Posts tagged guatemala

Confession: I am seriously obsessed with accounting. Accounting, at the end of the day, is the main reason that I started Unmarked Streets.

My sophomore year of college I took my first Intro to Accounting Course. We spent the first few weeks sifting through the holy trilogy of financial statements – the balance sheet, the income statement and the cash flow statement. We learned each one of the terms, and how to sum them together, and how they interact with each other. In the beginning I was kind of bored – accounting to me still seemed like a list of requirements that the IRS throws at you.

Then one day, our professor said something that changed my whole perspective. She was young for a professor, a bright, gregarious, lovely woman with BIG curly hair. One day she was talking about how the income statement and the balance sheet are linked together, what things you debit, what you credit, and I was doodling in the margin of my notebook. And then she yelled,

 “And THIS! This is the one mistake that I see every small business make. Every small business I have ever worked for has come to me and said, I am making money, but I have no cash!”   

 She was the kind of person that was prone to screaming in the middle of class for no particular reason, but she still made me sit straight up in my desk. How is it possible that a basic error that EVERY business makes is something that I am learning about in Intro to Accounting?

She went on to explain two basic principles that make the main difference between how an accountant keeps books, and how someone who is an expert in their business, but not necessarily accounting, keeps their books:

1) The basic idea that that, if you buy a bag of potatoes, you don’t book that expense in your income statement when you purchase it, you book it when a customer orders French fries. The expense is counted towards your profit when you actually use the item, not when you buy it. This is the basic difference between accounting in a business and keeping a personal budget in your home.

2) That most businesses have cash flow problems because they have too much inventory on hand. When a business is making profits but they have no money in the bank, it is usually because they order too many potatoes and have them sitting in the storage room. Because having inventory on hand is a real expense to your business, even if that cost doesn’t sit on your income statement. It can drain your cash even if it hasn’t hit your bottom line yet.  And poor inventory control is the number one reason for poor cash flow.

It completely boggled my mind that this very basic idea, something that is so easily managable, can be the reason that so many small businesses go under. I am spending $100,000 on a business degree, and I just learned the number one reason that 90% of businesses fail in 15 minutes.

Fast forward to 2010, when the idea of Unmarked Streets was just forming in my head. I had been working in microfinance, and I was so passionate that people had the solutions to lift themselves out of poverty, that the best businesses ideas come from the very communities that were in trouble, they just needed the capital to get their ideas off the ground. I truly believe that microfinance has been one of the most revolutionary innovations of the 20^th century, and that it has released millions of people from the cycle of poverty.

But the whole time I was volunteering, I had that voice ringing in the back of my head, “I am making money, but I have no cash”. Starting a business is easy, but running a successful business is one of the hardest things in the world, even if you are privileged enough to be able to start it with your own money. Growing a business when you have debt is even harder. And I knew that I wanted to find a way to give people an introduction to small business ownership. I wanted to give a “starter kit” to what I learned in business school, and teach basic cash flow management and accounting and marketing, so that women in poverty wouldn’t fall into the same old traps that so many small businesses fall into.  

So Unmarked Streets does three things differently than a typical microfinance institution.

1) We provide our entrepreneurs a business model that works – we provide a product that is already tested in the local market and has positive impacts in the community on its own. (clean cook stoves to start with).

2) We provide an education program on sales, marketing, and accounting

3) We take care of inventory management – we work with a model called micro-consignment, which means that we loan out our inventory to the sales women, who then pay for the stock once they have sold it. This means that the biggest and trickiest burden/cost when it comes to accounting is absorbed by us, so that the sales women can get comfortable with the idea of working for themselves and become experts in the other areas of running a business.  

And with this, we are creating a team of enterprising young women who will have the tools to pick a new path for their lives, to give them an opportunity to show what good businesswomen they can be. I was lucky enough to get a business education at an incredible school that taught me how to be a successful businesswoman, and now is the time for me to teach the things I learned to the people who have the most to gain.

