BUSINESS MODEL INNOVATION

 

Social mantra: Empowering low-income single mothers by facilitating social responsability programs for textile MSMEs that employ them

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Single mothers are significantly more likely to live in poverty compared to partnered mothers (Kramer, et al., 2016; Brady & Burroway, 2012; Hübgen, 2020; Crosier, Butterworth, & Rodgers, 2007). A crucial factor that enables families to escape poverty is full-time employment (Kramer, et al., 2016). However, if it is difficult for mothers with a partner to balance motherhood and paid work (Coombe, et al., 2019), it is even more difficult for low-income single mothers who lack a partner to share responsibilities and cannot afford childcare services.

Besides the financial constraints, single mothers face psychosocial challenges that detrimentally impact their health (Callaghan, et al., 2021). These include a lack of resources, underemployment, negative community perceptions and stigma, as well as a lack of social services and external support.

In Peru, 7.8% of households are headed by a single mother (INEI, 2019). Most of them are exposed to poverty and inequalities because of their low level of education and limited access to the labour market.

Given that 73.2% of them lack post-secondary education, job opportunities should focus on low-skill employment.

The fact that almost 80% have informal employment reflects the high informality in the Peruvian labor market, which reaches 76.8% nationwide and up to 94% in the poorest regions of Peru. This highlights that high labor informality in Peru is a structural problem. Despite the difficulty for a social enterprise to address it, this does not stop us from creating a positive impact, as will be shown later in the video.

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In the first round we explained the 3 root causes and 5 challenges that single mothers face: lack of parenting knowledge, emotional and financial abandonment of their children’s father, emotional challenges of single motherhood, struggles to balance work and motherhood and access only to informal jobs.

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Before making the market research our previous solution was to create a textile for interior design social enterprise that provides 4 services: training, formal and flexible employment, and parenting and self-esteem programmes.

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Nevertheless, for this round, we did our market research. Through desk research, we identified enterprises that work with female textile artisans in rural areas, and where or through which channels they sell their products. We also conducted five in-depth interviews with these textile business owners.

Our investigation gave us four main findings:

1. None of them provide formal jobs. It is almost impossible for them to do so for two main reasons. First, the women working with them, most of whom are single mothers, cannot adhere to a fixed schedule due to their motherhood responsibilities. Their family problems also negatively impact their commitment, productivity, and permanence in these jobs. Second, their sales are not strong enough to support a payroll and provide formal jobs.
2. The women working with them have other sources of income because the sales of their textile production are not enough to cover all their needs. Textile business owners would like to pay them more so they can focus solely on textile art; however, they struggle to make sufficient sales.
3. The Peruvian market prioritizes price, so it doesn’t value all the work behind a handmade textile piece, which takes a long time to produce as they naturally tie all the yarns. These business owners focus their sales on foreigners visiting their regions; however, since the pandemic, tourism has not yet fully recovered. Those who are more financially sustainable export their products, deciding to focus solely on the foreign market.
4. These business owners are aware of all the psychosocial challenges that single mothers in rural areas face. They have the willingness to support them somehow. Nevertheless, because all their efforts and resources are focused on making sales, they can’t do much. Additionally, they don’t know how to support them since they lack the human resources and time. They have also noticed how these challenges affect the women’s productivity, commitment to work, and even their job permanence.

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Considering our market research and what we learned from the effectual principles, we decided to focus on building partnerships rather than beating competitors. Therefore, we decided to convert these textile business owners in our customer with the main purpose of increasing our number of beneficiaries and therefore our impact.

Our customers are micro, small, and medium-sized handmade textile enterprises that employ single mothers in rural areas. Why textile enterprises? Because this activity allows single mothers to have flexible employment, as they can work from home. Furthermore, according to a study from the International Labour Organization regarding the labour situation of indigenous women in Peru, the manufacturing activities in which most indigenous women are engaged are those related to textiles (ILO,2016).

