Tuesday, January 28, 2014

Create a Business That Will Change the World

I have written blogs and articles on marketing strategies and identifying market opportunities for some time now. I like the idea of finding a starting place in underserved markets and building a business with significant upside.

For medicine I think that the use of technology to deliver healthcare at a distance can provide quality healthcare for individuals in rural areas and perhaps significantly change availability of health care in third world countries.

Clearly the most underserved markets are those living in poverty around the world. Almost half the world, over three billion people, lives on less than US$2.50 per day.

This is probably the most undesirable and underserved market in the world and the needs are extensive. I wonder though if it were possible to create products and services for this group, would it be possible to generate economic activity that would ultimately lead to higher incomes and standards of living.

Take housing for example; there are some entrepreneurs that are focusing on methods to build inexpensive housing for these markets. Contour Crafting is one such company using technology developed at the University of Southern California. http://www.contourcrafting.org/low-income-housing/

It seems to me if a project were focused on creating housing for the impoverished in third world countries, the industry would most likely employ individuals from the areas targeted by the housing project. This would promote the development of other related market activities.

Ultimately this would result in an increase in the standard of living and create demand for more products and services. It might even mean that these populations could drive economic growth worldwide as the populations develop.

Obviously, this is not new and is something that government and philanthropic groups have tried to achieve for a long time.

I would suggest a slightly different approach; build a self-sustaining, profit based business project based on the premise that individuals have income of US$1.25 per day per person or US$2.50 per day per household. Assume that only 1/3 of the income could be spent for housing. Further assume that housing would provide access to water and sewage services and have utilities available for normal home activities.

This is a pretty tall order but not impossible. If a housing unit could be built for US$1500 and financed over 15 years at 4.5% the monthly cost to an individual would be about US$11.50.

I started thinking about this as a potential solution and quickly identified roadblocks. For example, the government of the third world country would have to approve the project. Then there would be the challenge of finding land suitable for developing a low-income project. Then finding the building technology to develop lots for the property and the required infrastructure. The lots, infrastructure and housing unit would all have to be within the US$1,500 total cost. Finally, finding financial institutions willing to finance the projects would be necessary.

Perhaps a pipe dream, but if a business were able to address the challenges the size of the market is immense and the benefits to the world are immeasurable.  Clearly, the enterprise would have to have effective means of working with governments, acquiring and developing land, building housing units and creating financial packages attractive to financial institutions.

I would propose the development of such a business enterprise and would like to hear from anyone with ideas and approaches. I would also like to hear from groups that have started projects along these lines even if the projects didn’t end successfully.

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