Business concept: consultancy for the emerging markets

Think globally ... Act locally BoP-iD:

Jente Minne --- 2 Ma IPO --- Artesis hogeschool --- Tutors: Mia Cornelis & Guido Giebens

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Girls in FavelasRio de Janeiro, Brazil

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Jente Minne BoP-iD Business plan 2009-2010

Executive page

BoP-iD is a ltda. (LLC) which is going be founded by Jente Minne in Rio de Janeiro.BoP-iD is situated in the consultancy sector and, inspired by C.K.Prahalad, it’s addressing the forgotten markets of Brazil, the favela population. The company will address SMEs to encourage them to design for the BoP and to use its services. BoP-iD helps to create free competitive markets in the favelas and thus to eradicate poverty while making profits.

BoP-iD is specialized in dealing with the difficulties BoP companies experience, all these difficulties are related with the networking and understanding of the local situation. BoP-iD will remain very close in contact with NGOs and the local population and like this, it will obtain high quality, expensive information for a relatively low cost. This results in relatively high profits.

BoP-iD starts small with a multidisciplinary team specialized in dealing with BoP issues, and tends to expand by starting up local units in the whole of Brazil and south America. In this way it can achieve a competitive advantage over other competitors.The biggest advantage of BoP-iD is that it is addressing companies who want to design for emerging market, this is an innovative idea in a niche market where it has no competitors and which is hard to enter, even for big consultancy offices. This offers BoP-iD an exclusive accessibility to essential information and networks needed to enter the favela markets.

BoP-iD will start making profits from his second year and it expects to have a profitability of 50 percent, profits of BoP-iD are only raising because of the lowering costs and the raising efficiency.Besides that, BoP-iD is resistant towards market estimations and costs estimations ; it still makes profit with 20% less turn over and 20 percent higher costs as predicted.For the start up of the company , BoP-iD will use 20 000 euros of its own financing and lent 45 000 euros from the bank. BoP expects on gathering 50000 euros from extern investors. Its a one time investment in knowledge and networking and it will be amortized over 4 years, starting from the second year.

In a long term BoP-iD can become the leader BoP design/ consultancy office in Brazil and south America with local units in all cities that have more than 500 000 persons living in favelas. BoP-iD is a corporate social responsible company that follows a new trend of acting as a civil organization in a economical sustainable way.

It will do so by concreting his slogan : “Think globally, act locally”

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2. Table of content

2 1. Executive summary page3 2. Table of content4 3. Presentation of the company4 3.1 Company specifications5 3.2 Partners6 3.3 Functions of the partners and milestones7 4. Presentation of the Service7 4.1 What is BoP-iD offering?8 4.2 What kind of services and products are being designed for the BoP ?9 4.3 Why is it innovative? 10 4.4 Extra value11 5. Market analysis 11 5.1 Description of the industry11 5.2 Target group12 5.3 Market specifications and size13 5.4 Porter analyses of SMEs + motivation demand.14 5.5 Market scenarios15 5.6 The competition of BoP-iD16 5.7 Conclusions17 6. Swot analysis18 7. Company’s mission and –objectives18 7.1 Mission18 7.2 Short term company’s objectives19 7.3 Long term company’s objectives20 8. Strategy21 9. Value chain22 9.1 Activities of Bop-iD in the value chain23 10. Marketing plan23 10.1 Marketing goals and communication target group.23 10.2 Marketing goals and communication target group.25 11. The intern value chain28 12. Employees and organization29 13. Financial plan 29 13.1 Global prognosis30 13.2 Invest plan 32 13.3 Finance plan33 13.4 Fixed costs35 13.5 Break even tables36 13.6 Liquidity37 13.7 Ratios37 13.8 different scenarios38 14. Final conclusion39 15 Sources40 16 Attachments

Pg.

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3. Presentation of the company

3.1 Company specifications

Name of the company

Ltda. BoP-iD (LLC)Legal form:BoP-iD will operate partly as a consultancy office and broker service and partly a design office. The company is service based. There has been chosen for a Ltda., The Brazilian variant of a LLC. This is an appropriate legal form since the company will start small and won’t have sufficient funds to found a JSC. Also because the company doesn’t need huge investments to start up. Further more this legal form has limited liability and the company can act as a corporate body. According to the world bank it takes 2 to 3 months to start up a ltda., this means obtaining all necessary permits and licenses (e.g. alvará de funcionamento) and completing all the inscriptions, verifications and notifications with the authorities: local, state and federal. operations. The start up costs are estimated 1162 BRL or 465 euros.Tables about all the other states with this kind of information can be found on the web site of the world bank. The numbers represented here are for a company with predefined specifications and can differ according to the case. So the prices here are only an indication. In the attachment a case study can be found on how to start a company in Rio de Janeiro

26 DOING BUSINESS IN BRAZIL

RIO DE JANEIRO GDP per capita (BRL) 12,671City: Rio de Janeiro Ease of doing business (rank) 8

Starting a business Registering property Number of procedures 15 Number of procedures 14Time (days) 68 Time (days) 75Cost (% of income per capita) 10.89 Cost (% of property value) 2.68Ease of starting a business (rank) 6 Ease of registering property (rank) 7

Credit—creating collateral Enforcing a contract Cost to create collateral (% of loan value) 0.18 Complexity index 73Time (days) 27 Time (days) 813Ease of creating collateral (rank) 3 Cost (% of debt) 20.51 Ease of enforcing a contract (rank) 6Paying taxes Total tax payable (% gross profit) 207.59Number of payments 12Ease of Paying taxes (rank) 10

MINAS GERAIS GDP per capita (BRL) 7,709City: Belo Horizonte Ease of doing business (rank) 3


Credit—creating collateral Enforcing a contract Cost to create collateral (% of loan value) 0.85 Complexity index 78Time (days) 2 Time (days) 1,068Ease of creating collateral (rank) 1 Cost (% of debt) 19.77 Ease of enforcing a contract (rank) 13Paying taxes Total tax payable (% gross profit) 150.37Number of payments 23Ease of Paying taxes (rank) 13

MATO GROSSO DO SUL GDP per capita (BRL) 8,634 City: Campo Grande Ease of doing business (rank) 7


Credit—creating collateral Enforcing a contract Cost to create collateral (% of loan value) 0.81 Complexity index 76Time (days) 30 Time (days) 755Ease of creating collateral (rank) 6 Cost (% of debt) 16.79 Ease of enforcing a contract (rank) 4Paying taxes Total tax payable (% gross profit) 146.15Number of payments 12Ease of Paying taxes (rank) 3

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3.2 Partners

Jente MinneUnmarried, 24 years oldMaster in Product development in Antwerp Specializing in the European micro finance program at Solvay (EMP)Very limited work experienceThesis on designing for the bottom of the pyramid

+ : High educated Multilingual: Dutch, English, French, Spanish, Portuguese. Experience with living in Brazil and cooperating with Brazilians. Familiar with Brazilian bureaucracy. Some networks with local NGOs, contact with people from all over brazil. Young and motivated without being naïve about the difficulties.

-: Very limited experience Portuguese not perfect yet No contact with Brazilian/multinational corporations No experience with starting an own business

Brazilian Partner

Searching for this profile:Work experience in the field.Designer specialized in the first steps of the design process (Research).Interested in designing for the BoP with CSR.Some contact with Brazilian companies or MNC.Living/ having contact with people from the favelas (slums).Preferably bilingual.

Internship Student

Searching for this profile- Cheap labor force- Living in the favela / Contact with people in the favelas.- Good at making presentations and networking/ Graphic design skills. - Motivated to work for a starting company with CSR.- Able to work half time and being beyond his/her 3rd bachelor.

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The responsibilities of each of the employees is well defined, from 18 months on, Jente Minne will be responsible for the contacts with the corporations (clients), while the Brazilian partner will focus on the contact with the NGOs. The student will be held responsible for the presentations and the publicity. All the information obtained, will be checked by Jente Minne before it reaches the (potential) client.It will be necessary to work together and to know very well what the other partners are doing, both The NGOs and the corporations need to know and trust Jente Minne and the Brazilian partner in order to establish a good relationship without miscommunication. Since it starts as a small company, it should be able to perform this task in a efficient way. Several brainstorm sessions will be held together, since both of the employees probably know people from the favelas.In the first years, working together will be even be more essential since the founder isn’t familiar enough with Brazilian companies and Brazilian bureaucracy, and the Brazilian partners probably won’t have experience with designing for the BoP and neither had formal education about this topic.

3.3 Functions of the partners and milestones

EMP + working Paperwork Networking: corp. Networking corp.. Jente Minne in Belgium Networking corp. Supervising Supervising Networking NGO Research Paper work Paper work Portuguese Hiring Consultancy Consultancy Research Research

Helping paperwork Research ResearchBrazilian partner X Networking NGO Cooperation NGO Networking NGO Research Idea generation

Brazilian student X Networking Publicity Publicity Corporate image Presentations Presentations Networking Networking Preparation Year 0 Year 1 Year 2

- Travel to Brazil- Startup Rocinha- Start publicity

- First big customer- billable hours 50%- 5 proposals- Known by 50%CSR SMEs in Rio

- Growth 15%- Broker- Break even

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4. Presentation of the Service

4.1 What is BoP-iD offering?

BoP-iD is a design office, that motivates SMEs to design services and products for the BoP population in Brazil. The first office will be headed in Rio de Janeiro and will reveal the needs of the population in the favelas and the opportunities it offers for the companies. Later on, BoP-iD will expand over Brazil in small independent units and a network will be created which allows companies to implement BoP products more easily all over Brazil to obtain the high market outlet they need to make profits .CSR and sustainable design is what this company stands for and will be essential to maintain the necessary networks BoP-iD needs to offer its service.

