SME DEVELOPMENT(Small & Medium Enterprise)

Presented by:

Bob Kuhlman

Terry Williams

Joe Feth

As an Introduction…

…let me hook you with one of the best fish stories you’ve ever heard…

If you give If you give a man a fish...a man a fish...

……with a twist!with a twist!

Understanding “Business as Mission”Understanding “Business as Mission”

If you give a man a fish…

…he will eat for a day.

If you teach a man how to fish…

…he will eat for…

…as long as he can borrow your fishing pole!

If you give the man a fishing pole……he will eat until the line breaks and he loses all his lures!

However…

If you teach a man how to make fishing poles and lures…

…he will eat for a lifetime.

If you……teach a man how to produce fishing poles and lures,

…train him how to start and run a small business,

…provide him with some investment capital to get started…

Then…

Then he can…

…hire some others who are also poor,

…make many poles and lures,

…sell them to his friends and neighbors as payment for fish!

Then he will eat for a lifetime, his employees and their families will eat for

a lifetime, and many people in his community will eat for a lifetime!

The “marketplace” in the Bible…

• Of Jesus’ 132 public appearances in NT, 122 were in the marketplace.

• Of 52 parables Jesus told, 45 had a workplace context. • Of 40 divine interventions recorded in Acts, 39 were in the

marketplace or public square. • Jesus spent his adult life as a carpenter until age 30 before he

went into a preaching ministry in the workplace. • Jesus called 12 normal working individuals, not clergy, to

build His church. And some of them had questionable professions (tax collector, zealot)

• The Bible makes more references to caring for the poor than it does to heaven, hell or the second coming.

Where we came from…

Integra’s history…

• Roots• Early development• Partnerships and diversification• Refocus• New design• Fueling for growth

Robert FultonIntegra Founder

Poland

Albania

Areas of operation…

Slovakia

Romania

Russia

BulgariaSerbia

Hungary

Croatia

Belarus

The 7 Miracles of Socialism!

1. Each had a job!2. Even when each had a job, nobody did anything.3. Even when nobody did anything, the plan was

achieved more than 100%.4. Even when the plan was achieved more than 100%,

there was nothing in the shops.5. Even when there was nothing in the shops,

everybody had everything.6. Even when everybody had everything, all stole.7. Even when everybody stole, nothing was missing!

SME Kingdom Business Development…The Vision• Profitable and sustainable businesses

• Mature Christian business leaders

• Salt and light in the marketplace

• Stewardship that builds an economic base for local ministry

• Influence and impact in the community both economically and spiritually

A closer look…

Integra “by the numbers”…

EVALUATION CATEGORY

MICRO-ENTERPRISE

(MED)

SMALL/MEDIUMENTERP

RISE (SME)TOTALS

Clients Trained 6,288 1,842 8,130

Employees 4,099 445 4,544

Loans toDate

1,332 107 1,439

Total DollarsLoaned

$3,320,229 $1,980,849 $5,301,078

What is an SME?• Context is critical

– (Serbia vs China vs Brazil)

– SMEs will look different based on it’s location due to culture, politics, natural resources...

• Common Characteristics – Employment — 5-100 employees

– Investment capital — $10k - $500k

– ComplexityAccounting, human resources, legal, banking, mentoring,

education, training…are all important.

David BerlancicCroatia

Needs and Challenges for SMEs…• Lack of capital and banking services• Government corruption• Organized crime• Poor legal systems • Negative view of “work as ministry” by pastors• Lack of access to practical training• Lack of historical models (eg. former communist

countries)• Lack of employment

Oil PartnersBratislava, Slovakia

Who is our target entrepreneur?

• Sees business as a gift from God

• Views the workplace as a mission field

• Seeks to minister to their families, employees and partners

• Desires to glorify God through ethical operations, strong professionalism, and a justice orientation

• Demonstrates a measurable commitment to corporate social responsibility

• Demonstrates a stewardship heart for supporting local ministry

Vili…a story of “Sweet” Success!

