning method called the Green SWOT analysis

Exercise 9

Undertake the following SWOT analysis with your business idea

Strengths:

The strengths are the aspects that will ensure your business has a competitive advantage

for example:

Providing a uniquely green product or service, e.g. a green, portable dry cleaning

service, improved cook stoves, compressed earth blocks

The infinite supply of local raw materials (Wood, Sun, Sea, Wind for energy

production)

Increased operational efficiency (insulating housing material, fuel efficient or electric

motor cylces)

Improved clean environment (less smoke switching from diesel mill to electric mill)

Renewable energy subsidies or carbon credits through emission reductions (benefit

from state or program subsidies for energy efficient and renewable energy)

Reducing the costs of environmental regulation and green marketing (compliance

with waste and pollution regulation might reduce cost and sell to customers)

Weaknesses:

The weaknesses are aspects that may hinder you from reaching your green objectives, for

example

Your unique green product or service might have a limited target market, e.g. only

customers aware of health and environmental benefits might buy organic food

22

Limited technological know how e.g you and your customers might not have the

know how to operate highly energy efficient and new technology

Lack of scale compared to peers due to innovative pilot products and services

Opportunities:

These are external factors that will assist and encourage you to achieve your sustainability

goals, for example:

The growing demand for environmentally friendly products and services (the

environmental services industry is one of the fastest growing industries in the world,

generating $220.5 billion in 2007)

Many regions in the world and notably large parts of Africa are very rich in untapped

natural reserves of renewable energy, materials (clay and red earth for building

blocks), natural beauty (for tourism) and biodiversity (for medicine and restauration)

International institutions and programs are recognizing the importance of green

business and may provide funding

Recognizing the niche in your area, i.e. the product you intend to produce is

becoming popular in the area and nobody else is providing it.

Threats:

Your organizational threats are external aspects that may be harmful to achieving your

eco-friendly objectives, for example:

Lack of recycling facilities in your area.

Lack of green technology importing companies

Lack of export infrastructure to bring green products and agricultural produce to the

growing international market

Environmental degradation limiting the use of natural products and services (e.g.

pesticides killing bees impeding the production of honey, a natural and healthy

product that has beneficial environmental effects (pollination).

Exercise 10

Read the following story and answer the following questions:

1. Carefully analyze Dorit`s non-renovated mobile charging and Cyber Company, list the

problems you see!

2. Identify where she has done innovations, saved costs and improved her business!

23

Kofi’s Business Idea: Solar Water Heaters

Kofi’s father owns a hotel. Kofi was constantly exposed to the wants and needs of retired migrants, tourists

and migrant workers. He realized that there were many complaints about the water heating systems in the

country, if boilers were purchased; there were continuous electricity blackouts making the boilers useless,

additionally generators were unreliable. In his country, hot water was a luxury. Kofi believed that he had

found his business idea, selling solar water heaters, but was unsure if the idea was sustainable. He

consulted his “board of directors” his father’s friends, who were also entrepreneurs and they encouraged

him to move forward with his business idea, the manufacturing and instillation of solar water heaters.

After Kofi had completed all of the important steps of starting a business, presented his business plan to

the bank and acquired a loan, he decided to save costs by purchasing a run-down factory, with the hope of

renovating it in the near future. During the first quarter of business operations, however, he noticed he was

running at a loss. He was experiencing the same problems as the customers he met at hotel. He realized

that the lack of electricity was a major threat to the survival of his business.

He often had to close his factory early because of power cuts, losing productivity time.

The business was unable maintain contact with clients by email or telephone, losing sales

Staff were often unsympathetic and resigned due to intolerable work conditions, creating high staff

turnover.

Kofi meets Dorit – Green business Solutions

In order to solve this problem, Kofi consulted his “green network” to see who else

he could contact as his family was not familiar with green business. He came across

Dorit, a friend from secondary school; he was aware that she had also started a

green business. When he contacted her, he realized she:

Had paid off her loan from the bank

Was making 30% more profits than the previous year

Was exceeding customer needs and

was able to save money to expand the company to another region of the country

Kofi visited her Mobile Charging and Cyber company to gain ideas. After hearing Dorit’s story, he

realized that she was not instantly successful. She had made the same mistakes as Kofi and was spending

more than she was making.

24

Dorit had to make some changes and renovated her business as seen with the picture below:

25

Exercise 11

Greening Kofi’s Business

1. Imagine you were Dorit, how would you suggest Kofi green his process in order to solve his

problems?

2. What lessons can we learn from Kofi’s predicaments?

THE GREEN BUSINESS PLAN

The green business plan must also incorporate the triple-bottom-line approach: measuring

success according to the impacts on the people, planet, and the generation of profit. The

construction of the plan is not an overnight process and may take several weeks to

complete, especially if you are to receive feedback from stakeholders during the process.

Exercise 12

Stakeholder Analysis

Activity 5.2

Illustration: Picture of very large factory,

Very obvious sunlight in the top left corner

No windows,

Brick roof

Smoke coming out of chimney

Member of staff working outside (papers blowing away by strong winds)

Toilet with out of order sign over door with bucket in from of door

Before starting the business plan however, it is necessary to construct a stake holder analysis, as you

should be constructing your plan with stakeholders in mind (A stakeholder is anyone who you will

need and will be impacted by your business, or has a strong interest in what you do or produce)

In groups of no more than 2 write down who your stakeholders are for your business.

Remember that contacts from your Green Network can also be stakeholders.

26

Constructing the plan

This should have your name, the name of

your business, company logo, address and

website (if applicable)

This should include a short description of your business, why your product or services are

unique and how your business intends to generate revenue whilst sustaining the natural

environment. There should also be a financial summary including the funds needed, if

you intend to apply for a loan, as well as how you intend to use the loan once it is

approved. If it is easier, you can conduct this after the plan is completed.

Headings

Personnel, Market Information, The executive

summary

Company Overview, Background information

Suppliers, The Financial Plan

Cover Page, Location and Facilities

Objectives

Below is a list of headings, these headings are key in aiding the creation of a green business plan:

As a class read through the descriptions in the text boxes

Identify which descriptions match the heading provided and write them on top of the boxes

After you have identified the correct elements and agreed as a class, form groups of two or

three.

