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The "missing middle" of small businesses with Shamina Singh

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With all of these programs, we're engaging a diverse group of partners across sectors with the ultimate goal of developing lasting solutions that can benefit the greatest number of micro- and small enterprises.Modernizing small retailers in MexicoWhile many policymakers focus on bringing mom-and-pops into the formal sector, we believe it’s equally important to help these shopkeepers modernize their stores to keep their businesses competitive. We’ve learned that small changes can make a big impact – everything from improving signage to making prices clear, adding better lighting and streamlining bookkeeping can help boost these shops’ bottom lines. The question is, then, how can we deliver this kind of training in ways that are convenient, accessible and useful for large numbers of shopkeepers?&nbsp;&nbsp;&nbsp;In Mexico, we’re working with local organizations, along with researchers from Stanford’s Graduate School of Business and the World Bank on two interventions to help small retailers modernize. Using a “train not teach” approach, the focus is on practical, hands-on changes. The&nbsp;<a href="https://kingcenter.stanford.edu/news/retail-modernization-emerging-markets-strengthening-retail-backbone-economy" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">first program</a>&nbsp;works with small retailers in Mexico City to help them focus on areas such as the customer experience and to overcome their worries that modernizing will signal higher prices and scare away customers. The&nbsp;<a href="https://kingcenter.stanford.edu/news/retail-modernization-emerging-markets-strengthening-retail-backbone-economy" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">initial results</a>&nbsp;have been promising: those businesses that incorporated the specific practices saw sales grow by 11 to 17 percent.Building on these initial insights, we’re supporting a second program in Guadalajara, Mexico, that offers digital payment tools combined with specific training nudges to understand the drivers of technology adoption and use.&nbsp;&nbsp;Using digital channels and solutions to&nbsp;support entrepreneurs at scaleWhile the programs in Mexico show promise, we’re also asking how we can support small and micro-entrepreneurs on a larger scale. Digital and online channels are primed for such reach.<a href="https://www.fundes.org/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">FUNDES</a>&nbsp;in Colombia is developing its digital financial training approach by leveraging a 15,000-strong shopkeeper community on Facebook called&nbsp;<a href="https://www.facebook.com/entretenderosco/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Entre Tenderos</a>.&nbsp;FUNDES is delivering financial and management content, including videos and mini-modules of teaching material, to the Entre Tenderos network. The videos include a relatable character – Don Jesus – who provides encouragement and motivation to businesses to make improvements. FUNDES is also developing a virtual coach to help shopkeepers manage and optimize their inventories.In partnership with the Center,&nbsp;<a href="https://juntosglobal.com/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Juntos</a>&nbsp;is using its expertise in delivering digital content to underserved consumers to offer a text-based (SMS and WhatsApp) training program for underserved entrepreneurs in Colombia. Business owners receive content such as marketing and accounting tips by text and can ask follow-up questions to customize their own learning experiences. Juntos relies on a combination of automation, machine learning and human staff to conduct these two-way educational conversations with tens of thousands of merchants simultaneously. Working with two large financial service providers—Bancolombia and Movii —we’re testing the effectiveness and engagement levels of the training tips and reminders. These initial insights will help us better understand how we can reach entrepreneurs through these channels at scale with useful content.Another example of reaching greater numbers of entrepreneurs with know-how is a&nbsp;<a href="https://academy.connectamericas.com/enrol/index.php?id=127" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">virtual accelerator program</a>&nbsp;for high-potential, women-owned businesses, like an&nbsp;<a href="https://www.linkedin.com/pulse/bright-spots-central-american-women-entrepreneurs-driving-luz-gomez/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">organic farm and food producer</a>&nbsp;in Nicaragua or an early education center in Costa Rica. The project is designed by INCAE Business School, one of the leading business schools in Latin America, and builds on a successful curriculum,&nbsp;<a href="http://x.incae.edu/incae-mastercard-leads-mujeres/" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">LEADS Mujer</a>, delivered&nbsp;in person. Moving a portion of the courses online with webinars and other content means their valuable business advice can reach thousands. Already 1,600 women have signed on since March.&nbsp;Initiatives for entrepreneurs globallyDigital training is only one aspect of our work with small entrepreneurs globally.&nbsp;<a href="https://www.mastercardcenter.org/insights/powering-digital-transformation-to-help-small-businesses-thrive" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Through our support of Accion International</a>, we’re working with financial service providers in the region such as CÍVICO, a digital platform that connects small businesses and individuals to financial tools that can help them to enhance their businesses. For many, this is often their first opportunity to use quality digital financial services that can make a real difference in modernizing their business.In other regions, Mastercard has joined forces with&nbsp;<a href="https://www.mastercardcenter.org/insights/unlocking-growth-small-retailers-emerging-markets" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Unilever</a>&nbsp;to help shopkeepers in their distributor network access affordable credit while delivering training on how to use that credit responsibly and effectively.With all of these programs, we’re engaging a diverse group of partners across sectors with the ultimate goal of developing lasting solutions that can benefit the greatest number of micro- and small enterprises. We look forward to sharing the insights from this work to help ensure greater numbers of entrepreneurs can reap the full benefits of an increasingly digital economy.<a href="https://www.mastercardcenter.org/insights/las-herramientas-digitales-pueden-ayudar-a-los-negocios" rel="noopener noreferrer" target="_blank" style="font-size: 16px;">Click here</a>&nbsp;to see the Spanish-language version of this post.&nbsp;

Mastercard supports several programs in Latin America using digital tools to train and support striving entrepreneurs.

In Mexico they’re called tienditas, in Kenya dukas and kiranas in India or sari-sari shops in the Philippines. These ubiquitous mom-and-pop shops are a mainstay of neighborhoods around the world, selling everything from Maharashtrian lonches to cleaning products to Jarritos soda. In India, the nearly 12 million mom-and-pops <a href="https://www.thehindubusinessline.com/opinion/columns/the-kirana-store-will-remain-evergreen/article24016592.ece" target="_blank">dominate grocery retailing</a>, and in Mexico, people have been going to tienditas “since the Aztecs,” a man told <a href="http://retailersforum.weebly.com/uploads/2/8/0/3/2803078/selling_to_mom-and-pop_stores_in_emrging_markets.pdf" target="_blank">McKinsey Quarterly</a>. “It is our way of life,” he said.
These mom-and-pop shops are resilient because they know their customers. They know what the local community wants to eat, drink and what they need to get through the day. And they’re close by, a critical feature when many people don’t own a car.
Although these mom-and-pops understand their local communities, they still need support to benefit from an increasingly digital economy. At the Center, we’re committed to helping these merchants grow and thrive in countries around the world. In Latin America, we’ve recently launched several new partnerships and programs to deliver digital tools that help small and growing entrepreneurs strengthen their businesses.

Digital Tools Can Help Mom-and-Pop Businesses Stay Competitive