• The story…– Business launched in 1992

– $30,000 loan from Integra

– 200+ employees

• Motivation – to provide for…– Family

– Friends

– Church

– Community

• Comfort with equity strategy• Strong accountability• Partnership approach             • Long term interest in the project • Agreeable to seek advice; must be coachable• Operations capability that projects confidence

Equity Investments - Criteria

Oradexim Truck RepairOradea, Romania

• Review project for viability • Verify the principal’s character alignment • Ensure consistency with business climate of the area• Assess legal framework for project• Evaluate the specific integration of

“Kingdom” objectives• Provide a business plan, including…

Integra’s Commitment…

Artkeks Design/BuildSofia, Bulgaria

An Effective Business Plan…• Executive summary• Vision, Mission, Values and

Strategic Objectives• History of project (if expansion)• Business model description• What makes the project unique• Regulatory environment• Competitive analysis• Marketing strategy • Production process if appropriate• Environmental impact

• Financials - 3-years – balance sheet– income statement– cash flow

• Action plans – milestones with dates, – measurable goals– clearly defined responsibilities by name 

• Ownership structure• Management background• Spiritual and social impact 

Window ManufacturerBulgaria

• Ensure strategic assumptions are appropriate• Provide advice on business plan and evaluate the

chance of success• Review capital needs and investment sources• Evaluate managerial competence (local partners and

principal)• Ensure  “Kingdom Objectives”

are achieved

Integra USA Responsibilities…

Orion Medical ClinicSofia, Bulgaria

• Establish appropriate corporate structure• Identify critical legal issues related to the industry• Ensure local legal and accounting resources are

available to the business owner• Provide onsite monitoring of project• Ensure “Kingdom Objectives” are achieved

Local Partner Responsibilities…

Business Services CompanyMoscow, Russia

• Communicate with Integra (in U.S. and on site)• Meet with local Integra partners to review pre-

qualified projects and sponsors• Clarify what equity investment means• Participate with a representative of the

Board of Directors• Provide advice and counsel

as requested

Investor Specific Responsibilities…

Stone QuarryCroatia

• A maximum of 25% sweat equity

• Integra USA earns 5% for services rendered

• Integra local partner earns from 0-10% for services rendered

• Principal(s) earn from 10-20% for value contributed

Principles of Equity Participation…

Warehousing and DistributionMoscow, Russia

Assessing opportunities…

Oradexim Truck, Romania• Owner – Partnership

– Stelian Chereches– U.S. Partners– Integra Romania– Integra USA

• Location – Oradea, Romania• Business – Large truck repair

and maintenance shop• Operation launched –FALL 2008• Kingdom values

– Employs former addicts– Student internship program– Supports two local pastors– Supports orphan program

Assessing opportunities…

Orion Medical Clinic, Bulgaria• Owner – Partnership

– Clinic management– Bulgarian investment group– Integra Bulgaria– US Investors– Integra USA

• Location – Sofia, Bulgaria • Business – Medical clinic providing quality

care through prevention and diagnostics• Operation launched – JAN 2009• Kingdom values

– No abortions performed– Low cost senior citizen care– Medical care for orphans

Real life ministry results… Walking the Talk

• Free healthcare checkups for orphans • Commitment to Pro-Life - Gynecologist was fired after his

attempt to convince the mgr to do abortions in the clinic• Christian materials provided in waiting room• Increased number of church members taking advantage of

provision of quality medical care• The management rejected several offers from some

officials to do favors for money• The process of licensing and establishment of the clinic

took more time, but was done without any bribes• Interest in the Gospel being expressed by clinic staff

including one GP asking to meet with the pastor

Orphans College Program

• 8 Gypsy Students in college

(extremely rare in Eastern Europe)• We care for college tuition, room and

board, clothing, social worker, mentors,

etc…$6000 per student per year • Transition into some of our SME

businesses• Eventually some may develop their own

businesses

Iana Aliksieva – A brighter future!

• Early life spent in state run orphanage

• Enrolled and mentored in Integra “youth at risk” program

• Graduated high school and moved to“transition home” program foryoung adults

• Currently studying pharmacology with goal of owning a pharmacy

• Likely future SME funded business…demonstrating a “cycle of success”!

New Client Development…

Development Stage Albania Bulgaria Romania

Initial Evaluation 4 7 1

Executive Summary 1 3 2

Business Planning

3 2 0

Capitalization 0 1 1

Ongoing CoachingMentoring

1 14 5

Integra’s cycle of

Sustainable Growth

Recent Developments…

• Training partnership with the Joseph Center• Comprehensive business development curriculum

• Financial management training

• Human resource systems

• Marketing assistance

• Annual business impact assessment• 30+ assessment criteria evaluated in six categories

• Baseline “before” and “after” data collected

• Effectiveness / sustainability reported to donors and investors

Client assessment results…

Food for thought…

"Work is an expenditure of energy in service which brings fulfillment to the worker, benefit to the community, and glory to God."

John R. W. Stott

Author, Pastor and Theologian