Indonesia's micro-entrepreneurs know best business practices

Indonesia's micro-entrepreneurs know best business practices

Daniel Kingsley, Jakarta

I recently had the pleasure of sitting for three days with a
fascinating group of individuals; they included well-connected
media and bank presidents, well-respected academics, newly
installed government officials with backgrounds as fighters for
human rights, and...some extremely happy and successful micro-
entrepreneurs.

The most surprising thing relaxations to emerge from the group
was not the great success stories of the micro-entrepreneurs and
their abilities to grow businesses from virtually nothing, and to
have a bifocal, social assistance and profit motive rolled in to
one, view of their business.

The surprise was in the conversation and enthusiasm that the
micro-entrepreneuners' stories inspired in the better educated,
informed and more successful participants who were judging the
event.

This was during the judging of the UN sponsored, "Year of
Micro-Entrepreneur" award selection process. The criterion was to
identify micro-entrepreneurs that were successful and have had a
positive impact on their physical or social environment. Not all
of them had, just as not many larger businesses have such
considerations, but it was amazing to witness the degree to which
most of them were aware of their interaction with the community
beyond the "rules" of civil society, and the degree to which they
incorporated their activities with this environment.

It was discussed and noted by each of us, and in isolated
conversation that this best business practice that was clearly
consistent with the successful enterprises, was sorely missing at
the corporate level, and for good reason. Corporations have
shareholders and are accountable to them, they move freely
through regions, communities and countries by having established
good relationships with the government and civil society, and
concern themselves with compliance.

Given no rules on compliance to assisting in social capacity
building, it is not a good business practice to impact the
profitability of the shareholders by compromising the goal of
maximum profitability.

The goal of the micro-entrepreneurs is profitability as well,
and it is a motivation for them to incorporate their activities
with the community, because they do not have the resources to
move between communities, regions and countries, but are bound by
their limited resources to their community.

Therefore, they need to create stability in that community
through goodwill and they need to rely on their community for the
human resources to run their business. At the same time, the
corporation has the resources to pay for the licenses and the
minimum wage, and the government required compliance issues.

So, why were we left with lingering questions about the
differences in business "attitude" between the micro-
entrepreneurs and corporate managers? He had shareholder, and he
did what it takes to maximize profits, and they had only there
community, and they did what was necessary to survive in it and
grow their business at the same time.

But, isn't it a little premature to look it this way? If the
world arena is just a community with different rules I different
places, wouldn't it be logically that the same principals for
success would apply to both socio-economic groups.

For instance, the women in East Java employing handicapped
workers, who tirelessly goes to Bali in search for orders, is in
an entirely different community -- with different rules- than the
guy in Central Java who is teaching his competitors a better way
to grow a crops, even though they are going to become his
competitors.

Yet, they both see the value in assisting their community,
because it will reduce the over-all risk of their doing business.
In the one case, the idle handicapped workers can be taught to
perform the necessary tasks to satisfy labor requirements, while
the increased production of the crop farmer will fulfill the high
demand orders that attract the larger buyers. Each entrepreneur
is attempting to the requirements of his/her business in the
respective sector and geographic location.

So, after scratching our heads...we still don't get it. These
supposedly forward thinking and well educated jurists. However,
if we consider that perhaps the micro-entrepreneurs, with their
high level of risk, must incorporate risk management into their
business plan, then it begins to make sense. They have much more
to lose, e.g.- their livelihood, if they don't succeed and
therefore need to cover all aspects of risk in their management
of the enterprise.

They are also operating under particularly restrictive and
expensive conditions in an Indonesian economy that penalizes the
smallest enterprises through a selective process of enforcing
compliance costs. There is not room for error in managing their
risk. At the corporate level, risk management is a word, but
where is it itemized in the bottom line statement? Shouldn't
these risks be handled proactively, just as the micro-
entrepreneur handles them?

We understand that the Global Corporate Community of
multinationals with shareholders, and certainly the local
business elite have never adopted such principles.

Yet, how often have we seen bad press, initiated by a local
environment issue, disseminated globally in this electronic age,
result in a loss of capitalization of hundreds of millions of
dollars pro-actively handled? Is it possible that the costs for
"damage control" management to deal with the bad publicity would
have been more than enough if it had been properly managed from
the beginning in the form of community communications and
interaction?

The entrepreneurial sector in this country is operating at the
performance level so high, and in such a calculating manner, that
it is ready to explode once the simple tools of finance
accessibility and a proper education system are implemented.

These small businesses operate as representatives of good
business practitioners because they have created a well-led
organization (agreed, small as easily manageable) that can elicit
optimal value in all its relationships. Perhaps this is a best
business practice that has had an influence on increased profits
and enterprise growth of many of those finalists.

The promotion of good of business leadership, no matter how
small, will always be a worthwhile activity and lead to risk
managed growth and bottom line compliance, sorely needed given
the current economic environment in Indonesia.

The writer was a member of the jury to choose Indonesia's "UN
Micro-entrepreneur of the Year".