Here is a short description of our market size.

In Peru, 94.2% of all enterprises are micro, 5% are small, and 0.2% are medium.

Regarding employment, MSMEs employ 90.6% of the Economically Active Population. Microenterprises alone employ 74.8% of the workforce. Nevertheless, 8 out of 10 job positions provided by MSMEs are informal. In rural areas, 9.5 out of 10 job positions are informal.

Regarding productivity, MSMEs have much lower productivity than large enterprises. The productivity of micro enterprises is only 4.5% of that of large enterprises, for small enterprises it is 27.1%, and for medium enterprises it is 64.6% (PRODUCE, 2024).

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Now we are going to explain our business model, starting with the Value Proposition Canvas for our beneficiaries. In the costumer profile, the customer jobs are that SM want steady employment, and to work in an enterprise that care about their well-being. Besides, they aspire to enjoy their parenting journey by making their motherhood experience easier, and to increase the emotional well-being of themselves and their children.

Their pains are that their family problems affect their productivity at work and their ability to remain at work, and that they lack knowledge regarding how to improve their parenting practices. Their gains are that they want to feel understood and supported by their employers, improve their parenting knowledge and their relationship with their children.

In the Value Map our service is a social responsibility program offered through their employers, focused on self-esteem and parenting support. Our pain relievers are free access to self-esteem and parenting programs, as well as improvement in their management of parenting problems. These initiatives will have a positive impact on their productivity and commitment at work.

Our gain creators include the provision of self-esteem and parenting support programs by their workplace, offered for free. These programs will help improve their emotional well-being, as well as increase their productivity and motivation at work.

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For the Value Proposition Canvas for our customers, the customer jobs are that MSMEs want to increase their employees’ productivity and improve their quality of life, but they lack the resources to create programs or initiatives and do not know how to do it.

The pains are that MSMEs struggle to be financially sustainable, don’t have resources to support their employees’ emotional wellbeing, and don’t know how to create, measure and communicate their social impact initiatives.

The gains are that an increase in their employees’ productivity will benefit their sales, an increase in their employees’ commitment will reduce turnover, and they want to have realistic and affordable ways to enhance their employees’ well-being.

We are offering 3 services to our customers: parenting and self-esteem programs aimed at the single mothers that are part of their staff, social impact measurement, and communication and dissemination packages to promote their social impact.

Our pain relievers are that they would be able to focus on increasing their sales without worrying about their inability to develop social impact initiatives for their employees and to access social responsability programs for their employees by affordable prices.

Our gain creators are that they will create positive social impact without being a social enterprise or having an internal corporate social responsibility team, and will enhance the emotional well-being of their female employees, thereby increasing their productivity and commitment.

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Now we are going to present our Social Business Model Canvas, starting with the Value Propositions. For our customers our value proposition is “Our service helps MSMEs who want to support their employees by offering affordable, practical, and measurable social responsibility programs”. For our beneficiaries, our Value Proposition is “Our service helps SM improve their emotional well-being by offering parenting and self-esteem programs through their workplace”.

In the customers segments, our customers are textiles MSMEs that work with low-income single mothers in rural areas. Our beneficiaries are low-income single mothers employed by our customers.

Customer relationship. Our relationship with our customers is based on ongoing communication, transparency and accountability. And the one with our beneficiaries is personalised, based on trust and empathetic.

Channels. We are going to reach our customers through business associations, government databases, local business fair trades and word of mouth, and our beneficiaries through their employers.

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The next segments will be the same for both our customers and beneficiaries.

Key partners: community psychologists, textile business associations and the government.

Key activities: design the services, acquire customers, deliver the programmes, and measure the impact.

Key resources: a committed team, funding, the programmes, and specialized psychologists.

For our revenue stream, we offer a package of three services with pricing based on the size of the enterprise. We are also seeking revenue from private and public competitions, donations, and crowdfunding.