Pick one heading to focus on and write down how this could be different for a business

focused on greening the process. For example your target market may change from the

general public to other businesses.

Present your ideas to the class.

27

These will support your overall goal; such as the environmental and/or social problems

you hope to overcome in the long term. You must also be able to describe the short term

steps you have to take to reach your targets

For this section it is essential to explain the foundation of your business idea. If the

business is unique to your region or country, explain why this is needed and what

research you have done to prove this.

This provides a short description of what, where, why and how your business will operate.

You should also include

Your competitive advantage, if your business is not unique to your country or local area, explain why

customers will prefer your products. Are your products dealing with major health issues in your region?

Are your prices lower than competitors? Are you contributing to your local or central governments

environmental targets?

You should have an idea if your business is to be run online, or in a store. This will have important

impacts on your green initiatives, such as minimizing your greenhouse gas emissions, greening your

supply chain, and creating local green jobs. If you decide to purchase an existing facility, you should

think of ways to use energy efficient measures which in the long term will save money. In order to acquire this type of information you must understand the wants

and needs of your target audience. Research the trends and if there is a niche

that may be attracted to green products, for example if the market for cotton

shirts is growing, is there space for organic cotton shirts?

You should have an idea and be able to calculate the number of staff you will need. Will you

employ people who are passionate about green business? If you only employ part time staff, when

do you intend for them to become full time members of staff? To what extent will this effect salary

payments and overall profits of the business?

28

Adapting your plan

Writing a green business plan is one of the most important steps to greening and starting

up green business and may be the most challenging. It is always necessary to re-evaluate

and update your business plan to stay in sync with your business environment. By not

updating your plan:

You could miss out on other green business options. For example if technology

develops enabling for more cost effective solar panels you will miss that potential

cost-saving item and miss a revenue opportunity.

You may also lose track of competition. If a major competitor goes out of business,

and you do not adapt your market plan accordingly, you may also risk losing your

business by replicating the mistakes or fail to capitalize on your competitor’s loss.

Constantly updating and re-evaluating your green business plan is crucial in case

you may need further financing after starting your business. It demonstrates to

potential investors that your business is in tune with customer wants and needs and

will also highlight your business successes.

Creating a green supply chain is a critical element of ensuring that you adhere to triple-bottom-line

principles and ultimately reduce costs.

You can build a green supply chain by developing criteria that your company can use to select

suppliers. For example you could choose local suppliers when possible, prioritize suppliers who hire

from underprivileged communities, choose suppliers who also intend to green their businesses.

This is also crucial when trying to secure investments; this should

include an idea of your fixed, variable and startup costs and a cash flow

forecast, with explanations of how you came to such numbers. You may

also want to incorporate unpredictable environmental hazards such as

flooding or drought which may prove harmful to your business.

Illustration: Block making enterprise making

compressed earth blocks instead of formerly

cement blocks.

Boss: We have little customers because they believe compressed earth blocks are less strong and less durable! Worker: We might construct a demonstration house and increase marketing to show that our earth blocks are even stronger!

Illustration: Metal Factories in the background

A worker coming to the business owner: Boss, I

have found this improved cooking stove, it is

more efficient than our planned one!

Boss: Ok, try to come up with a design that

challenges even this more efficient one!

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THE GREEN MARKETING PLAN

As an Entrepreneur of a green business, you might, at the beginning be catering for a

niche market. A niche market is a distinct market which has a particular product or service

targeted towards them. This can be reflected in terms of price, quality, or the region or

area in which the product or service is delivered. Your status as a green, sustainable and

socially conscious business can be a powerful tool to differentiate you from the

competition. This provides the opportunity to create a brand name for your business.

Branding your business involves creating a symbol or sign to allow your target market to

differentiate your product from other goods and services.

There are many advantages of branding:

It encourages the entrepreneur to Identify and understand audience needs better

than anyone else through constant research, innovation and development.

It encourages consistency, if your product is selling high quality solar panels, people

will attach quality to your company brand.

It motivates curious buyers, which may expand your market

It allows for premium pricing, which will increase profits.

Exercise 13

Develop your personal brand for your business idea:

Starting the plan

The marketing plan must clearly describe how you will raise awareness of your products

or services, and set yourself apart from competition— both green and non-green. The

You have all been exposed to brands during your personal and professional lives:

In small groups of no more than three:

Think of or visit your local market or shopping centre and identify as many green brands

as possible

Also think of very big and successful brands such as Coke or Nike and identify their brand

strategy to see what you could copy

Think about how they have differentiated their products or services.

1. How could you use their strategies to enhance your green business ideas?

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most effective marketing plans will include the Marketing Mix. As you will be starting a

green business, this will also differ from a normal marketing mix as it will incorporate the

green mission into every aspect.

Product: You will need to make a variety of decisions about your product, not only should

the name of your company demonstrate that you are running a green business, but your

packaging, and general business practices should demonstrate this. For example your

products should be reusable, recyclable and generate as little waste as possible. You will

also need to assess the extent to which the products and services you offer will affect the

environment. This will allow for future planning and may also lead to the necessary

initiatives to maintain your product's position in the marketplace.

Price: If your green product costs more than traditional alternatives, it is a good idea to

use other areas of your marketing mix to explain why that is the case. As green products

often come with higher prices, you should think about how you will ensure that your

customers realize that premium pricing does not mean paying more, it means investing

and saving costs in the long term.

Illustration: Plastic pole producing business

Panel at factory:

Our poles are 100% for recycled waste!

We reduce pollution and save wood depletion

from Simba

Thereby we improve your health and natural

environment!

Illustration: Metal Factory in background,

customer reading a newspaper

Advertisement in newspaper:

Our cook stove cost 20$!

Yes, this is 10$ more expensive than the traditional one!

BUT in only 3 month you save more than 10$ in charcoal!

And in 6 month our stove comes for FREE!

In 9 month your purchase today means you gained 10$

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Place: This refers back to the green supply chain, whatever sales or distribution channel

you use, you should try to ensure that the greener options save you costs. Try to think of

where you can place your business to apply to your niche market but also attract new

customers.