The company offers 3 types of services:

- Detecting opportunities, preparing the design letter and selling the ideas to interested companies.- Offering consultancy in designing and fund-raising and being a broker between the companies and the NGOs. The broker service is offered as an extra service to provide a more complete package, and to partly recover not billable working hours. - Taking over certain phases of the design of the product/ service and the business plan, BoP-iD is specialized in the design stages that are considered to be the most difficult for companies designing for the BoP: strategical planning and verification, idea generation and trade off,concept design and testing, specifications, product launch and evaluation.

BoP-iD will be able to offer the most crucial information and networks for companies who want to design for the BoP. BoP-iD combines the strengths of the NGOs: contact with the local population, and doing research about the needs of the BoP with the strengths of the business world: Creativity, focus on profits, innovation and strong invest power.Bop-iD will be able to unite forces and to obtain information of high quality adapted to the needs of the companies. Furthermore, it will create bridges between the NGOs and CSR companies, this is important since companies suffer from a bad reputation . Co-creation is considered to be a key element in designing for the BoP and this will be our strength. By mainly focusing on the first stages of the design process, it can cause a lot of impact on the products with very limited costs.

The first product proposals will deal with basic needs, but the more the markets develop, the more invest goods and even luxury goods will be demanded. This offers huge opportunities for companies who want to achieve massive growth.

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4.2 What kind of services and products are being designed for the BoP ?

Health careWater purifiers, healthy cooking, food additives,first aid ,...

Education Education devices, lights,long distance Education service,...

Basic needs Food and water providers, agriculture goods, clothing, housing, safety (landslides),...

Transportation Transportation of food or other goods, own transport, upon hill transport lifts...

Investment goodsCell phones, battery chargers, normal phones, internet providers, transportation.Repackable food ,...

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4.3 Why is it innovative?

Designing for the BoP isn’t a new activity, some multinationals are involved for over 10 years with emerging markets, and they have already obtained high profits in this field. Although, unlike glocalization, real BoP design has mainly be done by big multinationals. To really obtain big profits and sustainable design, companies have to go beyond glocalization.The positioning of the company is a combination of networking, designing and consultancy. This is new service idea as well as the decision to attract SMEs to this market. The combination with consultancy about fund raising can also be considered to be essential and innovative. Because it is specialized in the fields where BoP companies tend to have difficulties, BoP-iD is able to offer high quality solutions for their challenges, and it will offer complementary solutions based on co-creation with the customers or civil organisations.Multinational companies have to invest huge amounts in research and gaining thrust of the target group, for SMEs it isn’t easy to make such a big investments and working together with BoP-iD can lower the costs of their first investments in a significant way.There is noticed a trend where NGOs tend to cooperate with MNCs but this is still a limited evolution with a lot of challenges to overcome. The mistrust of NGOs and the local population in MNCs are still high and having a intermediary in this situation can be very handy for BoP centred SMEs or MNCs.

The specific context of the favelas is important: Favelas have always been ignored by policy makers and companies and thus NGOs always had to fulfil the needs of this population. Even availability of basic needs as education, safe housing, electricity and water are a big challenge to obtain in some Favelas. The prejudices about favelas are huge and this prevents companies from addressing these markets. Because these markets offer big opportunities: big growing markets which represent a big amount of money without any competition and where your company can obtain a competitive advantage if you arrive first, with possibilities to expand all over South America.

The most innovative characteristics of BoP-iD

--> The services offered by BoP-iD are based on the issues BoP companies tend to have.--> A new relation between NGOs and companies .--> Addressing customers which have always been ignored. --> Combination between networking, broking, designing and research, in an uncommon environment.--> Making profits by eradicating poverty

BoP is operating in the field of radical innovation, which also means a number of issues have to be overcome:

- Hard to estimate the market- Big learning curve for BoP-ID- Hard to estimate costs, time needed and external conditions- Hard to obtain the thrust of the clients- Big adaptation process for the clients

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4.4 Extra value

4.4.1 Extra value for the client (companies) - Knowledge about opportunities in new, high growing markets which are relevant for the client .- Offering the networks that are essential for the client to address these markets .- A business approach which lays the focus on long term economical sustainability. - Rising CSR and corporate image .- Co-creation with the customers which increases customers satisfaction - Accessibility to new markets which couldn’t been addressed before, which can offer mayor economical and strategical advantages .- Economical advantage, since the companies doesn’t have to hire a whole research team to address the BoP market .- The key to radical innovative solutions which can offer new opportunities in the traditional markets ( Reverse innovation)

4.3.2 Extra value for the consumer (BoP population)

- Products that fulfil better to their wishes and demands .- Integration of favelas in the local (and global) economy .- Respect for the BoP population as customers .- Raise of local economy .- Competition for the MNCs, which avoids monopolies .- Influence of NGOs on the working of BoP companies .- Raising interest in the population of the favelas which can lead to political interest .

4.3.3 Extra value for the NGOs

- More effective solutions for certain problems- Source of income.- More power against the companies, --> more demand from the companies

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5. Market analysis

5.1 Description of the industry

BoP-iD is situated in the consultancy sector. It offers services to companies who would like to explore BoP markets. The goals of these companies are often increasing profits/growth, obtaining strategical advantage and enhancing their corporate image. BoP-ID will be active in the B2B environment influenced by NGOs and civil society. The BoP market is a growing market which attracts more and more companies and thus BoP consultancy is also a growing market. Expected is that the economical crisis and the small economical growth will even boost this trend.Consultancy can be a high profitable market, if it is well segmented.

5.2 Target group

Our Target group is the companies that have the economical investment power, the courage and the CSR to address the emerging markets. There is no specific industry defined. BoP markets suffer less of competition, and products aren’t segmented to lower the costs, specializing in one industry would lower the demand to much. In the first years BoP-iD will focus on MNCs to obtain a few big projects. This allows the company to obtain more fame, financial security and experience with addressing the BoP market. For this purpose, companies that invest large amounts of money in social projects , like Petrobrass, will be addressed. Afterwards the company will try to focus on SMEs by offering them opportunities to address the BoP market. The design projects will first focus on the basic needs of the local population, but when the favela markets are developing, a switch will occur to investment and luxury goods. Research about what is considered to be a basic, investment and luxury good at the BoP will have to be held, since this seems to differ from the traditional markets.

Geographically, first companies in Rio de Janeiro will be addressed, as well as the favelas in Rio de Janeiro. The first favela which will be addressed will be Rocinha. If BoP-iD is successful, it will expand all over brazil in small local units that are interconnected. This offers the possibility to easier implement projects in the whole of Brazil. The BoP markets can’t be addressed from 1 centralised headquarter, and thus this would be a highly efficient way of scaling projects all over Brazil. The philosophy of “think globally, act locally” is the key to success when addressing the BoP. On a long term, BoP-iD can expand over Latin America; the disadvantage here are the difference in language, and the political and bureaucratic difficulties to become a multinational company.In a later stage, SMEs from Europe can also be addressed.

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5.3 Market specifications and size

The market at the bottom of the pyramid is a huge, unexploited market. The whole BoP market is considered to 4 billion people. In brazil 26 percent of the population lives under the poverty line which means 46.8 million persons;In Rio de Janeiro about 40 percent of the population or 1.5 - 2 million persons live in he favelas. A lot of these people can’t be considered to be BoP since their income is higher than 2 dollars PPP, although Bop-iD intend to focus on companies that are interested in designing for the favela population. BoP-iD will start operating in Rocinha, a favela with a population between 100 000 and 150 000 inhabitants. This favela is chosen because of the following reasons:

- The biggest in Rio de Janeiro- A lot of NGOs are active in this region- Relatively stable- Growing population- Very different situations: from BoP population - inhabitants with an income >500 euros/month- Close to the south zone- Relatively good infrastructure

The size of the favela markets isn’t the issue for BoP-iD, more important is to find companies who want to address this market. Companies don’t invest in the favela markets because of following reasons:

- Instability or safety issues- Prejudice that there is no money to earn- Prejudices about Favela populations- Infrastructure problems- Higher risk investment- Lack of information and networks in these markets- Unexperienced in addressing the market.

Convincing and helping SMEs to overcome these prejudices will be the main challenge for BoP-iDOn our next page you can see a porter analysis of an SME who invests in the favela market and some strategical and economical advantages BoP and SMEs can achieve. Doing more research on the size of the market is hard since personal contact and proofed opportunities are necessary to break the prejudices. In this way it remains hard to estimate the market.

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5.4 Porter analyses of SMEs + motivation demand.

Please remark that this isn’t the Porter analysis for BoP-iD but for a general SME who would try to enter a BoP market, this is a very general model which specifies some typical characteristics of the BoP market, but it can still differ a lot depending on the actual product or service

Low

- Often no competitors

- If competition ->price

- Mostly glocalisation <-> BoP

Very Low- Forgotten market

- Demand elastic -> small PP- Substitution -> labour

Low- Often no alternatives- About basic needs

- Poorly informed- Often isolated

Depending- Close to City -> lot of supply

- Hard to distribute to the favelas- Quality is important

Low- Stigma BoP

- Lack of knowledge/networks- Only MNCs

- Low segmentation -> low margins- Long term return on investment

Rivalry between the companies

Power of the suppliersPotential competition

Power of the customers

Substitution possibilities

The porter analysis, shows that the favela market can be interesting because of their specifications, there is a very big market without competition, the customers have low power, and other there are no alternatives for a product, depending which kind of product you offer. Also, not many competitors are motivated to enter this market the company that arrives first can achieve a very fast growth and a strategical advantage ( I- curve instead of S-curve). Many multinationals have already understood the advantages of approaching the BoP market, and they have successfully implemented products in BoP markets. Other reason SMEs should the favela markets are:- SMEs are more flexible than MNCs and can be competitive.- Low growth and saturated markets will force SMEs to radical innovation.- CSR becomes more and more important.- Favela markets are emerging -> more and more products will be sold.- Scaling can cause high profits with small profit margins.- BoP customers are often very brand loyal.