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We have already mapped three crowdfunding platforms, noting that the main requirements are to be a non-profit organization, to be able to receive donations, and to issue donation certificates.

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For our cost structure, we are considering an initial investment and variable costs depending on the number of programs we offer. We assume that, at least in the beginning, the main team will work as volunteers until we can pay steady salaries.

Our program costs $120. We are forecasting 30 enterprises, resulting in a total cost of $3,600.

For income, we are charging different prices based on the size of the enterprise and forecasting an annual income of $5,700. All profits will be reinvested in the business, primarily for marketing and logistics costs.

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Regarding our ESG strategy, for the environmental aspect, we will measure our carbon footprint through the Carbon Footprint Peru Program, and work with companies that apply sustainable processes in their value chain. For example, those that only use natural dyes in dyeing and reuse textile waste.

In the social aspect, we will be positively impacting the mental health and motherhood experience of the women that work in the companies we serve. We will be also promoting a culture of social responsibility in the national MSMEs ecosystem, increasing the productivity of these enterprises, and preserving Peruvian textile heritage that provides employment to low-income single mothers in rural areas.

In the governance, we will create annual impact reports, promote a participative work environment where employees feel comfortable and safe sharing their opinions for the improvement of the organization, and establish horizontal communication within the organization.

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Our team consists of four members, with two out of four having experience in MSMEs, and three out of four having experience in rural communities.

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Our learning lessons are the following:

1. First, fieldwork was crucial to understand our customers’ needs. This helped us readjust our business model to be more impactful and sustainable.
2. Second, effectuation made us realize the importance of partnerships. We transform our customers into our partners because through them, we can reach more single mothers and increase our social impact.
3. And third, ongoing and deep conversations with stakeholders improve the business model. We started Benedicta Ayllu with one type of beneficiary; now, with our business model, we are positively impacting single mothers in rural areas, their children and MSMEs in Peru.

References:

International Labour Organization. (2016). The labour situation of indigenous women in Peru: a study.

Ministerio de la Producción del Perú. (2024). Las MYPYME en cifras 2022. Lima

INEI. (2022). Producción y empleo informal en el Perú. Cuenta Satélite de la Economía Informal 2007-2021. Lima

Alvarado, B., & Vilchez, R. d. (2015). Single, Divorced, or Separated? Factors That Impact the Lives of Women Who Are Heads of Household in Lima, Peru. SAGE Open, 1-9.

Kramer, K. Z., Myhra, L. L., Zuiker, V. S., & Bauer, J. W. (2016). Comparison of Poverty and Income Disparity of Single Mothers and Fathers Across Three Decades: 1990–2010. Gender Issues, 33, 22-41.

Brady, D., & Burroway, R. (2012). Targeting, Universalism, and Single-Mother Poverty: A Multilevel Analysis Across 18 Affluent Democracies. Demography, 49(2), 719-746.

Hübgen, S. (2020). Understanding lone mothers’ high poverty in Germany: Disentangling composition effects and effects of lone motherhood. Advances in Life Course Research, 44, 1-13.

Crosier, T., Butterworth, P., & Rodgers, B. (2007). Mental health problems among single and partnered mothers. Social Psychiatry and Psychiatric Epidemiology, 42, 6-13.

Coombe, J., Loxton, D., Tooth, L., & Byles, J. (2019). “I can be a mum or a professional, but not both”: What women say about their experiences of juggling paid employment with motherhood. Australian Journal of Social Issues, 54, 305– 322.

Callaghan, M. A., Watchiba, D., Purkey, E., Davison, C. M., Aldersey, H. M., & Bartels, S. A. (2021). “I Don’t Know where I Have to Knock for Support”: A Mixed- Methods Study on Perceptions and Experiences of Single Mothers Raising Children in the Democratic Republic of Congo. International Journal of Environmental Research and Public Health, 1-26.

INEI. (2019). Características de los hogares de madres y padres solos con hijos/as menores de 18 años de edad. Lima.