Promotion: Try your best to ensure that your customers understand that your product or

service is founded on green principles. If you will use promotional materials such as

leaflets, posters, flyers, try to think if it will be possible to use recycled, non-bleached paper

and non-toxic inks, now or in the future. You may want to work with local NGO’s to

promote your product and reach your target market through local institutions such as

schools, universities, or your local government.

People: In order for your green business to flourish, it may be necessary to recruit people

who are also interested in green business principles and are therefore likely to provide

satisfactory customer service. Perhaps you will also like to help your community by

creating green jobs by recruiting unemployed youths, on a full or part-time basis.

Illustration:

Interview situation: Plastic pole production Boss: Why do you want to work for my green business Applicant: I am convinced that Green is the Future! I believe with your business we can increase profits as well as improving and protecting the environment. Eventually we will improve our peoples life!

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Exercise 14

After intense discussions with Dorit, Kofi has realized that he will need to re- launch his business in order

to improve its image. Help to do the Mind mapping and adapt Kofi’s Marketing Mix

Organize yourselves into 5 groups , each representing one of the 5 P’s

Each group should imagine they are renovating the marketing mix for Kofi’s

business

In the center of your piece of paper, write “Greening Kofi’s marketing mix”

In one colour, create an arrow and on top write your specific area of the

marketing mix, underneath explain how you will re-launch that specific

section of the marketing mix

In another colour, produce 4 branches for the other sections and explain

how changing your aspect of the marketing mix may affect the others.

Each group should present their mind map to the class.

Present your ideas to the other groups.

Greening Kofi’s marketing mix”

P…………………………

…..

………………………………

………………………………

………………………………

………………………………

………………………………

………………………………

P…………….

……………………..

……………………..

P………………

P……………….

P……………..

…………………..

…………………..

……………………

……………………

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THE GREEN INVESMENT

Some Green Business ideas or Greening strategies require new buying or investment. These might be

greener appliances or eco-friendly machines. Think of a cell phone charging business that wants to replace

its diesel generator with solar electricity. But before buying new equipment you need to carefully assess

whether the equipment will pay off: You need to calculate the payback period. This is the time you need to

recover your initial expenditures. Most often eco-friendly equipment has very low running cost but

sometimes higher investment cost. For example, the diesel generator could take 100 litres a month to

generate electricity for charging phones and playing music. The solar system has no running cost as the sun

is for free. However, a solar system might be more expensive. The investment cost might be higher.

………………………..

………………………..

Illustration: Solar cell phone charging and music

business

Owner: My solar system runs for free! Thanks to the sunshine. But the investment cost of the system was quite high in comparison to a diesel generator.

Illustration: Diesel generator cell phone charging

and music business

Owner: I am paying 150 USD a month for running my diesel generator and every month fuel price is increasing.

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Exercise 15

As we have seen from Kofi’s case study, investing in renewable energy can be beneficial

as it may be more reliable than the national grid or generators. In the long term it will also

reduce costs.

This may also be your only option if your business is situated in a place where electricity

has not been installed.

Kofi calculated that the irregular electricity supply lost him roughly 60 days a year,

(averaging blackouts of 5 days a month) costing the business an average of $30 a day.

This amounted to:

$360 (12 x $30) lost the first year.

Considering the rate of inflation, at 5%, he decided to calculate his potential loss for the

second year

$540 ($360 x 1.05) potentially lost the year after.

One element that would enhance the business performance would be investing in solar

panels or photovoltaic installation (PV) cells.

$5000 would provide Kofi with a system that can deliver 1600W an hour in full sunlight; the

PV cells have a maintenance cost of $100 a year (2% the cost of the investment).

$5,000

35

Kofi had $3,000 dollars in his savings account but could only spare $1,000; $2,000 was to

repay the loan he had previously borrowed from the bank. Therefore, he was provided a

grant from Dorit of $1,500.

He realized these funds would not be enough therefore would need to take out another

loan for the other $2500. The annual interest on the loan would be 10%.

Investment

$2,500 $2,500

1600W an hour

Maintenance cost : $100 per year

$5,000

Loan from the bank 10% interest

($2,750)

2,500 X 1.10 (as interest is 10%) (If 14% multiply by 1.14)

$1,000 Personal

+

$1,500 grant from Dorit

36

He estimates that in a year, his part of the country has 280 sunny days with 10 hours of

sunlight a day.

The PV Cells can produce 1.6KW (1600 watts) when operating at capacity of 10 hours a

day, 280 days a year.

1.6 x 10 (hours of production) x 280 (days of production) = 4480KW a year produced

Kofi’s government also offers an incentive scheme; the scheme guarantees a minimum

payment ($0.08) for all renewable electricity generated.

Kofi will use half of the electricity (2240 KW) at $0.08 a KW

Kofi also receives income from any surplus electricity, allowing him to sell the electricity

that he doesn’t use into the national grid at a price of $0.15.¨

Kofi will sell the other half of the electricity (2240 KW) at $ 0.15 a KW

Total income:

2240 x 0.08 = $179.2 (electricity generated)

2240 x 0.15 = $336 (electricity sold)

Total = $415.2 (515.2 - $100 maintenance costs)

Kofi uses this to pay off the loan taken with the bank.

$2750 - $415.2 = $2334.8

280 sunny days per year

10 hours per day

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Regarding the next year, he adds an extra 10% as he is charged an annual interest rate on

$2334.8

$2568.28 + $2500 = $5068.28 (total investment)

($2334.8 x 1.1)

The next year the market price of electricity increases by 5%.

The government also decides to increase its payments to follow the market price.

This means Kofi’s income also increases by 5%

Total income:

$179.2 x 1.05 = $188.16 (electricity generated)

$336 x 1.05 = $352.80 (electricity sold)

Total = $440.96 (540.96-100)

He repeats the previous equation to pay off the debt with the bank

$2568.28 – $440.96 = $2127.32

$2340.05 ($2127.32 x1.1) + $2500 = $4857.12

He continues to do this year on year, using money from savings minus the maintenance of

the PV panels to pay off the bank. Slowly, he is witnessing a return on his investments.

