Understanding the Theodora Project Part Four – Introduction to Revolutionary and Transformational Potential – The Numbers

Early on in the project, one of my contacts referred a book to me. It’s Lean Impact by Ann Mei Chang. At the time, I was not in the state of mind to be reading anything. But this Fall for some reason I picked up…and was immediately transported. For Ms. Chang (a Google senior executive who changed to the social impact career path), challenged most of the assumptions for building social impact ventures. She attacked the traditional grant funding model as stifling innovation and taking focus away from achieving actual impact and locking impact organizations to working just to get more grant funding. She argued that many organizations look to achieve numbers that look good but don’t actual measure real impact. Her thesis was social impact organizations should look at what could potentially be achieved and be sure that was worth pursuing. Then, using lean techniques, she urged organizations to test, test, and test more to ensure that the model for change offered was practical, pragmatic, and scalable. Lastly she stated that these tests should be done as quickly as possible and with as little cost as possible.

 

I decided to take this approach to heart. And I started by doing some simple calculations of what our impact truly could be if we were successful and developing viable model.

• We pay our participants $400 a month/$4,800 a year. That, by the way, is considered a middle-class to upper middle-class wage in Ghana

•  We charge clients a flat fee of $200 a month/$2,400 a year

• Based upon the amount of time our participants work in a week and their relative productivity, it is not unreasonable to expect a fully trained and productive participant to handle 10 clients.

• That means a participant should be able to bill $24,000 a year. With a direct labor cost of $4,800, the gross profit is $19,200…not bad. 
  

•  Let’s assume we have 10 participants working at full capacity. That would be $240,000 in revenue with $48,000 in direct cost and $192,000 in gross profit.

•  Further assume that overhead and reinvestment use 60% of gross profit or $115,200. That leaves $76,800. If we were structured as a participant owned cooperative we would distribute that to the 10 participants or $7,680 each, That’s a bonus of 160% of the annual wage!

 I would call that significant impact for our participants.

 

But what about big impact?

• Well the U.S. Small Business Administration in the 2010 census stated there were 21 million businesses with NO EMPLOYEES. That’s individuals working on their own. That potentially is our target market. But in fact many of those would never have an assistant. So let’s assume only 20% of the market is really a potential for us. That would be 4.2 million.

• In Ghana a study done in 2016 estimated 80,000 women engaged in sex trade. Let’s assume Theodora Africa could engage 10% of these or 8,000.

• If those 8,000 were working at the rate we discussed and had 10 clients each, we would be serving 80,000 clients, slightly less that 2% market share. That would be 8,000 women out of sex work, earning well more than middle-class incomes, bringing in $19.2 million of export services into the Ghana economy!

That would be what I would call Impact. Something well worth investing in. Of course this is based on a bunch of assumptions not the least of which is our proving we can create very competitive virtual assistants that can serve U.S. clients.

 

More on that in my next post.