3CF Updates From the Field: A Week in Vietnam, Part II

Board Member Sara Cannon visited Vietnam in September, 2015, with 3CF partner: Thriive, an organization that builds prosperity and pays it forward in vulnerable global communities. Thriive is a unique charity that supports small business development through providing loans to small businesses, who then pay “forward” the full value of the loan to marginalized groups in their communities through donations of business goods, services, or job training. In her recap from the experience, Sara reflects on the adjustment from service mindset, to business mindset, to a mindset that blends the two.

Revenue, cost, profits, overhead, percentage yields… prior to this trip it was all Greek to me, or more appropriately in this case, it was all Vietnamese to me. After spending the week observing the final selection business interviews with Thriive Vietnam, I realized I’ve learned an incredible amount in a relatively short time. In some ways, I’ve learned a whole new language too. No, not Vietnamese—I’ve learned the language of Business.

While traveling with Thriive in Vietnam, our team interviewed 25 businesses, of which 18 were awarded Thriive loans. Now, as a teacher in my 8th year of instructing 5th graders, I must admit that the field of business is rather foreign to me. So, to get up to speed, I charted out some basic vocabulary, which was key to making the experience a little less daunting. I tackled the concepts of revenue, costs, and profit to start.

Revenue is the total amount of money taken in by a company. Revenue can include sales, income, return from services, yield from property, etc. During each of our interviews, revenue was a key topic of discussion. Most business owners were honest and forthright about their revenues; a focus on revenue makes sense because sufficient and sustainable revenues are key criteria for both lenders and investors, as are trust-based relationships.

Costs are expenditures or prices paid to run the business. Costs can include rent, supplies, materials, fees, insurance, employee salaries, etc. During the interviews, the subject of costs occasionally proved challenging as cultural differences seemed to make it difficult to communicate about cost structures and variables. Some business owners, for example, included their own salaries as a cost of doing business, while other owners did not. Fortunately our translator (from Vietnam National University - CEDS) was fluent in English, Vietnamese, and Business so she had no trouble ferreting out financial discrepancies.

Profit is the monetary surplus remaining after costs are deducted from revenue. For many of the small business owners interviewed, profit margins were small. They were hopeful for Thriive’s support to help them achieve the scale they need to increase their margins.

After better understanding some of the basic business vocabulary, I began to further analyze the “business mindset.” Money. Right? Isn’t business all about making money? As an elementary school teacher, I have a service mindset so this shift in thinking was difficult for me. I spend my own money on classroom supplies because my students need them. My income statement shows a larger cost, but if my students gain academic knowledge, social awareness, or empathy, I consider it a win. What I have learned through working with 3CF and Thriive is that there is a whole field developing in the world of business, philanthropy, and international development that is formalizing a blend between the business and service mindsets. Those tenured in the space often refer to it as blended value.

One ecotourism company we interviewed demonstrated a great example of this service vs. business mindset. A veteran businessman from our interview panel asked the owner why she was requesting a loan to buy a truck. He was concerned that the $27,000 truck would only increase revenues by 2%. He was looking at money-in vs. money-out, prioritizing money over service. The business owner graciously thanked him for his expertise, but asked him to consider her additional business priorities: service, reputation, and quality. She did not want her business to suffer in its quality or reputation; she wanted to continue offering high quality services through socially minded travel. She was prioritizing service. While the two mindsets can be at odds with one another, Thriive’s program model does a great job of combining them through incentivizing profit generation as well as “corporate” philanthropy.

Goo Foo Entrepreneur, Trieu Nguyen Quan, shares his ice cream with our team. Simply delicious!

Repayment of loans is another business term I gained familiarity with during my week in Vietnam. Usually loans are repaid with interest, but in the case of Thriive, repayments carry 0% interest and are repaid in the form of charity, not cash. Businesses receive a loan of up to $10,000 and repay it not to Thriive, but to their immediate communities through donations and job training.

GooFoo Ice Cream Company provides an excellent example of a Thriive repayment plan. Goo Foo will repay its loan to a group of local blind, homeless individuals along with a small freezer so they can sell the ice cream and generate income. In addition to the donations, GooFoo will also train local, underprivileged youth in barista skills for coffee shops, thereby increasing their employability to help lift them out of poverty.

For me, Thriive’s repayment system is a truly unique mechanism to blend the business/service mindset. Results show this to be true as well. Thriive has seen that a majority of its participating businesses continue to participate in charitable activities even after loans have been repaid in full.

My week in Vietnam spent learning a new language and new way of thinking was informative and fun. Easy as mo…hai…ba! I guess I did learn to speak a little Vietnamese after all.

Sara Cannon joined the 3rd Creek Foundation board in 2013. She graduated from UC Davis in 2003 with a Bachelor's of Science in Human Development, San Francisco State University in 2005 with a Multiple Subject Teaching Credential, and TEFL Worldwide Prague in 2008 with a Teaching English as a Foreign Language Certificate. She currently teaches 5th grade in the San Jose Unified School District in San Jose, CA.