Return on Investments

Year

long-term

liability (Debt)

Total investment

(Debt +2500)

Electricity

generated

Electricity

sold

Total Income

( - 100)

Outstanding balance

(Debt – income)

Kofi has managed to find a way to generate revenue from renewable energy

Using the table below, in groups of 2-3 try to calculate how many years it will take for Kofi to

repay his debt to the bank. Remember – These calculations:

Assume that the price of electricity will continue to increase by 5% annually

Assume that Kofi’s need for electricity will stay the same

They also do not take into account any potential profit generated from his business;

which could also be used to alleviate debt.

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1 $2,750.00 $5,250.00 $179.20 $336.00 $415.20 $2334.8

2 $2,568.28 $5,068.28 $188.16 $352.80 $440.96 $2127.32

3 $2340.05 $4840.05 $197.57 $370.44 $468.01 $1872.04

4

5

6

7

8

9

10

Exercise 16

The owner of Metal Factory business entered a business partnership with one designer

and one wood craftsman. As wood and metal are expensive commodities they have

decided to green both their metal and their furniture business as they believe it could

provide them with higher profits. Their business will focus on making metal products and

furniture out of scrap metals and wood.

This business will charge for the removal of commercial waste from small and medium sized

businesses.

They will dedicate two mornings a week for removals at a competitive rate of $50 per clearance

contract.

They will use their large garage to stock their materials and for crafting their domestic furniture and

metal products (doors, windows, fences, lamps, chairs, tables, lights).

They will sell their products both online, for a small delivery fee, and direct to customers.

Their main investment at this stage is their eco- friendly transit van to be used for contracts

and deliveries

Low Emission Compliant Transit Van

+ 10%

Cost: $2,600

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The partners originally had $2,600 personal savings which was just enough to buy the eco-

friendly car, not maintain it. They requested a loan of $1,760 from the bank which was

also charged at a rate of 10% per annum

Investment

How it works:

$2,600 $1760

Maintenance costs (Petrol, MOT, Insurance) $1760

Petrol $480 MOT $80 Insurance $1,200

4,360

Loan from the bank 10% interest

($1,936)

Personal savings account

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The business aims to complete two contracts per week. Therefore, they can earn $100 a

week from collecting waste materials from commercial businesses. This is

$100 x 48 weeks in a year (allowing 4 weeks holiday) = $4,800

They estimate a calculation of $200 a year for the purchase and maintenance of materials

(light bulbs, plugs, carving and engraving equipment, paints, and potential repairs).

Total income = $4,600 ($4800 – $200)

For the first year they will use this to pay off the loan taken with the bank.

4,600- $1936 = 2,664

At the end of the first year we can see that if the contracts are kept at a minimum of two

per week, they will have cleared their debt with the bank, managed to save $2,664 and

made a return of $64 on their entire investment.

The maintenance costs for the vehicle remain, however the business will be able to cover

the maintenance costs from year two onwards.

*Discounting four weeks for potential holidays

Year

Debt

Total

investment

(Debt +2600)

contracts

per week

Revenue

Generated*

Earnings (revenue minus

maintenance/costs)

Savings (Earnings

minus debt)

1 $1936 $4,536.00 2 $4,800 $4,600 $ 2,664

2 (-)$2,664 (-)$64 2 $4,800 $2,840 $5,504

3

4

5

6

7

8

9

10

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It is evident that not all green investments have the same return on investment (ROI)

timespan; as your maintenance costs and startup costs can vary depending on your

business option. In the previous exercise certain aspects of the economy were placed at a

fixed rate:

The increase in electricity prices

Kofi’s need for electricity

The solar panel maintenance cost

GREEN INNOVATION

Innovation is the driver of business. All successful business are founded on innovation. Think of Dr.

Pemberton who invented the recipe of Coke, a new product. The company owners became billionaires.

For this exercise think about greening the “Metal Factory” in the context of your country. Try to

calculate the return on investment if:

In years 3-5 the business has 3 contracts per week and needs more space. Find out the

cost of storage space in your local area.

From years 6-8, they keep the rental space and the price of fuel increases by $20 per

month in year 6, drops by $10 per month in year 7, and increases by $25 per month in year

8. However business dropped to one contract per week

From years 9-10 the business recovered and petrol returned to the normal rate. With four

contracts per week however, they decide to hire an employee on minimum wage to assist

with the clearance contracts on four hours for four days. Use the minimum wage rate in

your country to calculate the return.

Finally - research and/or visit similar businesses and find the price of similar home

furniture products. Try to think about the extra profit the business will make from selling

their products.

Furniture: • Make furniture out of scrap materials, or refurbish old furniture to be sold as

improved.

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Now, think of Henry Ford, he did not invent the automobile, but he invented the assembly line, a new

production process, and made cars much cheaper. In your business you also need to be innovative of your

products and processes. Think of you replicating coke or the assembly line. These products and processes

already exist and by entering these markets you will probably fail because there is high competition. But

not all innovations need to be big and completely new. You can think of making slightly better or cheaper

products or processes and you will be successful in the market.

Worldwide, green product and process innovation is a fast growing field. Because of environmental and

economic concerns of a resource constraint world, companies massively invest into eco-innovations. It is a

promising innovation strategy because it makes products better for customers’ health (e.g. organic food),

better in terms of customers’ running cost and durability (e.g. energy efficient light bulbs, cell phones and

computers or highly insulated low energy houses). It also makes production processes less expensive, more

energy efficient (e.g. improved cooking, solar water heater) and material efficient (e.g. recycled steel).

Exercise 17

Read this true story from the news article published by the Daily Nation in Kenya and answer the following

questions:

1. What consumer need did the D-Smart company address?

2. Why is the hot water iron a green innovation?

3. What are the benefits of the iron?

4. Do you think that the use of the hot water iron is always environmental friendly?

5. What kind of innovation could you think of to make the use of the iron less costly and even

greener?

Kenya Daily Nation, Friday 8 July 2011

Green Youth Enterprise’s hot water iron earns students top award

Illustration: Plastic pole production site

Owner: I invented the plastic poles because they are cheaper than iron, stronger than wood and more durable as plastic is non-degradable and termites will not affect them.

Illustration: Solar lantern lender with solar

lanterns on the bicycle

Owner: I invested into 20 solar lanterns. In the evening I bring the charged lanterns to women who pay 20 Shgs, the amount they otherwise would pay for kerosene. In the morning I collect them to charge them in the sun. I did not invent the product, the lantern, but the process of lending. Many households cannot afford buying lanterns but are willing to pay for better light!

