The minimum wage in the Philippines is about 300 pesos per day ($6.67). Rebecca and her daughter have been in the rag making business for the last several years to supplement the family income. Her husband makes a modest wage, but it is a struggle to make ends meet for their family of four. Rebecca came to our Start Your Business class with a great attitude and big smile. She took to the financial exercises like a duck to water. Our Exercise 31 is calculating profit and loss. She had completed the previous 30 exercises, which included fixed and variable costs, and other financial concepts. We were all enthusiastic about the end results. All of a sudden, her face clouded up and tears appeared in her eyes. When asked what happened, she spoke in a soft sad voice that the exercises showed that she had been making 390 pesos a month for the last several years (about $8.67 month)!!! She was devastated that she’d worked so hard for so little.
Her DBA instructors and classmates rolled up their sleeves and vowed to make “lemonade out of lemons.” Rebecca told us that if she had an electric sewing machine, she could produce many more rags and make some good money. We embarked on a revised plan with the electric sewing machine. The profits and cash flows looked good!! Rebecca was getting excited again. And then the bottom fell out. Our hearts broke when we found out that she doesn’t even have electricity wired into her modest house.
Undaunted, Rebecca and her instructors came up with another alternative. By adding additional higher margin products like pot holders and door mats to her rag production, she could she could produce a significantly higher income.
The pictures document our recent visit to Rebecca’s modest home (a 50 square foot structure… no, this is not a typo). We asked her what has changed since she attended our class. She was thrilled to report that she no longer was having to borrow money from the loan sharks (20% interest per month), because of what she learned in class. She was positive cash flow and making more than she was before our training. She is planning to have electricity in her home in the next few months. And the good news is that the “manual” sewing machine she owns has an electric motor… it’s really an electric sewing machine that she has been using manually. So when her electricity is installed, she can really ramp up!