What is the difference between: a business in a poor community, vs well-off community?

Economies of scale!

This is the benefit a business in a well-off community gets from making a big amount product at one time. It comes from investing big money in big machines and systems, run by people with big skills. It’s the competitive advantage that nobody can beat! It makes top quality products at the lowest price, conveniently delivered to everybody’s nearest store.

Sipho (in the picture) is a business owner in a poor community. How can Sipho’s business compete? How will she draw customers into her store and away from the cheap, good quality products from the well-off community? Perhaps their only advantage is that she lives in the community. Her poor community business is right in the middle of the poor community. So, she decides the best she can offer is variety: A few of a lot of things. She makes a small quantity of products. She employs a small amount of people and invests a small amount of money. It’s bad quality, expensive and doesn’t generate much profit. But it’s next door, so a few people buy it.

What the REWX is doing for Sipho is giving her a hope – a fighting chance. She gets new and real advantages to help her create her own good-quality, good-price products. Firstly, Sipho gets labor that costs her little because it’s partly paid for by someone else. With cheap but reliable labor, she can sell her products and service cheaper. Second, the community gets more employees earning a salary. So, more people in the poor community have spending power to buy products made at the business next door. Cheaper products with more paying customers is a recipe for increased demand for poor community business products. These businesses can now sell more of a product. So they can survive by selling just one kind of product. They can do a lot of it and get good at it!

Sipho can start her business on a journey towards economies of scale!