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Joseph Muchuha, a form three student at Dagoretti High School, irons school shirts with a hot water

iron which uses hot water instead of electricity or charcoal.

Under the Junior Achievement Programme which supports entrepreneurship training in-school 11

teenagers had formed a student-run enterprise that would earn them a good profit as well as make

their company competitive. They were trained with ILO’s ‘Start Your Green Business’ tools under

the Green Jobs and Youth Entrepreneurship Facility.

The teenagers learned about business opportunities in energy and material efficient production as

well as in recycling. Sensitized about higher market potential for new innovative green products and

services they settled on creating an iron that relies on hot water to smooth unsightly creases from

clothes and promote neatness in school.

For that, D-Smart - their company - was declared the best student-run enterprise in Kenya. While

announcing this year’s winners, the judges said they were impressed by the innovativeness of the

iron, which had the potential to go large-scale and be sold to Kenyans who have no access to

electricity. “A lot of areas in Kenya have no electricity and this unique and environmental-friendly

product can meet the needs of Kenyans in those areas at an affordable cost,” said Sanda Ojiambo,

the Safaricom Head of Corporate Responsibility and a judge at the event.

Their ironing device, which uses hot water, is quite popular with fellow students. Before the

innovation, students used unsophisticated means to press their clothes, but they were not as

effective. “We ‘ironed’ our clothes by putting them between two mattresses and lying on them

overnight. Now, thanks to the hot water iron, and for only Sh15, students can wear well-pressed

shirts to any function and stand out from the crowd.

The iron is made of simple, easily accessible and recycled materials. A galvanised iron hanger

makes the basic frame onto which black canvas paper for the base, aluminium foil, cotton wool for

insulation and plastic lamination paper are modelled. The school provides hot water to make hot

beaverage in the evenings. It is this water that D-Smart use to provide ironing services to the student

community which is environmental friendly. When D-Smart was liquidated from an initial capital

of Sh7,000, the enterprise returned a profit of Sh25,500. In addition to winning the company of the

year title, they also won the most innovative product award.

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The Solar - Radio.

This is a very creative innovation for people living in areas that

have little or no electricity but lots of sunlight. The solar

empowered radio is a small portable radio with in-built photovoltaic

cells, fixed over a panel.

Advantages include:

The problem of electric-supply or purchasing the batteries no longer exists.

It replenishes electric current with sunlight-generated power, without interrupting the

program or affecting its performance.

It is most economical and affordable.

iBamboo iPhone Speaker

The iBamboo iPhone Speaker is a natural and elegant way to amplify the sound of your

iPhone. Made from sustainable bamboo, the speaker

requires no electricity and is light and robust allowing you

to carry it around.

Advantages include:

It is one of the highest, natural conductors of sound

materials for speakers.

It grows faster than any commercialized plant.

Bamboo is Biodegradable.

Solar Powered Bags.

45

A solar powered bag is a book bag that has

waterproof solar panels designed into each bag.

These bags contain a converter that converts solar

energy into the batteries where you can then run

your laptop, phone or other electronic device.

Advantages include:

For every hour charged in the sun, they can provide 2 - 4 hours on your laptop.

Simply converting to a solar powered bag can help save money when we need to

charge cell phones or other electronics.

These bags can go anywhere with you while looking stylish and in fashion.

Sugarcane Disposable Bowls.

Sugarcane Disposable Bowls allow you to enjoy any event that requires disposable bowls

without worry over the waste going to landfill.

These eco-friendly bowls are fully compostable and are made from a sustainable material.

Advantages include:

They will not absorb oil, nor will they leak.

They can be disposed of in compostable waste, once

exposed to heat, damp and bacteria the bowls will fully

decompose after a few months.

The bowls are constructed from sugarcane fiber, by

making use of it in this way it saves the fiber from being

discarded or burnt.

Clean Energy Water Clock

46

The Clean Energy Water Clock is a digital clock that uses water as a power source.

The Clean Energy Water Clock uses water to create electrical energy. It achieves this

through an electrochemical reaction between the water and the devices electrodes. The

electrical energy that is generated is used to power the digital clock display.

Advantages include:

There is never a worry over batteries running out with the clock,

It can operate from moist soil which allows you to grow small plants in the clock.

Activity 7.2

Innovative Ideas.

FINANCIAL OPTIONS FOR GREEN ENTREPRENEURS

A wide range of financial incentives are available to ensure that Green Entrepreneurs are

supported at the initial stages and during the running of their business.

Some governments, particularly in the Southern Africa have reduced costs for

assets required for Green Businesses. Green Entrepreneurs qualify for an

immediate deduction of half the cost of the equipment, including the installation or

erection costs if applicable.

As we have seen from these examples, green technology can be created from any aspect of the

environment.

On you own:

Carefully analyze your place of residence.

Identify one item and think about how you can transform it into a sustainable/green

innovation.

You must use alternative ideas from those displayed above.

Either present your ideas to the class or discuss individually with your teacher.

47

The South African government has implemented a Renewable Energy Feed-In

Tariff (REFIT); especially beneficial for solar power as tariffs are guaranteed for 20

years, without digression. Therefore you are guaranteed a certain price for selling

any unused energy back to the national grid.

Each technology is eligible for a different tariff, since the costs differ in each case.

This is advantageous as Entrepreneurs can plan their investments on a long-term

basis.

The REFIT System.

The clean development mechanism (CDM) allows developers of low carbon

projects in Africa to generate carbon credits and sell them in the carbon market,

thus obtaining additional financial resources.

Carbon credits

A carbon credit is a permit that gives a company the right to emit a specified amount of

carbon compounds into the atmosphere. Carbon credits can be purchased if emissions are

expected to exceed the quota or sold if the Quota is not reached.

As a Green Entrepreneur, you are at an advantage as you will be awarded carbon credits

and will be able to trade them or sell them. One option would be to sell them to

businesses which are in need of extra credits as their emissions are expected to exceed a

quota. Ultimately, this will allow you to generate an additional source of income.