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Research about how the favela markets wel evolve is scarce and probably no generalisation can be made, allthough in this chapter, a few scenarios are written to understand in which way the favela markets can evolve and the consequentions for BoP-iD, the topics written below will also be taken in consideration when picking out in which favela markets BoP-iD wants to be active.The scenario written below are extracted from literature about designing for the bottom of the pyramid and it is not known which of the scenarios, in which graduation, and where they will happen.

A switch to an inclussive kapitalistic system.

The favela markets are also calling the attention of the SMEs besides the MNCs and they start investing in this markets. A free market economy establishes in the favela markest, where SMEs can compete with the MNCs because of their specific advantages. because the favela markets are developing, the demand of BoP products becomes higher and more companies get attracted to the market. This would be the perfect scenario for BoP-iD, since it would be the pioneer in a fast growing an profitable market.

Monopoly of MNCs

Because of the big investments that need to be made to serve the favela markets, and because of the economic crisis, only MNCs are able to invest in the favela markets. This creates a big strategical advantage over the SMEs who don’t want to invest in the market anymore. This creates a monopoly of the MNCs in the emerging markets. When this occurs BoP-iD will need to start focus on the MNCs, which will be hard since they will tend not to outsource this kind of work. Or to motivate SMEs to ivnest in the market by finding external capital for them.

Protectionism or safety issues in the favelas

Aswel the informal leaders, as the civil organisations can block the cooperation with BoP-iD, if BoP-iD doesn’t earn the thrust from them. This means that BoP-iD wouldn’t be able to do his research, neither to implement in this favela. The only thing BoP-iD can do here is moving to another favela. This can also happen in unstable or unsafe favelas like in the north part of Rio, where often wars between different favelas burst out.

BOP markets are integrating in the emerged markets ( long term)

If the favela markets emerges, these markets will get more attention and they will evolve like the western markets, this means BoP-iD will loose his specific advantage in this favela market, and achieved is goal. BoP-iD will need to find another Favela .

Disinterest in favela markets

As well SMEs as MNCs aren’t enough interested in the favela market.The stigma on favelas are to big and the companies don’t see opportunities in designing for them. This means less demand and less billable hours for BoP-iD this results in a lower turnover. Since BoP-iD only has fixed costs, this will have a big influence on the finances of BoP-iD and it can mean the end of the company. Convince SMEs to design for the favela markets is crucial for the ecomical sustainability of BoP-iD

5.5 Market scenarios

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5.6 The competition of BoP-iD

No design offices or consultancy for the BoP or for the favelas have been found in Rio de Janeiro or in brazil. Although 1 BoP consultancy offices have been found, they are listed beneath

Direct competitionTriple value strategy consulting:They help BoP program managers to achieve access to BoP markets, to foster insight in local needs, co-creation of BoP business models with local stakeholders and identifying extern capital to finance the BoP venture. They work with local BoP experts and marketing processionals and their teams contains 2 persons. They don’t execute design phases; but they can be considered to be direct competitors. They are not executing active company recruitment and BoP consultancy is just a small part of their activities .

Indirect competition

NGOsNGOs can’t be considered to be a direct competitor since, designing and consultancy aren’t their focus, but indirect they can be considered to be a competitor for BoP-iD. MNCs companies tend to work together with NGOs to obtain their market information, and to implement their products/ services. By cooperating with NGOs BoP-iD can become another player in the value chain which offers as well the companies as the NGOs an extra value. The extra value BoP-iD is offering:

--> Selecting economical viable opportunities--> Offering innovative solutions--> Decreasing mutual mistrust--> Feedback for reverse innovation--> Active recruiting companies--> Not restricted by governmental policies to get funds.

Local companies:Local companies can be considered a competitor and a partner of BoP-iD. The difference with local companies is that they are harder to reach, this can be an advantage for me since companies will need my help to get in contact with these local companies. One of the disadvantages is that local companies can be sold by bigger companies and the know how and networks can be obtained in this way instead of using my services.

Local universitiesUniversities, can also be seen as competitors or partners, since companies tend to work together with them, but they are also my source to get well educated people or we can work together to do certain research projects. In Rio I haven’t seen universities active in the BoP field, although there is a university who does a lot of research about the favelas and NGOs. This university can be a great partner.

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Web sites en forum about BoPOn web sites like design4billions, there are forums and frameworks to facilitate design for the BoP, although, by now, these web sites are to general and limited to be a serious threat, maybe they are even an advantage since they can stimulate companies to make the step to design for the favela population. Although BoP-iD will have to keep an eye on the evolution of these web sites and frameworks.

5.7 Conclusions

BoP-iD is operating in a very big unexplored and growing market with very little competition.It will start small and local in Rocinha in Rio de Janeiro, but it will expand in Brazil and maybe even in the rest of south America. The challenge of BoP-iD isn’t to overcome competitors or to find a market that is big enough but convincing companies to invest in BoP markets. This is a mayor issue because of the many prejudices and the high risk of these investments. The strategy BoP-iD is opting for is starting with a big project, while obtaining more experience in the field, and stimulating SMEs and MNCs by giving them opportunities to design for the favela markets. Saturated markets and small economical growth will force more and more companies to invest in these alternative markets, and will raise the chances of finding more customers. Unfortunately it is hard to execute research about the interest of SMEs in Rio about BoP-iD; the companies can’t understand fully the service until an offer has been made , and doing research by mail isn’t possible since Brazilians (Rio de Janeiro) nearly never respond emails. Theoretically, we can expect that more and more companies are interested in serving the BoP but estimating the market is the biggest challenge for BoP-iD. Therefore BoP-iD doesn’t focus only on SMEs in the beginning, but also on MNCs, which are known to have interests in the BoP. While doing some tasks for them, the potential of SMEs can be more investigated.If the interest in the favela markets is getting bigger, the chance of getting competitors will raise. BoP-iD wants to have a strategical advantage towards their competitors by having broad networks and several local units everywhere in Brazil. The indirect competitors shouldn’t be considered to be a big issue for now, they can even offer a lot of opportunities for BoP-iD.

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The flexible labour contracts, facilitate to hire people for a short time and thus to be more flexible and efficient. The company needs a relatively small investment in the beginning (1 year of research, no production infrastructure) and it is situated in a profitable industry, while the labour costs are cheap. This can justify the risks of the project: the difficulties to predict the demand and the fact that the time to earn some money will be longer than in a usual consultancy office. The fact that BoP-iD barely has direct competition and is operating in a fast growing, market, can cause a strategical advantage which positive for the long term sustainability of the company.Starting with small units, which can expand if they are successful, has a positive impact on the weaknesses and the threats; BoP-iD won’t be depending on only 1 region and design solutions can be implemented in different markets at the same time. This offers bigger and better scaling for BoP companies and thus more profits, this will give me a strategical advantage over copy cats.

- Few competition- Low income and flexible labour contracts - Local expertise- Multilingual- Motivation- Innovative service in profitable industry- Multidisciplinary approach- Flexibility and adjusted service - Relatively Small investment- Big profits- Social responsible company (CSR)- Specialized in micro financing

- Fast growing market- Very big and expanded market (Brazil)- Following economical trends- Trend: Ethical entrepreneurship and CSR- Professionalisation of the NGOs- Geographical spreading + unity of language- Networking with civil organisations universities and local companies(Co-creation)- Economical crisis en small growth --> companies are searching alternative markets- Flexibility and local directed of SMEs

- Brain drain- Level of education employers- Cultural and linguistic differences- Hard to predict the market- High adaptation for SMEs- Limited resources- No experience and reputation- High dependency on other institutions

- Competition/ monopoly MNCs- Safety issues in the favelas- Ecological issues- Acceptance of local population- Competition of big consultancy offices - Less big investments because of the crisis- Prejudices about BoP/favela population- Period until first earnings is longer than a common design or consultancy office- Hard to find the investors for BoP-iD

6 Swot analysis

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Starting in a small way allows BoP-iD also to start with limited resources, and when the company obtains more experience and knowledge, the company can grow and expand without being stuck in its infrastructure.A big issue is to persuade the SME companies to design for the favelas, BoP will overcome this challenge by offering consultancy about designing for the BoP and how to find extern funding, by approaching the client with product ideas, and by pointing out successes obtained by multinationals. The crisis will be probably over when BoP-iD is starting and companies will start investing again.BoP-iD has decided to operate in Brazil because of it’s political context, it’s availability of good education, its ,in general, relatively decent infrastructure, the ability of networking, the unity and size of the market, and the knowledge of the language, bureaucracy and habits of the country. Also expanding outside of Brazil can be easier, although some political issues can occur.One of the biggest challenges, will be to obtain as fast as possible enough experience and knowledge, since we are designing and giving consultancy about a market which has been always ignored by companies, and thus a lack of information is a mayor issue. Networking with civil society is the key to the solution.

7. Company’s mission and –objectives

7.1 Mission

BoP-iD its mission is to make profit by eradicating poverty in a sustainable way by encouraging SMEs to invest and to design for the “favela”population and to use the services BoP-iD offers .

