Mark Joaquin Ruiz is the co-founder of Hapinoy, an organisation dedicated to building up the capacity and skills of small shopkeepers in the Philippines. In this interview he explains some of the lessons that Hapinoy has learnt the hard way. The text of the interview and further details of Mark’s work can be found below.

In developing countries like the Philippines, you often find yourself in rural areas where there’s a general lack of access to basic products and services, such as health care, water, financial services. But wherever you go, you can find very small “hole in the wall” shops – in the Philippines, they are called sari-sari stores.

[My co-founder Bam Aquino and I] aimed to answer two questions as our starting point. How can we help these very small shops grow their business? And second, how could we use sari-sari stores as a distribution network to bring needed products and services to benefit the poor communities they are located in?

The Hapinoy social enterprise program has three components. First is training and education for the store owners, the women microentrepeneurs. Second is access to capital through microfinance institutions. And third is providing new business opportunities. We operate a network of around 10,000 stores in southern Luzon. We started our journey in fast moving consumer goods but have since evolved really into providing different kinds of products and services. We’ve experimented in solar solutions. We’ve experimented in health care, providing over the counter medicine to around 4,000 shops. We have also started providing mobile financial services.

Although we now have thousands of shops, it actually started with one, just to tinker and get an idea about how it could work. From that one store, we then expanded it into 10 after three months. After we got some traction with that initial 10, we expanded to 30. Then we came up with a two-tier model wherein we had a larger community store and a smaller store. And over a couple of years, we were able to figure out a certain ratio wherein one community store could service around 50 smaller stores, so then we were able to get to 200 community stores each serving roughly an average of 50 smaller stores under them. And that model allowed our network to scale.

It hasn’t been an easy ride. Sometimes I joke that we’re on version 23 or 24 of our model. In the beginning, we wanted to do so many things immediately – the training, the microfinance, linking up with suppliers and partners. And then we realized that we were trying to do too much. The ultimate question we needed to answer was, what in the world are we going to be the best at? You cannot be the best at everything. That requires a certain kind of focus. And we realized that our core strength is a deep level of understanding of our store owners such that we can effectively communicate and operationalize the products and services that can be distributed through our network.

It sounds fairly simple, but it took us several years and a lot of zigzags before we got there. We have to continuously have our ear on the ground and be very good at contextualizing and understanding the market environment our store owners are facing. Ultimately, it goes back the fundamental question, what is the real need? What problems are worth solving in the community? A lot of people in these primitive communities don’t have access to basic financial services, so financial inclusion is now something we see as a critical pillar. It’s something that could benefit the communities, as well as a huge business opportunity for the store owners.

Keeping the Mission Front and Center

As a social entrepreneur, focusing on the core also means not losing sight of your mission. We could change what products and services will be offered to adapt to the needs of the market. We could change our model entirely. But for me personally, as a social entrepreneur we should never, ever compromise our social mission. A social enterprise will necessarily need more resources and partners as it scales. And often this comes in the form of investors. We were very lucky that the initial founding partners were extremely aligned to the mission. We all believed in it. We all drank that Kool-Aid, and there was no debate in the boardroom of what we were trying to achieve, especially for our women microentrepreneurs.

But as we were scaling and growing and we needed to get more resources and investors, we had to be very careful because bringing investors on your board is like getting married. So take the time to really get to know your investors. Do you have the same value system? Do you both believe in the same vision, mission, and direction of this organization? Is there that flexibility in terms of adjusting the model as needed?

When we got in our first impact investor, they actually educated us in how to make sure that the enterprise would always stay true to its mission. And the way they did that is to attach a shareholders’ agreement to their investment that basically said all shareholders – existing and future ones – need to sign off on certain conditions. The first was an articulation of the social mission of the organization, and the second was a formal recognition that the social entrepreneur should have the strong voice in making sure this mission and vision are adhered to.


Aggregate the Last Mile

Big corporations operate in areas that make the most economical sense for them. This means they end at a certain boundary, and beyond that boundary are the marginalized people that social entrepreneurs serve. In the Philippines, large grocers don’t want to go deeper and deeper to the rural areas because the economics don’t work. But as a social entrepreneur, that’s exactly the market you want to serve.

So how do you get around that? You have to make sure that it makes economic sense for large companies to engage the communities you serve. In our case, we did it by aggregating the small sari-sari stores by linking them in an organized manner to community stores. The companies are definitely interested in reaching those stores, and now it’s economically viable for them to do so, because we are the intermediary enabling them to reach thousands at once.

As you aggregate a channel that used to be fragmented, there are interesting business models that you can explore. This is particularly true for what we do now in mobile financial services, wherein we’re actually educating store owners into something fairly more complex. Second is the actual flow of services or products, where you can get a percentage of the transactions that flow through your network. Third, we have a research unit. As we get more and more stores into our network, we’re also able to harness data that is valuable to large companies because now they’re getting insights into their existing products. Last, we have become a laboratory. Companies hire us to test products and services – so we’re helping them create new value for last mile customers.

For anyone who wants to be a social entrepreneur, it is critical that the problem you want to solve is forefront in your mind and is very clear to you. It needs to be something you are extremely passionate about because otherwise you are going to give up – you will be saddled with so many challenges and distractions and pulled in a thousand different directions. Once you’ve discovered what this thing is, you have to continuously have your ear to the ground; otherwise, you won’t know what’s really going on. That doesn’t mean it will be a straight road. There will be a lot of twists and turns. But there is a light at the end of the tunnel, I promise. Just don’t give up!


Social Entrepreneurs: Innovators for Action

This post is part of a major series of interviews with leading social entrepreneurs associated with the Schwab Foundation. For further insights from the world of social enterprise see the following posts:

Explainer: What is a social entrepreneur
5 powerful ideas for global impact from social entrepreneurs
10 lessons from leaders — social entrepreneurs tell all
How to make everyone a microentrepreneur
Driving up school standards in Kenya with smart data
The full set of interviews


Author: Mark Joaquin Ruiz, Co-Founder and President, Hapinoy / MicroVentures. For more about Mark’s approach read An economic revolution driven by microentrepreneurs and watch Empowering women in the Philippines.

Image: A sari-sari shop belonging to the Hapinoy network