48

Activity 8.1

Research for Finance

MONITORING AND EVALUATING YOUR GREEN BUSINESS

Monitoring and evaluating the progress of your business is crucial in ensuring that it

remains profitable. The importance of this process is often undermined. Constantly

evaluating your business:

Knowing exactly how you can benefit from the incentives your government provides, or the funding available is not an

easy task. Exchanging knowledge provides a platform for generating ideas, working together and networking.

On your own or in groups research green business incentives, through contacting your “Board of Directors”

and “Circle of the Task”, via the internet, visiting your local government, visiting Non-Governmental

Organizations or International Organizations that promote sustainable development and/or Green Jobs.

Keep the key words in mind when researching on the internet to give you a head start.

Give your selves two days to find out what incentives are available and how this relates to your business.

Present your findings to the class.

Key words.

REFIT, Green incentives, carbon credits, carbon markets, CDM, green

microfinance / enterprise funding, donors, Green Business Competition

49

Will help you improve your planning process and ultimately your personal skills as

an evaluator and program planner.

It provides an opportunity to make adjustments to the business plan

It encourages you to find solutions to difficulties before major problems arise.

It adds value to the business as employees are consulted on a regular basis.

Examples of monitoring and evaluation techniques include:

Focus Group discussions (Talking to your employees about what can be done to

improve the business).

Direct observation (monitoring the daily functions of the business)

Questionnaires (a good method for people to voice any concerns covertly)

Report Writing (This is a good way to evaluate the findings of your business).

Activity 9.1

Monitoring and Evaluating – Kofi’s solar Water Heaters.

Learning Matrix

In chapter 4, we saw that Kofi had problems with his finance, electricity, his sales, productivity and staff

turnover. We have explored ways in which Kofi could improve the overall image of the business, by comparing

it with Dorit’s and using the 5 P’s. Now it is essential to ensure that the business remains profitable.

In groups, of 3 or 4 discuss and list all of the changes that were suggested in activity 4.2 and activity 6.2

for Kofi’s business.

Using the learning matrix below, write down things that your group believes are now positive about the

business and in the other section, any potential improvements that still need to be made.

Under the light bulb, suggest creative monitoring and evaluation techniques to ensure that the

improvements become positive aspects and the positive aspects of the business remain that way.

50

Monitoring and evaluating waste production

The 3 R’s, Reduce, Reuse and Recycle is one crucial way in

which a green business can manage waste production, improve

efficiency and ultimately maximize profits.

Reducing is the most important step; it includes altering your

businesses consumption. Most businesses provide excess product packaging that a large

majority of customers will throw away; this is one area that you should try to avoid if you

choose to create a green product. There are many ways to achieve this:

51

Reduce packaging, the Size and where possible the weight of any packaging you

provide, this reduces unnecessary expenses.

Try to reduce Produce naked products; if you wish to produce an eco-friendly soap

can you design it in such a way that it is attractive without packaging?

Reusing also increases efficiency, reduces waste and ultimately increases profits. It

includes reusing old or excess assets and still ensuring a profit is made. Some ideas for

reusing in a green business include:

Reusing containers, you may wish to create incentives for customers to return used

packaging, perhaps discounts on the next purchase for refills or cash back for

returned packaging.

You may wish to use the unwanted packaging for another purpose; this involves

turning the packaging into an entirely different product, reselling it and creating

another form of income for the business.

Recycling is the third priority in the 3Rs efficiency strategy. Just like the repurpose

process, it might be carried out when reduction and reuse are not possible. Recycling can

provide new raw material from wasted material. Therefore, recycling prevents waste

disposal and the extraction of raw materials. The benefits of recycling to your business are:

It is a good way to handle the waste your business produces.

It can provide cheaper raw materials, which reduces costs and the environmental

impact.

Activity 9.2

Now think of your Green business and the waste it is likely to produce.

In groups of four, think of what can be reduced, reused and recycled.

Then also think of what can be “repurposed”. Try to be as creative as possible.

Discuss what measurements will be put in place to ensure maximum use of recyclable products.

Think how you will use non-recyclable waste e.g. Creating a compost heap like Dorit.

52

Business Name or

(Student Name)

Reduce Reuse Recycle Repurpose

ADAPTATION TO THE CHANGING ENVIRONMENT

Developing states are particularly vulnerable to the effects of climate change. The

increased occurrences of flooding, drought and deforestation have further deteriorated

their natural environment. The two main ideologies focused on dealing with such issues

are:

53

Mitigation, this refers to the reduction of emissions per unit of output and halting

deforestation. In particular, there is an emphasis on shifting from fossil fuels to

renewable energies.

Adaptation, this is the process of ensuring that your business is resilient to the

impacts of climate change, such as flooding, heat waves, droughts and other

extreme weather events.

A large majority of developing countries have a legitimate need to increase their energy

supply. To do this sustainably, they should be able to develop clean energy sources. There

is enormous potential for this, because they have an abundance of renewable energy,

especially solar energy which is an emerging market. Adaptation is especially important

because the global mitigation efforts cannot outweigh the rapid occurrences of climate

change. Typical changes in the environment that will have a direct impact on your

business are:

Deforestation

Pollution (air, waste)

Lack of resources (Water, wood)

Degradation (Soil erosion, floods)

A good entrepreneur will plan in advance and adapt his or her business continuously.

For example, Fishermen might engage in sustainable fishing to secure their continuous

supply of fresh fish. A business that loses workers due to sickness as a result of

extensive toxic waste water, might invest in a sewage plant to secure its water supply

and recover the health of its workers.

ctivity 10.1

Mobile learning – Adapting to my environment

It is essential to understand the environment in which your business will be based.

On your own or in groups explore your environment.

This may be the location where you intend to set up, or the location of your competitors.

Can you identify any signs of environmental hazards or degradation?

You may wish to reflect on the environmental threats established in the SWOT analysis

If not, speak to your contacts from your “Circle of task” and “Board of Directors”, they

may have a better idea of how conditions have changed over the years.

Take pictures of the surroundings and/or take notes from what you see and hear.

Think of ways in which you may adapt to the environmental changes and discuss this with

the class the next day.

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Summary

How can I ensure that my business

adapts to the environment?