7.2 Short term company’s objectives

Preparation year: Jente Minne will specialize in micro financing and work full time to earn 20.000 euros to invest in the company, besides that Jente Minne will improve his business plan, network with NGOs, designers and companies. He will still operate from Belgium.

Year 0: The company estimates to finish all the paperwork, and to be able to startup the company in 1 year. This includes, obtaining the licenses and the name of the Ltda. Having 2 partners, creating a web site, having some networks and cooperation contracts, and starting to research opportunities which can be offered to companies. The founder also expects to have improved its Portuguese. At the end of the year, the company needs to sign 1 contract so it can spend at least 50 percent of its time on billable activities

Year 1: The companies objectives are to get a 50% brand awareness with target companies in Rio de Janeiro. This looks a lot but many of the company won’t be our target group. We think obtaining this by personal mailing, organizing business dinners, and proposing them opportunities when designing for the BoP. Furthermore the company will try to make brand awareness with it’s first big project. Bop-iD would like to achieve a 5-10 percent brand awareness in the whole of Brazil during year 1.The company also plans on signing some more contracts so the employers can work 65 % percent of their time on billable activities .

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Year 2: The company plans on growing with 15%, because of less time spend searching companies, more effective working, and more efficient networking.On the other hand, the year before BoP-iD had work from the first year it could use, that’s why it looks only a small growth, but in fact BoP-iD expects working a lot more efficient from the 3rd year on.BoP-iD also adds its consultancy and broker service to its gamma, which generates extra income. At the end of year 2, an evaluation will be made whether the company should grow locally or expand geographically with a new local unit, situated in an other metropolis city of Brazil. From the 3rd year on the company would like to focus more on SMEs

7.3 Long term company’s objectives

The long term company’s objectives are, to become market leader in Brazil as a BoP consultancy and design office. The company tends to have a local unit in every Brazilian city that has more than 500 000 inhabitants living in the slums. If the political and judicial aspects allow it, BoP-iD will try to expand its territory over other countries in Latin America, as Chile, Argentina, Uruguay, Bolivia .This territorial expansion is important since products and services designed for the BoP needs to be scaled over big dispersed markets in order to achieve profits, and thus products need to be implemented over boundaries and borders. Offering the contracts and help to implement the products in different geographical markets, is a strategical advantage BoP-iD wants to achieve.

Besides the geographical growth, BoP-iD wants to change their focus from MNCs in the beginning to SMEs in a long term. In the beginning MNCs is the best way to grow since they a lot of funds, which they partly invest in CSR. This allows Bop-iD to obtain a big contract, to create brand awareness, to build up experience and to pay back our investment. Once the company is more experienced, and known, it will encourage SMEs to invest in the favela markets. SMEs are more sustainable partners, since they will be more reliant to us and SMEs have a more flexible structure, which allows better to act locally, furthermore the prejudices against SMEs are smaller than against MNCs.

Our activities will be expanded from designing to giving consultancy and acting as a broker. This is important to offer the whole package. The evolution that we are expecting according to the sectors, is that we will start with projects to fulfill basic needs, when the markets are further emerging, investment and luxury goods will become more the focus. In a long term our markets should be absorbed by the traditional market.

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8. Strategy

The strategy of our company is one of market differentiation. By addressing a market which is ignored and which still suffers from a lot of prejudices, BoP-iD tries to obtain a unique positioning which leads to a competitive advantage. The company will use its networking and its specific knowledge (BoP, micro financing) and networking to discourage competitors. In a longer term, the geographical spreading, which allows implementing simultaneously in many favelas will also foster an advantage over the competitors.Since BoP-iD is offering services which can cause companies high profits and strategical advantage over the other companies, and since it is unique in the market, that is hard to enter, high prices can be asked. On the other hand investments and costs will remain low, especially since the company is focussed on the first steps of the design, that are known to be the most cost effective and efficient phases. This allows Bop-iD to provide high quality information and achieving higher profits.

By specializing on the aspects where companies experience difficulties, Bop-iD can offer high quality information which in complementary with the strengths of the client. The fact that these phases are divided over the whole process can also be seen as an advantage, The client is still reliant on Bop-iD for the implementation of the product. This gives BoP-iD more power, to encourage sustainable behavior. Sustainable design is crucial to remain the confidence of the NGOs and the customers (favela population).

Networking is an important part of our strategy, Co- creation with NGOs and the customer will significantly lower the costs, and will allow BoP-iD to foster information that is hard to obtain. Also The fact that at least 1 of our employees has to live in the favela, is very important. It is known that BoP population only starts sharing interesting information when a band is created, which means that traditional market analysis techniques like in depth interview, personas, group interviews, don’t satisfy. The flexibility and motivation of our company allows us to think outside of these common working hours and really earn the thrust of our customers, something which is highly uncommon with other consultancy/design offices. The ideo HCD toolkit is one of the tools that will be used .Besides networking with civil society, BoP-iD will also unite forces with universities, the networks made at esdi will be used to offer internships for esdi students, and to work together in some projects. This can offer great opportunities. Since students think more out of the box than experienced designers.

BoP-iD has a unique position between NGOs and corporations, it tries to find a way to obtain the goals of both organizations in a more efficient and sustainable way. In this point of view, BoP-iD tries to offer economical, social and ecological sustainable solutions.

The marketing strategy of BoP-iD is unique in the way that it is going to address its clients with solutions, by offering the client ideas how they can make profits in the “favela” market, BoP-iD convinces the SMEs to choose for BoP-iD. More information about the marketing strategy can be found in topic 10.marketing plan.

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This scheme shows the extra value BoP-iD will produce and it explains the importance of good networking. More information about the activities (shown in the rectangle boxes) will be provided on the next page. The green boxes are the activities BoP-iD will generate income with.

With the start up, BoP-iD will execute research and networking, and will obtain interesting strategical information. This information will be put in a presentation and presented to the elected companies. If the company is interested, a contract can be signed and BoP-iD can offer the company general consultancy, services in relation with the design of the BoP business plan/product/service and broker services.

The services related to the design process are always executed in cooperation with the customers, the civil societies organizations and the client (company).The physical design of the product and service are left to the companies, since it is known that they don’t have big issues with this topic, and since they have more experience and infrastructure to complete this task. While networking, co-creation with the BoP population and dealing with BoP issues, will be executed by BoP-iD

After the implementation of the product, the company will ask feedback from the NGOs and the client and after services as customer satisfaction, product upgrade or publicity/service upgrades can be offered.

On the next page the activities will be described more into detail.

9. Value chain

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9.1 Activities of Bop-iD in the value chain

All the activities related to our service are explained here. In chapter 11, a list with all business activities will be presented with all the activities granted to the employees

Strategical opportunities :The first assignment of BoP-iD is to do some research about the business opportunities designing for the favelas offers. BoP-iD has to give enough information to their clients to convince them, but it has to take care that their clients don’t to steal the Idea without using BoP-iD’s services. The main activities are described here, there has to be noticed that these activities don’t generate income for the company, but many of these activities will be a one time investment in knowledge :- Networking with civil society- Research about the market and its peculiarities : infrastructure, safety issues, greenfield innovation,micro financing, governmental or informal policies,...- Millennium goals and PRSP (poverty reduction strategy papers) research- Needs analyses- Idea generation, brainstorms- Feasibility study and opportunities- Presentation

Sign contract: Interested companies with the right policy have to be found and convinced to participate:- Finding companies- Marketing activities: see topic 10.- Executing the presentations- Designing and Signing the contract.

Consultancy:- Finding and presenting examples of successful BoP cases- Presenting market peculiarities- Obtaining and presenting information about extern funds- Using cases from our experiences (if allowed)

Design brief formulation: - Ethnographic research- Study local live and live with the population- HCD strategies- Idea generation and brainstorming- Product/service/business plan specification- Feasibility study

Product development: - Concept and pilot testing- Usability research- Evaluation & applied research

Product launch:- Designing and offering distribution networks- Research involved with marketing/publicity- Improving their CSR- End of life scenarios of products- Implementation in other regions/favelas

Broker:- Designing the contracts- Leading the negotiations

Service after Implementation:- Customer satisfaction research- Service Upgrade research- Publicity / marketing upgrade- Scaling / implementation in other regions

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10. Marketing plan

10.1 Marketing goals and communication target group.

Marketing goals:The main marketing goal of BoP-iD is to encourage SMEs to design for the favela population and to use our services to achieve sustainable economical activities in the favela market. To Achieve this goal, BoP-iD will challenge the prejudices and mutual mistrust that exist from both parties and BoP-iD will need a big budget to achieve a mentality change. BoP-iD will have to invest a lot in marketing goals in the beginning, the company will especially spend a lot of time on marketing activities. (Min. 20 percent of our overall time)

Marketing target group: Since BoP-iD is situated in a B2B market, the target group of the company will be other companies. More specified, companies with following specifications:- Interested in CSR activities- Able to do big investments- Operating in the industry we found opportunities for- Innovative focussed

In the first period, the company will address MNCs as well as SMEs, but in the future BoP-iD would like to address mainly SMEs. In the beginning the company will also focus on companies in Brazil, this also can change in the future to companies located in Belgium and Europe

10.2 Marketing goals and communication target group.

Product:BoP-iD offers several services which are related to innovation for the population of favelas, the company offers, consultancy, several services dealing with the design of the service/product/business plan and a networking/brooking service with local civil society organizations.This service can be seen as a investment good for the client and has to generate and extra value to the clients economical activities and/or to their corporate image. BoP-iD needs to proof that addressing favela markets is profitable. Furthermore the service has to generate sustainable solutions which are approved by the local population and civil society groups. Infringe their thrust is pernicious for BoP-iD. BoP-iD is specialized in these services that are known to be difficult for BoP companies and together with the client BoP-iD creates a package of the services they would prefer.The full list of services provided by BoP-iD can be found on pg.14, although this list can still be adapted during the start up of the company, according to the quality of the staff, the services that are demanded and the peculiarities of the favela market.