Reblog from World news and comment from the Guardian | guardian.co.uk

Expansion of sugar exports, demand for palm oil, cattle farming and subsistence communities pushed off their traditional land produced the world’s fastest rate of deforestation

There are cows as far as the eye can see beside the road leading to the archaeological site of La Joyanca, in north-west Guatemala. Over the last 10 years, the primal forest has been cut down, replaced by grassland for intensive cattle farming. Here in the Petén region, around as well as inside the Laguna del Tigre National Park, agriculture is inexorably devouring the forest.

The process has been triggered incrementally in a series of seemingly minor steps. “At the end of the 1980s, when this zone was not yet a national park, Basic Petroleum obtained an oil exploration concession in the Laguna del Tigre area, in the heart of the forest,” said Marco Cerezo, a Guatemalan environmentalist who founded FundaEco, a leading NGO dedicated to nature conservation and development. “Later, the oil companies asked for, and obtained, permission to build a road to their oil wells. And that is where the land clearing started, all along that road. Now approximately 40% of the national park has been cleared.”

The same thing is happening across the Petén region, which extends across the northern half of the country to the border with Belize and Mexico. According to the latest report from the UN Food and Agriculture Organisation (FAO) published at the end of 2010, Guatemala has experienced the most rapid deforestation of any country over the last five years.

In 2010, primary forest accounted for 1.6m hectares, compared with 2.4m 20 years earlier. Guatemala, which, after Brazil, has South America’s second-largest rainforest cover, lost an average of 27,000 hectares a year between 2000 and 2005 (a rate of 1.32% per year), increasing to 68,000 hectares a year between 2005 and 2010 (3.72% per year), meaning that the rate of deforestation has almost trebled in the course of a decade.

It is driven by two factors, explains geographer Gilles Selleron: “Thanks to satellite imagery we can distinguish between the cattle rearing, which is mainly carried by the Ladino population, people of Hispanic origin, and the traditional subsistence farming of corn, marrow and beans by the indigenous Q’eqchi, a Maya people.” Selleron, who is based at the French national research institute and the environmental geography unit at Toulouse University, is a specialist in forest dynamics.

Demographic pressure does not explain the speed with which the agricultural and grazing frontier has advanced. Nor why small farmers are pushing their way deeper and deeper into the forest.

According to Cerezo, recent trade negotiations have allowed Guatemala to increase sugar exports, so sugar cane plantations have expanded. This competition for the land in a country that has never implemented agricultural reforms is occurring at the expense of local communities, which are being forced to search for new land.

But that’s not all. “In the last five years, the biggest contribution to the rapid deforestation has been the massive increase in demand for palm oil and the narcofincas or narco-farms,” said Cerezo.

Agro-forestry NGOs in the field are also coming across a new pressure: land appropriation by drug traffickers by forced purchase or illegally felling trees in protected areas. “The drug barons are trying to acquire a social status with land and cattle ownership,” explains Cerezo. “They’re setting up a new type of feudalism, with thousands of hectares being turned over to intensive cattle farming.”

And if the sugar cane, palm oil and narco-farms were not enough, open-cast mines are also competing for land. These pressures combine to push small communities deeper into the forest. In Guatemala, one of the poorest and most corrupt countries in Latin America, Cerezo believes the forest has become the focus for the tensions running through society.

For Selleron, the erosion of the forest should also be seen in historical perspective and points to the fact that forest coverage has ebbed and flowed. “You have to remember that 2,000 years ago the peak of the Mayan civilisation was achieved by clearing the forest, which was considerably reduced at the time,” explained the geographer. “During the Classic Maya period, between AD200 and AD900, the population density in what is now Petén was approximately 200 inhabitants per square kilometre, compared with fewer than a dozen today. They were obliged to clear the land and cultivate it to feed that population.”

But another factor now also plays a part, climate change. “In the 1990s, the environmental NGOs saw the forest as a reservoir of diversity to be preserved,” explained Cerezo, “but now it’s perceived more as a way of attenuating the effects of climate change.” In the last two decades there have been far more episodes of heavy rainfall, which, coupled with deforestation in this mountainous land, has led to disastrous mudslides.

Despite the difficult outlook for Guatemala’s primal forests, NGOs are not giving up. Discussions are under way with the French banking group BNP Paribas to use carbon compensation schemes to fund forest management.

This story originally appeared in Le Monde