What makes Balloon Unique to our Beneficiaries?
Why do our entrepreneurs choose to work with us over other microfinance institutions or entrepreneurship organizations?
This question of ‘why do people choose us?’ is one which most organizations deal with throughout their organizational lifetimes. We recently conducted a series of interviews with several Balloon entrepreneurs (our main beneficiaries). Two of the questions looked to tap into this exact question:
- Why did you choose to work with Balloon?
- Why did you not work with other finance providers or entrepreneurship organizations?
Below we capture some of the insights we arrived at analysing this data. This can be organised under three major themes, what we do – split into financial and non-financial support, and how we do it.
Financial Support: conditions of the loan
What we refer to as ‘growth focussed finance’ (finance which is designed with entrepreneurs’ growth in mind) was the most often mentioned aspect for wanting to join the Balloon program. Contrary to other organizations, Balloon has structured its business model in such a way so that we can offer entrepreneurs the best possible finance (see upcoming publication ‘This is Balloon’). A big part of this offering is low interest payments.
As noted by Evans (Nakuru, Kenya) interest payments can sometimes make or break a business: “The loan being interest free was also another thing that convinced me to pursue Balloon especially because I am starting up a new business thus, getting the interest free loan would not strain my business.”
A second aspect of the finance that entrepreneurs are drawn to was the lack of required collateral: “[other] financial providers have very many requirements such as collateral that I was not able to meet” – Brian (Eldoret, Kenya)
A third aspect was flexible repayments of the loan: “Balloon as an organisation is very understanding – if an entrepreneur is going to be delayed paying one of the installments back, Balloon provides the flexibility to repay the loan at a different time. This makes a huge difference.” – Flomena – pictured below (Eldoret, Kenya)
Summing up these three points well, Musa (Mbale, Uganda) noted: “Balloon charges no interest rates on loans it awards. No collateral [is] needed. A good grace period is given for loan repayment”.
Non-financial support to entrepreneurs
Balloon works hard to offer as much as possible in support of people’s businesses. While a big part of that is the appropriate finance discussed above, equally important is the non-financial support.
Sophia (Nakuru, Kenya) made this point well: “Someone can give you money but if you don’t know how to use it, you are going to use it in a wrong way”.
Expanding on what Balloon does in this space, Brian (Eldoret, Kenya) noted: “I worked with Balloon because it is one of the few organizations that are interested with not only the business but the entrepreneur. Other financial providers or organizations are only there to give you the loan at an interest and not interested if you’ve learnt anything or not. Balloon gives the entrepreneur the whole package, the learning experience and the loan that has no interest that will help the business to run smoothly.” – Brian (Eldoret, Kenya).
Onesmus (Nakuru, Kenya) agreed: “In Balloon, you’re not only given a loan but you are given free two-month training on how to establish and grow your business. The Balloon training is very significant and easy to learn which helped my business to really flourish. The two-month free training was awesome!”
A big part of this is the personal development that entrepreneurs go through while working with Balloon: “I liked the idea of the program because I wanted to work with UK volunteers to learn about another culture.” – Farnedes (Eldoret, Kenya). When discussing the motivations for applying to Balloon Hellen (Mbale, Uganda) noted a major attraction for her apart from the financial support was Balloon’s focus on personal development: “Above all, the objective to empower the young adults with different skills.”
It was not just the business benefits brought about by working with Balloon. Sarah (Mbale, Uganda) noted that a major attraction was working with: “good, fun people”. While Stephen (Mbale, Uganda) was there in part to “make friends”. Aludira (Eldoret, Kenya) “had a great time working with the Fellows”.
Summing up the non-financial support well, Winnie (Njoro, Kenya, 2015) noted that Balloon’s competitors “do not visit you, encourage you and coach you. They do no follow up and they are not there for you like Balloon is”.
The Balloon ‘way’
As noted, Balloon tries to be there for entrepreneurs, that also means using processes and a style which makes our offering as accessible as possible. A lot of this has to do with reduced administrative burdens. Ivan (Eldoret, Kenya) noted “The bank is more difficult to get a loan as they require many documents. For a start-up entrepreneur [Balloon] is easier.”
Furthermore, being informal businesses, many entrepreneurs do not have the governance policies required of formal businesses, which can make accessing other finance difficult: “With all other finance providers you must have security measures such as log books or a title deed of your work” – Evelyn (Eldoret, Kenya).
Indeed, keeping things simple was a major attraction, as was a respect for entrepreneurs time: “I chose to work with Balloon because of their simplicity and flexibility. [Also] I was attracted to this programme as oppose to others as the volunteers came to the entrepreneurs.” – John (Eldoret, Kenya)
Focusing on individuals rather than groups (as done with traditional microfinance) was another strong point: “Most of the micro-finance organizations here in Kenya require you to work in groups. I have heard stories of when some people in groups disappear after getting the loan and the people left in the group have to pay for it.” – Tabitha (Eldoret, Kenya)
This distinct way of doing things has clearly left an impression with Shadrack (Mbale, Uganda) noting “Balloon Ventures clearly set their own rules”.
For Balloon this is all good news, we have invested a lot of time in putting together the best possible offering to our entrepreneurs. It seems that our hunches about what they need to grow their businesses were in the right direction. This quote from Billy in Eldoret perhaps sums it up best:
“Banks do not offer entrepreneurship training. They have high interest rates and repayment periods are long and inflexible. They need collateral for your loan. On the other hand, Balloon gives you training, low interest rates and reasonable repayment periods. Also, you test your business idea so you know if it works. You gain new friends and different ideas from volunteers.”
Our next step is to dig deeper in terms of what entrepreneurs need and continue to innovate in order to provide services that meet these needs.
This piece was written by Nicholas Andreou. Nicholas leads the Insight & Impact function at Balloon Ventures. He holds a PhD from the University of Nottingham and has previously held research positions at Harvard University and the World Health Organization as a student.