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Price: The demand of our service is rather price inelastic, if it can be assured that companies can obtain high profits with using our services, they will be motivated to pay a high price for it.Besides that a big part of our activities costs can’t be passed to our customers (see blue square activities pg 13). Companies will expect very high quality information to be able to predict the risks involved with the investigation and thus a high price will be reasonable; offering a low price will under validate our services.For consultancy and design services, we are opting for a price per hour since it will be hard to predict how much time some research projects will take and to remain flexible. Sometimes the client will ask for additional services related to our networks and our goal is to offer the company all the services they need relating to networking with civil society and the target group.The broker service is paid with a commission which will be 20 Percent higher than our outsource costs, since it is impossible to define hours to this service, although this service won’t be added in the financial plan; we don’t consider it as a main income generating service and it doesn’t generate extra costs.Since wages of high educated people in Rio de Janeiro don’t differ a lot from wages of high educated people in Belgium, and since we have a lot of labor time we can’t charge to the client, we take a price of 500 € or 1250 reais a day (8 hours). The first year we won’t be able to receive any income and the second year we expect to spend 50 percent of our time to billable activities.Our company expect to increase their efficiency with 15 percent in the 3rd year. The company will learn to work more efficiently and some extra services as the broker and the consultancy service are introduced. But at the same time new customers need to be found. In a long term the efficiency should go up, if less time has to be spend on finding customers, networking and research.

Place:The first office of BoP-iD will be situated in the center of Rio de Janeiro, which is easy to reach as well for companies (situated in the south zone or the center) as for the NGOs and people from the favelas. The city center in Rio de Janeiro is not too expensive and is a very common place to settle a company. Expanding is also easy because of the availability of many offices in the neighborhood. Important to mention is that one of the employees of BoP-iD has to live in Rocinha. Living with the customers is essential to build up the thrust and to obtain the right information about the target group. Also all employees will have to spend some time with NGOs and population of Rocinha. Informal contacts are important and informal meetings will be organized by the CompanyWhen BoP-iD decides to open a new headquarter, this headquarter will function on it’s own, after a training. Jente Minne will be supervisor of the several headquarters.

In a long term, the main headquarter may be situated in Europe, maybe in Belgium, this is interesting for the founder, Jente Minne, since it is his home place. Furthermore, it can be interesting to attract European companies to invest in the emerging Brazilian markets. This can only be accomplished if the good working and sustainability of the company is assured.

Like mentioned before, our services will be offered first only in Rio, afterwards in Brazil and then Internationally ( Brazil and Europe) , The markets our client are designing for are expanding from Rio to Brazil and to south America.

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Promotion

Promotion will be a very important task of BoP-iD, since it will be hard to convince companies to design for the favela target group. We are operating in a business to business approach where personal contact is really important, especially in the Brazilian culture, Brazilians often tend not to respond e-mail,letters nor phone calls. Since our target group will be limited to the companies with the right profile (see pg. 15), mass communication isn’t the right horse to bet on. The promotion tools the company will invest in are personal letters, publications in magazines about CSR, a web site + mailing list, business cards and personal contact. Networking through NGOs and linked will also be used to attract the attention of potential clients .

Personal contact is our main marketing strategy, business dinners, personal meetings and invitations to info cycles will be held by our own employees. A personal contact from the beginning is important from the beginning. All the companies that are interesting for BoP-iD will be screened and if we find an opportunity which lays in their field they will be contacted personally. 40 percent of our promotion funds and 10 percent of our overall time will be spend on personal contact with potential clients (without the making of the presentations).Besides personal contact, publishing in papers about CSR and networking through web site and mailing list will be an important issue. Since the future tends to do everything more online, and audiovisual presentations can be uploaded easily, this will definitely be used. This is a great medium to approach innovative managers, and a lot of importance will be held to it. “Streetwize” and “the mobile school” will be sources of inspiration for the setup of our web site.Letters will be used to remind potential clients about our offerings, we will only communicate over mail , if we have met them personally before.

To create networks with civil society, personal contact, the mailing list and letters will be used. The importance of the media for convincing NGOs to cooperate are similar to these of the companies and the same marketing mix will be used, except from publishing in magazines, this won’t be used to find partners.

11. The intern value chain

In this topic all the activities of BoP-iD will be described and entrusted to one or more of the employees, if more employees are given the first name is the responsible of the task.The topics in red are outsourced are partly outsourced.1 Start-up tasks

Year 0 : start up companyJente Minne :- Portuguese classes- Micro financing classes- Networking with NGOs and ESDI- Networking Designers in Brazil / internationally- Arranging visa- Find investors

Year 1Jente Minne :- Hiring employees- Arranging visa- Improving Portuguese- Startup procedure- Supervising- Finding investors

Year 1Brazilian employee :- Helping startup- Designing house style- Designing web site- Finding investors- Educating Brazilian student

Year 1Brazilian Student- Designing house style- Designing web site

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2 Networking with NGOs + marketing- Finding proper NGOs- Contact them and schedule meetings- Personal meetings- Informal meetings with favela community- Making the contracts- Signing the contracts- Remain up to date from their activities- Send letters

3 Networking with potential clients + marketing- Keeping web site updated- Searching proper companies- Contact them + schedule meetings- Organize information cycles + execute them- Make presentations- Personal contact + business dinners- Making offers and price estimation- Designing publications for the magazines- Sending personal letters- Making and signing contracts

4 Other non billable activities- Research about the market and its peculiarities : infrastructure, safety issues, greenfield innovation,micro financing, governmental or informal policies,...- Millennium goals and PRSP research- Needs analyses- Idea generation, brainstorms- Feasibility study and opportunities- Making Presentations- Supervising & correcting presentations, projects, ...- Publishing

5 Billable activities + brokera) Consultancy:- Finding and presenting examples of successful BoP cases- Presenting market peculiarities- Obtaining and presenting information about extern funds- Using cases from our experiences (if allowed)

Brazilian employee+ Jente Minne (year 0) Brazilian employee + Jente Minne Brazilian employee + Jente Minne Brazilian employee + Jente Minne + StudentOutsourcedJente Minne Brazilian employee + Jente Minne Brazilian employee + Jente Minne

Student + Brazilian employeeJente MinneJente MinneJente Minne + Student StudentJente Minne + Brazilian employeeJente MinneStudentJente MinneOutsourced + Jente Minne + Brazilian employee

Brazilian employee + Jente Minne + student

Jente Minne Brazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentJente Minne + Brazilian employeeStudentJente Minne

Main responsible of the content

Student + Brazilian employee

Jente MinneJente Minne

Student

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b) Design brief formulation: (co -creation)- Ethnographic research- Study local live and live with the population- HCD strategies- Idea generation and brainstorming- Product/service/business plan specification- Feasibility study

c) Product development: (co -creation)- Concept and pilot testing- Usability research- Evaluation & applied research

d) Product launch: (co -creation)- Designing and offering distribution networks- Research involved with marketing/publicity- Improving their CSR- End of life scenarios of products- Implementation in other regions/favelas

e) Broker:- Designing the contracts- Leading the negotiations

f) Service after Implementation: (co -creation)- Customer satisfaction research- Service Upgrade research- Publicity / marketing upgrade- Scaling/ implementation in other regions

6 Administration- Paying bills and checking finances- Bookkeeping- Paying taxes- Lobbying

7 Expansion activities

If the companies expands, new employees will be attracted and Jente Minne will spend more time starting up and supervising the 2nd unit. Because of the collaborations, the Brazilian employee will be able to take more responsibilities and to educate the other employee.

Brazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentJente Minne + Brazilian employee + studentJente Minne + Brazilian employee + student

Brazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentJente Minne + Brazilian employee + student

Brazilian employee + Jente Minne + studentBrazilian employee + Jente Minne + studentJente Minne + Brazilian employee + studentJente MinneJente Minne + Brazilian employee

OutsourcedJente Minne

Brazilian employee + Jente MinneBrazilian employee + Jente MinneBrazilian employee + Jente MinneBrazilian employee + Jente Minne

Outsourced + Jente Minne

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12. Employees and organization

Like mentioned before, the BoP-iD team will exist out of 3 employees, from whom 2 full time and 1 student half time. The responsibilities are mainly divided over the 2 full time employees in such a way that:

- All the activities dealing with networking with the NGOs, and local population research are the responsibility of the Brazilian employee .- All the activities related with, the general organization of the company, supervising, economical verifications, and contact with the companies is the responsibility of Jente Minne.

The Student is responsible for making presentations and keeping the web site up to date.

It may seem that the Brazilian employee has a lot of work, but for the local research a lot of co-creation with civil societies or universities will be done. Many of these activities will be especially a lot of work in the first year of BoP-iD and will decrease substantially when the company obtains more trustable and efficient networks.

It is a logical division because:- The Brazilian employee will have more connections with NGOs and speaks better Portuguese than Jente Minne, furthermore Brazilian designers are more specialized in the human and design factors, than in the economical and technical properties of product design. - Jente Minne will be more specialized dealing with the economical and the organization of BoP companies, being specialized in Micro financing. And probably his English will be better, but its Portuguese will be worse.- The students at esdi are especially well educated in graphic design, and the tasks given by the student can always easily be checked. In this way BoP-iD tries to avoid big responsibilities for the student, but still gives the student the feeling that he is a true member with responsibilities. BoP-iD will try to keep the student during its last 2 years of his studies and than it will try to offer him a full time job offer in the company, so his knowledge and networks aren’t lost.