55

ANSWERS Exercise 1

1. Regarding the process, if fossil fuels such as diesel is used for heating and

electricity generation there is pollution from emissions. If there is no water

treatment, contaminated water from the dying process will pollute the river.

Regarding the product, if chemical dying products are used they will be dangerous

for the environment. If polyester is used, a from oil derived synthetic product, it will

impact the environment along the supply chain when extracted and then

manufactured. If cotton from conventional agriculture is use, it might have negative

impacts when chemical insecticides and fertilizer is applied when growing.

2. Machines can be highly energy efficient, material use could be optimized, lean time

could be reduced to reduce energy consumption, overall running time of machines

can be reduced through more efficient organization, insulation can be improved for

better cooling or heating, natural light might replace electric lighting.

3. Natural dying chemicals can and organic grown cotton can be used.

Exercise 2

Key challenges can be:

High energy, water and material consumption

Lack of energy, water and materials

Soil erosion, extreme weather events, forest degradation, waste and pollution

Key resources can be:

Waste and recyclable resources

Natural products that are harvested sustainably: wood, non timber forest products

such as fruits, meat, honey, invasive species, herbals etc, organic fertilizer, eco-

charcoal from organic waste or sustainable wood, soil and clay

Natural services: Wind, sun heat, water flow, sun light, biodiversity (medicinal

products, biodegradation for composting), integrated pest management from

microorganisms to control pests etc.

Revenue from key resources

Energy production from wind, sun, water flow, biomass

Organic fertilizer production from organic waste

Recycled paper, glass, plastic, metal etc from waste

Natural building materials and compressed earth blocks from clay and earth

Exercise 3

Key benefits are

56

Improved health and healthy environment for customers

Reduced running cost from energy production

Improved energy, water and material efficiency

Reduced pollution

Increased biodiversity

Long term sustainable production

Exercise 4

If you rate 1-3: You are not a green entrepreneur

If you rate 4-6: You are not very green but you have potential

If you rate 7-10: You are a green entrepreneur and might become successful green

business

Exercise 5

If you have filled all the cells in the table as provided you have succeeded and you need to

do continue doing it every month to see improvement. If you have mission cells, talk to

other business owners and find out how they did.

Exercise 6

1. The carpentry business should be better organized. First, the wood

for the day to saw should be prepared and stocked close to the saw.

Only when every thing is ready the machine should be started and

only used as long as there is work to do.

2. Beauty hair could first close the door to keep the cool air in and

switch off the aircon if no clients are in (behavioural change).

Further, the aircon need to be fixed, water is dropping, and the filter

cleaned, this reduces energy (improvement). In addition, Beauty

hair could improve the roof and window insulation which will reduce

the need to cool and install a solar water heater (substitute and

invest).

3. A new welding machine which is smaller and consumes less energy

was purchased. In addition, the workers changed their way of

repairing. Instead of using welding, they used screws to fix the

motor cycle. Sometimes there are alternative innovative processes

which require no energy. This requires innovating its business and

out of the box thinking.

Exercise 7

57

Production

inputs

(i) Behavioural change to

reduce inputs or improve

process?

(ii) Is there better

technology?

(iii) Possible

substitution or a

new way of

production?

What Investment

or action is

needed?

Water Metering usage, Reduce

total use and losses ,Reuse

water

Low-flow aerators Water harvesting,

use grey water

Invest into grey

water usage

system

Energy: Metering usage, Switch off

lights & machines when not

run

Automatic sensors Solar water heaters,

LED light

Switching from

fossil to renewable

Raw material Reduce scrap,

Dematerialize design and

substitute materials

Machine better

yields

natural renewable

materials ( concrete

vs. clay bricks)

Buy compressed

earth block

machine

Land Trees planted beneficial species? conversion into

garden, forest

Get tree seedlings

Building Windows, doors, equipment

changed to save on energy?

Refurbish building Newly designed? Contract workers

to insulate house

Machines Operating machines

reducing consumption?

Are there more

efficient ones

can they be

substituted

Optimize energy

and material use of

your machines

Cultural

value

Protection of natural

heritage sites

other sites with

value

Marketing natural

beauty

Give your

business a Green

brand

Bio diversity Protection of natural sites

and management of

biodiversity

sites with value medicinal, cultural

or economic value

Improve diversity

on your land

Exercise 8

The following only provide some examples and the list is not comprehensive

Energy, water, pollution and other

environmental challenges

What products or services would alleviate the

challenges

Forest loss Improved cook stove to reduce charcoal

Congested sewer system due to waste Waste collection and cleaning business

High and variable kerosene and diesel cost Solar lanterns and solar system to produce

electricity

Climate variability Weather information system and drip irrigation

Degraded soil Organic fertilizer and land protection through

tree planting

58

Exercise 9

If you found 3 entries for each of the strength, weakness, opportunities and threats you

are well done. If not, ask your business friends to help you.

Exercise 10

Problems include:

The high cost for fueling the generator, which continued to rise as her government reduced fuel

subsidies.

The generator also caused a large proportion of noise and smoke pollution

Lack of available clean water, therefore the building and staff practice were below sanitary

standards, this significantly reduced her number of customers.

The building was poorly designed, Copper roofing, which meant overheating in the Cyber Café.

Sporadic electricity, further deteriorating her business.

Dorit had also not installed a system for disposing of her damaged items.

Solutions include:

Solar system

Water harvesting

Natural insulation of building

Tree planting for natural shading

Recycling of electronic and paper waste

Dry eco-toilet

Gardening to add business and improve business image

Exercise 11

Kofi could green his process by:

Natural lighting and cooling

Improved eco-friendly sanitation

Renewable energy usage

Waste and recycling

Increase of energy and material efficiency

Exercise 12

Cover Page

This should have your name, the name of your business, company logo, address and website (if applicable)

The executive summary

59

This should include a short description of your business, why your product or services are unique and how

your business intends to generate revenue whilst sustaining the natural environment. There should also be a

financial summary including the funds needed, if you intend to apply for a loan, as well as how you intend to

use the loan once it is approved. If it is easier, you can conduct this after the plan is completed.

