More outreach means more members.
More members means more borrowers.
More borrowers means more profit.
The more the better, the merrier, right?
Nope. It is not always the case.
We are easily trapped racing for more-the growth-as if growth is equivalent to success. Not all growths are beneficial. Some growths are harmful. Be aware.
The title of this article seem contradicts my assertion that doing microfinance business is simple, i.e., serve as many outreach you could manage.
No. It only serves my assertion because I made a qualifying statement: “outreach you could manage.”
More members isn’t always better. More outreach is great but if 90% of them fall in turn-over department, does it really matters? Can you see my point? I would prefer to have slow outreach and few members that will become my lifelong members-borrowers rather than to have thousands of outreach but seeing them flee because I could not manage them well.
Growth is not Bad but…
Manage them well. Keep it Simple, Sam. Do you still remember?
Growth is natural in every business. If you spend some quality time establishing quality relationship, then you’ll grow, err, your business grow. Then, again, relationship-building is the key. It is not the system, the product. It is the relationship you built that guarantees your success.
How Can You Be Successful with Limited Outreach?
Do away with numbers. Forget your multiplication table for awhile. Or, just don’t believe to the Christian Bible’s command of “go and multiply.”
Reserve your energy. You can always summon them later. Keep your business simple, Sam. Simplicity is always the best. Don’t think of any reason to complicate things while you are still grasping everything to make your business a success.
- Have Less, Do Better – it is always easy to focus if you are doing few things. With focus, you could do any of them incredibly well (if not the best) and make lasting impression. With this, you can now establish a quality relationship. They’ll remember you as the best. I know.
- Offer Quality Products and Services – Since, you are focused, then you could offer high-value quality products that will dramatically lessen your delivery expenses. (Forget the debate of high operating expenses in microfinance. Just focus and keep it simple.) Who, then, needs to have a thousand outreach to be successful?
- Hasten Your Relationship – While you are starting with few outreach, you could give them quality time. Personal contact can build relationship beyond surface level. Can you not associate your quality time with your love ones? You love your members, aren’t you?
- Relationship Builds Your Business – Focus on people and not in numbers. The more you build relationship with, the more people know that you are the best. They will create your business’ growth by referring you to their friends, relatives and peers. You need the best customer service to meet their expectations. Since, you are focused in people and not in numbers, you can give them quality customer services. Your quality products will compliment their needs and they will surely recommend these services to people your products fit. How is that?
- Be Accessible – If you are doing the 4 ways to become successful mentioned above, then you have plenty of time to spare. Filters, barriers, walls are not necessary. In a quality relationship, quality time and quality communication matter. Communication bridges relationship. Invest on it. Your members want to talk to you, give them the opportunity. It is the only way to show that you care and really helping them.
The lesser you do, the deeper you go. Focus on depth, not on reach.
Again, KISS it!
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So long…
Florentino
RADICAL FRONTIERS 
Excellent post in its simplicity – go for quality over quantity: something many commercial MFIs forget
Thank you, Fehmeen.
This aim for quantity leads to credit pollution. There are so many MFIs sprouting because they smell profits doing business to poor people. And, the equation of ‘more clients, more profits’ is ruining the vaunted credit discipline of the poor.
Indeed. Credit pollution is one of the shortest routes to the potential demise of microfinance because then, MFIs will simply be loan sharks in a different suit. Speaking of multiple borrowing, there was recently an article that talked about the upside of multiple borrowing because it helps lower risk for borrowers as well as MFIs. Perhaps you’d be interested in reading it: http://www.microfinancefocus.com/2009/11/07/narrowing-benefits-multiple-borrowings/
Thank you for the link.
Soon, I will be dealing with this pollution in my blog. In our operation, this credit pollution leads to higher Portfolio at Risks.
I hope what we are doing could help to some other MF people and could draw some caution from us by not only aiming for OSS and FSS but also organizational stability.