Since the BoP-iD activities are all very connected and a lot of the activities includes brainstorming and networking, The members will work very close together and many decisions will be made with the 3 employees. As long as the company remains small this can easily be done in a efficient way. All the contracts will be signed by Jente Minne and the Brazilian employee, to avoid miscommunication. This is important because the Employee is mainly dealing with the contacts with the NGOs, while Jente Minne is dealing with the contacts with the client. But an agreement between the client and the NGOs needs to be obtained.

If BoP-iD expands locally or geographically, a new employee, active in the management or economical sector, will be attracted and Jente Minne will organize and supervise the start up of the second unit. In a long term, Jente Minne will only supervise the several local units, while every unit can work independently. This also allows the company to attract international clients.

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13 Financial plan

The financial plan is starting with year 1, which means the first year that the company earns money. There has to be mentioned that there is a preparation year, which isn’t included in the business plan since the company isn’t founded at that time and the founder is doing another job, and specializes in micro financing. Then there is a Year 0 which is the start up of the company. Year 0 is included in the business plan as an investment in unmaterial activa. (see scheme pg 6)

13.1 Global prognosis

Global prognosis Year 1 Year 2 Year 3

Turnover Expected evolution 15,00% 0 %Amount (no VAT) 158.125,00 181.843,75 181.843,75

Purchases % of the turnover 0 0 0Amount (no VAT) 0 0 0

Other variable costs % of the turnover 0 0 0Amount ( no VAT) 0 0 0

At year 1, a turnover of 158.125,00 euro is expected. This is measured by counting 50% of the labour time as billable hours. The wage is 500 euros a day/person. or 62.5 euros an hour. BoP-iD has a capacity of 632,5 working days with its 3 employees. Counting 50 percent as billable working hours seems a lot, but the first year (year 0) is dedicated to the start up, research, networking and finding clients, and this labour will allow BoP-iD to do its work a lot more efficient the following years.

In year 2 BoP-iD expects to work 15% more efficiently because it will have more brand awareness, and it’s also providing the Consultancy service. The broker service isn’t counted in the Financial plan, and thus neither in the Turnover. This is because BoP-iD doesn’t consider this activity as a profitable activity but more to complete its service. Since this service doesn’t imply more costs for the company, and it would generate some extra income (the service would be outsourced and sold for a 20 percent extra), an underestimation of our turnover/ profit is made.

In year 3 BoP-iD doesn’t expects to work more efficiently, but in a long term it expects to be, especially when various local units can cooperate and exchange research information. Also because BoP-iD will need less time to spend on networking and finding clients, as the favela markets emerge, more products will be demanded also.

One remark needs to be made: it is hard to estimate the target market and thus the turnover can differ a lot. BoP-iD has to obtain high enough profit margins to compensate for the risk.

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13.2 Invest plan

In the table on the next page, the invest plan can be found. BoP is focussed on all the activities which are based on contact with the civil society and the customer. BoP-iD doesn’t do the materialization design steps and doesn’t make complicated mock ups. Therefor BoP-iD doesn’t need a lot of infrastructure. The company rents an office which is fully equipped, and maintenance is included. 500 euros will be extra invested to personalize the office. Also, 2 laptops, with the necessary software (1 CAD program + the office package + the adobe package), A printer, a projector, a video camera and a regular camera are purchased. BoP will also invest 1000 euros in research literature and databases.

The biggest investment will be the 1 year of research (year 0) BoP-iD is doing before starting its financial activities, so the plan includes the fixed costs of 1 year as an investment. The wages from the 3 employees are a bit lower the first year. (1250 euros and 250 for the student) This is amortized over 4 years. This investment can be seen as an overestimation since probably only Jente Minne will start working from the beginning of year 0, the other employees still need to be found and the paperwork needs to be done, but BoP-iD wants to start working with 3 as fast as possible.Because Bop-iD already has to buy all our materials from year 0, but it will only start earning in the beginning of year 1; all the investments in the table below are amortized over 1 year less than their usual time, ex. The computers are amortized over 2 years since they are being used during year 0.

The start up costs are indicative costs from the world bank, the bookkeeper and notary are prices that would be common in Belgium. This is maybe an overestimation but since Rio de Janeiro is known to be bureaucratic, it can be considered to be a fair estimation.

2000 euros of register money is included, this is necessary to avoid shortage when payments are late, or extra purchases need to be made. Since no big purchases need to be made, this will be sufficient.

The investment looks big compared to other consultancy offices/design offices, allthough this is not unfamiliar, it is know that the first investment for BoP companies are big, since there is need for a lot of research. These investments need to be made one time and they pay off (in a short or long term) if the company makes the right choices.

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Invest plan Year 1 (euro) Year 2 Year 3

Total activa ( with evolution bank account)

115.000,00 0 0

Total activa 104.168,29 0 0

1. Fixed activa 100.168,29

1.1 Fixed material activa 9.100,00Extra furniture 500,002 Laptops 3000,00Software 2.000,00Printer / copy machine 500,00Projector 600,00Video camera + Camera 1.000,00Office material 500Books and magazines (research)

1.000

1.2 fixed Immaterial activa 90.903,291st year of research (fixed costs)

88.603,29

Portuguese courses 300,00Interests loan bank 1 year 2.000,00

1.3 start up costs 2.165,00Bookkeeper 800,00Notary 900,00Start up costs 465,00

2. available activa 4.831,71Register money 2.000,00Bank account evolution 2.831,71

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13.3 Finance plan

Since no earnings are expected to be made the first year, an investment of 115 000 euros needs to be made. The founder isn’t able to finance this investment on its own and thus extern investors or a business angel needs to be found. The founder is able to invest 20.000 euros, which he will earn during the preparation year. (year before year 0) A business angel will need to lent 50.000 euros and 45.000 euros need to be lent by a bank. This way the company would be able to have a solvability rate which is credible. But the founder will still remain the main shareholder.Another option is that the 2 full time employees invest in labour and in own material during the first year (using own laptop, using own house instead of renting an office, using own car,...) Like this BoP-iD would need less money from extern investors.

Finance plan Year 1 (euros) Year 2 Year 3

Total passiva ( with evolutions cash credits)

115.000,00 0 0

Total passiva 115.000,00 0 0

Own resources 70.000,00In money Investment Jente Minne 20.000,00 0 0

Investment business angel 50.000,00 0 0

Loan capital 45.000,00Loan bank 45.000,00 0 0

Solvability 61 %

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13.4 Fixed costs

The office BoP-iD rents is is located in the center of Rio de Janeiro and costs 750 euros a month. The offices are fully furnished and includes even the services to attend clients. Also water, electricity and condominium. Besides the office, BoP-iD will need to rent a garage which is 125 euros a month, 24 hours security included.The transportation costs are estimated on 5.300 euros, this includes 1 car that can be fueled 2 times a week, and 800 euros on bus tickets to provide transportation within Rio for the student and the Brazilian employee (round ticket for every work day).

The office material includes a cellphone/ land line and broadband internet package for 2011 euros a year (company “oi”), and some smaller purchases. Cleaning the offices is an extra service which costs 1000 euros a year. The accounting will be outsourced for 1500 euros a year.

Publicity is very important for the company and a decent amount of money will be invested in it. Personal contact takes 40 percent of the investment in publicity. Besides personal contact, BoP-iD will invest in publishing in CSR magazines. Convincing potential clients of the opportunities that BoP offers is essential for the company.

The employee costs are set on 45.600 euros a year, this is set on 1.750 euros gross earnings for the 2 full time employers and 300 euros for the internship. These are common prices , and the earnings of the student can even be considered high. This is because some flexibility and motivation is expected from him, and the company would like to keep him .

Depreciations are relatively high, especially the first 4 years, since the company made an investment of doing research for 1 year. When BoP-iD wants to expand geographically, the profits from the first office can be used to finance the new unit, because of the know how, the second office should be able to start earning a lot faster than the first office and thus a significant smaller investment will be needed.

Other company’s costs are estimated on 550 euros a month for the household insurance, and some local taxes, although the taxation system in Rio de Janeiro is complicated and thus it is hard to estimate this costs.