Objectives

These will support your overall goal; such as the environmental and/or social problems you hope to

overcome in the long term. You must also be able to describe the short term steps you have to take to reach

your targets

Background information

For this section it is essential to explain the foundation of your business idea. If the business is unique to

your region or country, explain why this is needed and what research you have done to prove this.

Company Overview

This provides a short description of what, where, why and how your business will operate.

You should also include

Your competitive advantage, if your business is not unique to your country or local area, explain why

customers will prefer your products. Are your products dealing with major health issues in your region? Are

your prices lower than competitors? Are you contributing to your local or central governments environmental

targets?

Location and Facilities

You should have an idea if your business is to be run online, or in a store. This will have important impacts

on your green initiatives, such as minimizing your greenhouse gas emissions, greening your supply chain,

and creating local green jobs. If you decide to purchase an existing facility, you should think of ways to use

energy efficient measures which in the long term will save money.

Market Information

In order to acquire this type of information you must understand the wants and needs of your target

audience. Research the trends and if there is a niche that may be attracted to green products, for example if

the market for cotton shirts is growing, is there space for organic cotton shirts?

Personnel

60

You should have an idea and be able to calculate the number of staff you will need. If you only employ part

time staff, when do you intend for them to become full time members of staff? To what extent will this effect

salary payments and overall profits of the business?

Suppliers

Creating a green supply chain is a critical element of ensuring that you adhere to triple-bottom-line

principles and ultimately reduce costs.

You can build a green supply chain by developing criteria that your company can use to select suppliers. For

example you could choose local suppliers when possible, Prioritize suppliers who hire from underserved

communities, Choose suppliers who also intend to green their businesses.

The Financial Plan

This is also crucial when trying to secure investments; this should include an idea of your fixed, variable and

startup costs and a cash flow forecast, with explanations of how you came to such numbers. You may also

want to incorporate unpredictable environmental hazards such as flooding or drought which may prove

harmful to your business.

Exercise 13

There is no solution to a successful brand, important that you cover the benefits

customers gain by purchasing your product or service or in terms of quality or price!

Exercise 14

If you have a strategy for people, place, product, price and promotion you are fine, try it

out it is only the market you can tell. If you are missing elements, read through the

explanations again and try to get ideas based on the examples provided

Exercise 15

Year

long-term

liability (Debt)

Total

investment

(Debt +2500)

Electricity

Generated

Electricity

sold

Total

income

(- 100)

Outstanding

balance (Debt -

Income)

1 $2,750.00 $5,250.00 $179.20 $336.00 $415.20 $2,334.8

2 $2,568.28 $5,068.28 $188.16 $352.8.0 $440.96 $2,127.32

61

3 $2,340.05 $4,840.05 $197.57 $370.44 $468.01 $1,872.04

4 $2,059.24 $4,559.24 $207.45 $388.96 $496.41 $1,562.83

5 $1,719.11 $4219.11 $217.82 $408.41 $526.23 $1,192.88

6 $1,312.17 $3,812.17 $228.71 $428.83 $557.54 $754.63

7 $830.09 $3,330.09 $240.14 $450.27 $590.41 $239.68

8 $263.65 $2,763.65 $252.15 $472.78 $624.93 (-)$361.28

Year Profit

Total

investment

(2500 - profit)

Electricity

used

Electricity

sold

Total

income

(- 100)

Savings

(profit + income)

9 $361.28 $2,138.72 $264.76 $496.42 $661.18 $1,022.46

10 $1,022.46 $1,477.54 $277.00 $521.24 $698.24 $1720.7

However it will take a few more years to accumulate the entire return on investment ($5,000). At this stage,

$2,763.65 of Kofi’s investment still needs to be recouped. Students can choose to calculate this in their

leisure and may restructure the table, as shown with the one above, to avoid confusion.

Exercise 16

Year

Debt

Total

investment

(Debt +2600)

contracts

per week

Revenue

Generated*

Earnings (revenue minus

maintenance/costs)

Savings (Earnings

minus debt)

1 $1936 $4,536.00 2 $4,800 $4,600 $ 2,664

2 (-)$2,664 (-)$64 2 $4,800 $2,840 $5504

3 (-)$5504 3 $7200 $4,424 $9,928

4 (-)9,928 3 $7200 $4,424 $14,352

5 (-)14,352 3 $7200 $4,424 $18,776

At the end of year 8 Kofi will have paid off the loan with the bank, and made a surplus of $361.28

62

*Discounting four weeks for potential holidays

(Calculations based on EU estimations, to be used only as an indicator of potential profits as students

will research and form their own calculations)

Office space $68pm, petrol $40pm, equipment $200pa Minimum wage$5.50ph

EXERCISE 17

1. Customers’ need is to iron

2. It is a green innovation because it is from recycled material (green product) and uses a potentially

greener source of heat (hot water instead of charcoal).

3. It is cheaper because from recycled material and it potentially increase energy efficiency by using

in large quantities heated water instead of individually heated charcoal irons.

4. If the hot water is heated by very inefficient three stone fires with charcoal originating from

virgin and cleared forest the use of the iron is not environmental friendly.

5. Use or innovate a solar water heater system to heat water for the iron

USEFUL BUSINESS WORDS

WORD THE WORD MEANS MORE ON PAGE

6 (-)$18,776 1 $2,400 (-)$616 $18,160

7 (-)$18,160 1 $2,400 (-)$496 $17,664

8 $(-)17,664 1 $2,400 (-)$796 $16,868

9 $(-)16,868 4 $9,600 $2,600 $19,468

10 $(-)19,468 4 $9,600 $2,600 $22,068

63

64

There are seven IYB Basics manuals. Each manual helps you solve problems and improve one

important part of your business.

Illustration

IYB BASICS: MARKETING helps you provide what

your customers want

Illustration

IYB BASICS: BUYING helps you buy goods,

materials and equipment

Illustration

IYB BASICS: STOCK CONTROL helps you keep and

control stock

Illustration

IYB BASICS: COSTING helps you calculate the costs for your products or services.

Illustration

IYB BASICS: RECORD-KEEPING helps you keep and use records

Illustration

IYB BASICS: FINANCIAL PLANNING helps you make

plans for cash, costs and sales

In these manuals you

will learn…

Basic Business

Illustration

IYB BASICS: People and Productivity helps you

65