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Year 1 Year 2 Year 3Total fixed costs 102.642,91 102.642,91 98.615,95

Rent + local costs (included) 10.500,00 10.500,00 10.500,00Rent office 9.000,00 9.000,00 9.000,00Rent Garage 1.500,00 1.500,00 1.500,00

Transport costs 5.300,00 5.300,00 5,300,00Gas + gasoline 1.000 1.000 1.000Buses 800 800 800Leasing car 3.000,00 3.000,00 3.000,00Insurance 500,00 500,00 500,00

Office material 4.811,00 4.811,00 4.811,00Oi conta total (Phone and internet) 2011 2011 2011Stamps 100 100 100Cleaning offices 1000 1000 1000Printing 200 200 200Accounting 1500 1500 1500

Publicity costs 7.230,00 7.230,00 7.230,00Web site 100,00 100,00 100,00Publicity in magazines 3000,00 3000,00 3000,00Networking web sites 100,00 100,00 100,00Meetings 1000,00 1000,00 1000,00Business dinners 2000,00 2000,00 2000,00Publishing 1000,00 1000,00 1000,00

Employee costs 45.600,00 45.600,00 45.600,00Bruto wages 45.600,00 45.600,00 45.600,00

Depreciations 26.917,07 26.917,07 24.167,07

Other company’s costs 550,00 550,00 550,00Household insurance 500,00 500,00 500,00Taxes 50,00 50,00 50,00

Financial costs 1.542,08 1.058,20 407,00Interests (without interest on cash credits) 1.734,84 1.190,47 457,88

35


13.5 Break even tables

In year 0 BoP-iD expects to have 104.168,29 euros of debt, which will be financed by the investors. From year 1 on BoP-iD expects to make profits. Profits are expected to increase because of the decreasing costs and increasing efficiency (more billable hours). The NGOs and civil society organizations will be paid 20 percent of the company’s profit after taxes, divided by the amount of work they executed for BoP-iD. Besides that, they can earn money on the contracts BoP-iD arranges with the clients and they are able fulfill their goals in a more efficient way. BoP-iD wants to appreciate this win-win situation. By giving a percentage of the profit, the company won’t have to pay the other organizations in the beginning, and the more turnover/profits the company makes, the more it will ask the NGOs to participate and thus the higher their wage should be. An issue that can occur here is that NGOs won’t participate because the state finance them earlier or more than BoP-iD and they will prefer spending time working for the Government. Lobbying will be necessary to arrange a co-finance program.

Analysis year 1Expected turnover 158.125,00Expected variable costs 0Mean contribution margin 100,00%Expected fixed costs 102.642,91Break- even turnover 102.642,91Profits before taxes 55.482,09



36


13.6 Liquidity

The monthly liquidity tables can be found in chapter 14.The monthly and annually liquidity tables give always a positive balance, which means that BoP-iD won’t have problems paying off its debt. The company lented nearly 11 000 euros more than it expects to need to fill up gaps (more investments needed, late payment,...) After the first month profits will raise fast and the company will remain financially healthy. The company makes high profits because of the low labour costs and the high prices it can ask for its services without having variable costs.

Annually Liquidity Year 1 (euros) Year 2 Year 3

1. opening saldo 70.000,00 81.511,87 173.205,15Income from sellings 158.125,00 181.843,75 181.843,75Credit takes 40.000,00 0 0

2. total year income 203.125,00 181.843,75 181.843,75Variable costs 0 0 0Fixed costs 73.960,00 73.960,00 73.960,00Invest expenses 102.168,29 0 0intrests 1.734,844 1.190,47 457,88Redemption 13.750,00 15.000,00 15.000,00

3. Total year expenses 191.613,13 90.150,48 89.417,88

4. Year balance 11.511,87 91.693,28 92.425,88

5. End balance 81.511,87 173.205,15 265.631,02

Biggest liquidity shortage 0 0 0

Mean liquidity balance 47.558,07 128.045,10 220.135,20

37


13.7 Ratios

Ratios Year 1 (euros) Year 2 Year 3

1 Solvability 0,61

2 Netto capital of BoP-iD 12.831,71 0 0

3 Profitability 0,48

13.8 different scenarios

The turnover of the first year is 20 percent lower ( 40% hours = billable)The turnover of year 1 is 126.500 euros or 20 percent lower than expected and the expected growth of 15% is made in year 2 :- The company makes still 23.857,09 euros profit the 1 st year (before taxes and extraction of the NGO fee.) the profit is rising every year.- No liquidity shortage, the first month an end balance of 11.063 euros,and raising .

The turnover of year 1 is 30 percent lower ( 35%hours = billable).The turnover of year 1 is 126.500 euros or 20 percent lower than expected and the expected growth of 15% is made in year 2 :- The company makes still 4.138,34 euros profit the 1 st year (before taxes and extraction of the NGO fee.) the profit is rising every year.- No liquidity shortage, the first month an end balance of 9.745,67 euros and raising.

The Investments in year 0 (accounted in year 1) are 15 percent higher:- The company makes still 51.575 euros of profit.- The company will have a liquidity problem in his first month (-1.926,21), the other months are ok.- It is very unprobably that this situation would happen since more then 88% of our invest costs are loans which are perfectly predictable.

The fixed costs have raised 20 percent (turnover and investments stay like predicted):- The company makes still 34.953,51 euros profit the 1 st year (before taxes and extraction of the NGO fee.) the profit is rising every year.- No liquidity shortage during the first 3 year, the first month an end balance of 10,277,79 euros,and raising

The turnover of the first year is 20 percent lower and the fixed costs have raised 20 percent ( 40% hours = billable)The turnover of year 1 is 126.500 euros or 20 percent lower than expected and the expected growth of 15% is made in year 2 :- The company makes still 3.328,51 euros profit the 1 st year (before taxes and extraction of the NGO fee.) the profit is rising every year.- No liquidity shortage during the first 3 years, the first month an end balance of 7.642,38 euros,and raising .

38


13.9 ConclusionAccording to the financial plans, BoP-iD can considered to be a profitable investment . From the second year on, relatively high profit margins will be made (profitability of 48% in year 1) since unique information is offered that is obtained in a cheap way.The high profitability is a compensation for the risks of the investment . The first years of BoP-iD will be the hardest, since the 1 time investment in knowledge and networking needs to be paid off, while the company isn’t yet able to obtain a lot of brand awareness. There for some scenarios have been executed on the first years. Even with a turnover that is 20 percent lower and the fixed costs that are 20 percent higher, BoP-iD remains profitable, from year 1 on. This is remarking knowing that the company only has fixed costs and the company needs to deal with a bigger investment than common design offices.

If the investments would be 15 percent higher than expected, which would be very uncommon, BoP-iD wouldn’t have problems on a long term, but its first month of year 1 it would have a liquidity problem of -1.926 euros or a litle bit more than 1 full time wage (1.750 euros).The scenarios have been mainly positive for BoP-iD. This is very important since it is hard to predict the market and some costs.

The financial plan has been conservative in the meaning that it made an overestimation in the costs ( from considering the 2 employees hired from the beginning of year 0) and an underestimation of the income (not counting profit margins on the broker service).According to the financial plan BoP-iD is a profitable investment.

14 Final conclusion

BoP-iD can be considered to be a profitable company with a high corporate social responsibilty. It follows the trend of investing in the BoP, reverse innovation and doing co-creation and opperates in a market that has a lot of potential on growing faster than the emerged markets.BoP-iD comes with a total new service in the profitable sector of consultancy and design offices and achieves to obtain expensive information for a cheap price. This results in relatively high profits and a strong resistance against market and fixed costs underestimations .BoP-iD has a clear task division where every employee has his responsibility, while it also encourages team working.BoP-iD doesn’t have direct competitors in his sector and by expanding over Brazil it will obain a strategical advantage over incomming competitors. Since networking and gaining thrust with NGOs takes time, BoP-iD is also good protected against very big design or consultancy offices who wants to enter the market.

Besides that, BoP-iD has some challenges to overcome also.It has to hold a good band with civil organizations, and it will also be dependent on them, while not assuring them from the first day a big steady compensation. The investment is bigger than other design offices, since more research needs to be done in the beginning.Another issue for BoP-iD is that it is really hard to estimate how many SMEs and MNCs are interested in our services, therfore it is probably hard to find investors, also because favelas still suffer from a lot of prejudices. Also local instability, lack of information and the fact that the founder isn’t from Brazil, can cause some challenges. A full list can be found at pg.17

BoP-iD wants to make profit by eradicating poverty by thinking globally and acting locally !

39


15 Sources

Dahan, N.M. e.a., Corporate-NGO Collaboration: Co-creating New Business Models for Developing Markets. Long Range Planning, In Press, Corrected Proof. Available at: http://www.sciencedirect.com/science/article/B6V6K-4Y0547H-2/2/8787855fc77eb4d8a078828360ce075d [Bezocht Maart 25, 2010].

Dr. N.Dawar, N. & Chattopadhyay, A., 2002. Rethinking Marketing Programs for Emerging Markets. Long Range Planning, 35(5), 457-474.

Eindwerken Tu delft. Available at: http://www.io.tudelft.nl/live/pagina.jsp?id=01da40ff-7c18-4f73-a3d6a041ae82de45&lang=en

Home - Royal Philips. Available at: http://www.india.philips.com/ [Bezocht November 5, 2009].

Immelt,J.R., Govindarajan,V., & Trimble,C., 2009. How GE Is Disrupting Itself. Harvard Business School Publishing Corporation. Available at: http:// hbr.harvardbusiness.org/2009/10/how-ge-is-disrupting-itself/ar/1

Kandachar, P., 2008. A model for design processes for the Base of the Pyramid product.

MDG ́15 - milleniumdoelstellingen. Available at: http://www.mdg15. net/be/MDG%2715/millenniumdoelstellingen/op_een_rijtje [Bezocht Mai 5, 2009].

Oetzel, J. & Doh, J.P., 2009. MNEs and development: a review and reconceptualization. Journal of World Business, 44(2), 108-120.

Prahalad, C. K., (2006). The Fortune at the Bottom of the Pyramid,Upper sadly river, NJ: Pearson education.inc. ISBN 0-13-187729-1

SadreGhazi, S. & Duysters, G., 2008. Serving low-income markets: Rethinking Multinational Corporations’ Strategies. United Nations University-MERIT. Available at: http://www.merit.unu.edu/ publications/wppdf/2008/wp2008-024.pdf

Unknown., 2006. Doing Business in Brazil. world bank. Available at: http://www.doingbusiness.org/Features/Brazil.aspx

Various web sites with practical information about Rio de Janeiro.

Work - Human Centered Design Toolkit - IDEO. Available at: http:// www.ideo.com/work/item/human-centered-design-toolkit/ [Bezocht November 10, 2009].

40


Jente Minne BoPiD

StartersCoach. - Uw financieel plan stap voor stap. BoPiD 21/04/2010

Liquiditeitsplan per maand

Vaste kosten (Excl. afschrijvingen en intrest)Variabele kosten

Investeringsuitgaven (Incl. voorraadevolutie)Intresten (excl. intrest op kaskrediet)Aflossingen

KredietopnamesOntvangsten uit verkopen

1. Openingssaldo

2. Totale maandinkomsten

3. Totale Maanduitgaven

4 Saldo maand

5. Eindsaldo

Maand 1

70.000,0013.177,0845.000,00

58.177,08

012.310,00

102.168,2900

114.478,29

-56.301,21

13.698,79

Maand 2

13.698,7913.177,08

0

13.177,08

05.350,00

0183,15

1.250,00

6.783,15

6.393,93

20.092,73

Maand 3

20.092,7313.177,08

0

13.177,08

05.685,00

0178,06

1.250,00

7.113,06

6.064,02

26.156,75

Maand 4

26.156,7513.177,08

0

13.177,08

05.725,00

0172,98

1.250,00

7.147,98

6.029,11

32.185,86




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 5

32.185,8613.177,08

0

13.177,08

05.685,00

0167,89

1.250,00

7.102,89

6.074,20

38.260,05

Maand 6

38.260,0513.177,08

0

13.177,08

05.350,00

0162,80

1.250,00

6.762,80

6.414,28

44.674,34

Maand 7

44.674,3413.177,08

0

13.177,08

06.060,00

0157,71

1.250,00

7.467,71

5.709,37

50.383,71

Maand 8

50.383,7113.177,08

0

13.177,08

05.350,00

0152,63

1.250,00

6.752,63

6.424,46

56.808,16




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 9

56.808,1613.177,08

0

13.177,08

05.685,00

0147,54

1.250,00

7.082,54

6.094,55

62.902,71

Maand 10

62.902,7113.177,08

0

13.177,08

05.725,00

0142,45

1.250,00

7.117,45

6.059,63

68.962,34

Maand 11

68.962,3413.177,08

0

13.177,08

05.685,00

0137,36

1.250,00

7.072,36

6.104,72

75.067,06

Maand 12

75.067,0613.177,08

0

13.177,08

05.350,00

0132,28

1.250,00

6.732,28

6.444,81

81.511,87

De resultaten werden bereikt aan de hand van uw invulgegevens. De juistheid van het resultaat hangt uiteraard af van de volledigheid en kwaliteit van de ingebrachte gegevens. De uitgever kan niet aansprakelijk gesteld worden voor de gevolgen van beslissingen genomen op basis van deze resultaten

16 Attachments

41


Jente Minne BoPiD






1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 13

81.511,8715.153,65

0

15.153,65

012.310,00

0127,19

1.250,00

13.687,19

1.466,46

82.978,33

Maand 14

82.978,3315.153,65

0

15.153,65

05.350,00

0122,10

1.250,00

6.722,10

8.431,55

91.409,88

Maand 15

91.409,8815.153,65

0

15.153,65

05.685,00

0117,01

1.250,00

7.052,01

8.101,63

99.511,51

Maand 16

99.511,5115.153,65

0

15.153,65

05.725,00

0111,93

1.250,00

7.086,93

8.066,72

107.578,23




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 17

107.578,2315.153,65

0

15.153,65

05.685,00

0106,84

1.250,00

7.041,84

8.111,81

115.690,04

Maand 18

115.690,0415.153,65

0

15.153,65

05.350,00

0101,75

1.250,00

6.701,75

8.451,90

124.141,94

Maand 19

124.141,9415.153,65

0

15.153,65

06.060,00

096,66

1.250,00

7.406,66

7.746,98

131.888,92

Maand 20

131.888,9215.153,65

0

15.153,65

05.350,00

091,58

1.250,00

6.691,58

8.462,07

140.350,99




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 21

140.350,9915.153,65

0

15.153,65

05.685,00

086,49

1.250,00

7.021,49

8.132,16

148.483,15

Maand 22

148.483,1515.153,65

0

15.153,65

05.725,00

081,40

1.250,00

7.056,40

8.097,25

156.580,39

Maand 23

156.580,3915.153,65

0

15.153,65

05.685,00

076,31

1.250,00

7.011,31

8.142,33

164.722,73

Maand 24

164.722,7315.153,65

0

15.153,65

05.350,00

071,22

1.250,00

6.671,23

8.482,42

173.205,15


42


Jente Minne BoPiD






1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 25

173.205,1515.153,65

0

15.153,65

012.310,00

066,14

1.250,00

13.626,14

1.527,51

174.732,66

Maand 26

174.732,6615.153,65

0

15.153,65

05.350,00

061,05

1.250,00

6.661,05

8.492,60

183.225,25

Maand 27

183.225,2515.153,65

0

15.153,65

05.685,00

055,96

1.250,00

6.990,96

8.162,68

191.387,94

Maand 28

191.387,9415.153,65

0

15.153,65

05.725,00

050,88

1.250,00

7.025,88

8.127,77

199.515,71




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 29

199.515,7115.153,65

0

15.153,65

05.685,00

045,79

1.250,00

6.980,79

8.172,86

207.688,56

Maand 30

207.688,5615.153,65

0

15.153,65

05.350,00

040,70

1.250,00

6.640,70

8.512,95

216.201,51

Maand 31

216.201,5115.153,65

0

15.153,65

06.060,00

035,61

1.250,00

7.345,61

7.808,03

224.009,54

Maand 32

224.009,5415.153,65

0

15.153,65

05.350,00

030,53

1.250,00

6.630,53

8.523,12

232.532,66




1. Openingssaldo



4 Saldo maand

5. Eindsaldo

Maand 33

232.532,6615.153,65

0

15.153,65

05.685,00

025,44

1.250,00

6.960,44

8.193,21

240.725,87

Maand 34

240.725,8715.153,65

0

15.153,65

05.725,00

020,35

1.250,00

6.995,35

8.158,30

248.884,17

Maand 35

248.884,1715.153,65

0

15.153,65

05.685,00

015,26

1.250,00

6.950,26

8.203,38

257.087,55

Maand 36

257.087,5515.153,65

0

15.153,65

05.350,00

010,18

1.250,00

6.610,18

8.543,47

265.631,02


43


38 DOING BUSINESS IN BRAZIL

Procedure 8. Register employees with the social integration program (PIS)

Time: 1 dayCost: No costComments: The enrollment of a company’s employees with the social integration program (PIS) is obtained by fi ling a form, signed by the company’s legal representa-tives, with the Caixa Econômica Federal.

Procedure 9. Notify the employment of workers to the Ministry of Labor

Time: 1 dayCost: No costComments: The employer is obliged to inform the hiring or dismissal of any em-ployee to the local department of the Ministry of Labor (Delegacia Regional do Tra-balho) until the 15th day of the month subsequent to the month of the event, upon delivery of written notice by post or via internet.

Procedure 10. Registration with the patronal union and with the employees union

Time: 5 days, simultaneous with procedure 6Cost: Annual fee to be paid depending on the unionComments: The company will have to register at the patronal union corresponding to the fi rm’s activity and will have to pay the contribution to the patronal union. Each municipality and state shall have their Unions as to the activity rendered by the company.

STARTING A BUSINESS

Rio de Janeiro Standard company legal form: Sociedade LimitadaCity: Rio de JaneiroData as of: January 2006

Procedure 1. Check company name with the Board of Trade of the state of Rio de Janeiro (JUCERJA)

Time: 1 dayCost: BRL 11

Procedure 2. Request the registration number for federal taxes —National Registry of Legal Entities (CNPJ)

Time: 1 dayCost: No costComments: The request is done on line. The taxpayer accesses the web site of the federal tax authority (Receita Federal) and downloads the program Receitanet. At the site, she must fi ll in the registration forms—Ficha Cadastral da Pessoa Jurídica and Quadro de Sócios e Administradores—save them in a disk, send it to the federal tax authority via Receitanet and print the entry form—Documento Básico de Entrada (DBE). The DBE and the disk will be added to the registration procedures at the Board of Trade. The enrollment at the National Institute of Social Security (INSS) is automatic with the issuance of the CNPJ.

Procedure 3. Pay the Board of Trade’s registration fees

Time: 1 dayCost: See procedure 4

Procedure 4. Register with the Board of Trade

Time: 30 days Cost: BRL 172.06

Procedure 5. Register company for state taxes at Secretaria de Estado da ReceitaTime: 15 daysCost: BRL 95.81

Procedure 6. Obtain the authorization to print receipts/invoices (AIDF) from the state’s tax authority

Time: 1 day Cost: No cost

Procedure 7. Preliminary consultation with the municipality

Time: Procedures 7 to 9 take 30 days, simultaneous with procedure 5 Cost: No costComments: During this procedure the municipality checks if the proposed activity can be undertaken in the designated premises. In most cases the request is approved instantly, based on the data of the cadastre for the IPTU (Imposto sobre a Proprie-dade Predial e Territorial Urbana). In case of missing information, there will be an inspection of the proposed premises.

Procedure 8. Obtain operational license (alvará de licença)

Time: Included in previous procedureCost: No costComments: The request is simultaneous with the registration for municipal taxes. It is possible to obtain a provisional operational license (alvará de autorização pro-visória), valid for 180 days. Other special licenses (municipal, state and federal) are necessary in case the activity has environmental impact or involves food, chemicals or fuels.

Documents

Business concept: consultancy for the emerging markets