Community-owned businesses can have a great impact in alleviating rural poverty. Lahanaa is an example of this concept.
--By Shrijana Tha Shrestha
Humans are capitalist by nature. And yet humans are communal by instinct. Though world politics is divided between these two natural instincts, I was amazed to find them in perfect synchronicity at Newa Lahanaa: a community owned and run restaurant on Kirtipur heights. I was there to celebrate one of my friend’s birthdays. As a foodie who loves Newari cuisine, I tasted some of the best authentic Newari dishes I have ever had there. But the party was over for me soon. The explorer in me was trying to dig out the details that made Newa Lahanaa a successful business proposition. Since its establishment it has continuously empowered its member community and provided them a platform where they earn a dignified social living. But what are the elements that have established it as a competitive market force that provides a sustainable income to its members and as an institution, preserves their identity and caters to their cultural, social and religious needs?
Community Vs Personal Enterprises
A community owned business has its stocks sold or earned by the community members where each member has a claim to part of the company assets and profits. This type of business creates the conditions for economic and social progress for the whole community with active participation and fullest possible reliance upon the community’s initiative. Businesses owned by the community also aim to be profitable like any other business, but the difference is that in community businesses profits are reinvested back into the community. Comparatively, privately held businesses are owned by the company founders, management or a group of private investors. The profits are limited to the company stakeholders and the products or services are produced for commercial purposes. These businesses do not invest the profit in communal development.
While both these models have their own significance in the economic development of a country, community owned businesses have a greater significance for a community. Though privately held businesses have a greater capacity to provide returns, acquiring start-up capital and accessing resources to operate them in Nepal are scarce, especially in rural settings. Community businesses address these shortages to some extent. Exploring community businesses as a viable business model in select communities with unique business propositions that can be commercialized, and developing communal micro enterprises, can be imperative in increasing business activities at the local level.
Feasibility of Unique Community Businesses
Nepal is home to a diverse mix of indigenous cultures, products, and life-style. Figuring out valuable business propositions, preparing business models and operating a community business can be imperative for the overall success of the community. Community-owned businesses can have a great impact in alleviating rural poverty.
Lahanaa is an example of this concept. As an important poverty alleviation tool, such homegrown businesses have huge socio-economic potential for community development. Such institutions promote equal participation in the decision making process leading to increased awareness among stakeholders, provide a sustainable income source thereby ensuring better living, health and education for their families and also promote harmonious relationships among community members through regular discussion and cooperation, just like a Guthi.
There are many Guthis in Nepal and in Kathmandu. Lahanaa is one such unique business venture to harness this cultural institution while serving-up the rich Newari food heritage and hospitality to its customers. Its fusion of a traditional organizational structure and modern hospitality services, is unique. This ability enabled it to thrive in the midst of fierce competition among restaurants in Kirtipur – where like in other parts of Nepal, non-Nepali eateries outnumber traditional ones. But there is more to its success than just this fusion and in my point of view these elements can help boost the overall performance of any community business.
Unique Business Proposition
True to its name, Newa Lahaana, which means Newari civilization, banks upon Newari cuisine and culture as its unique business selling point. It serves authentic Newari cuisine with authentic Newari hospitality. It preserves the indigenous culture and presents it to its customers in the form of a modern restaurant business. Integrated with the Newari cultural institution, Guthi, the business is owned by its members where entrepreneurship is strengthened by cultural ties. This is a unique situation where business stakeholders maintain their personal and communal relationships, while working together for the growth of the business, preserving their cultural identity and promoting their heritage.
In the present fast paced individualistic life-style, working together for a communal project seems to be an issue when it comes to implementing a development project. As a community owned business, Newa Lahanaa addresses this issue through its cultural institution, Guthi and its financial returns. The institution has clearly stated rules and regulations for its entire members and the returns that they will receive for offering their services. As everyone’s presence and efforts are recognized, the members have developed the ownership of the business. Offering special discounts to members at the restaurant and providing special cultural celebration services at their homes on special occasions are some of the ways through which the business continues to be a part of each member. In return, the members feel like owners of the business and contribute to its growth more eagerly and responsibly.
Responsible to Community
As a social business, Newa Lahanaa is responsible for the development of the community of which it's a part. Of its total annual profits it invests 50% in community development, which among others includes operating the community waste management tasks, water supply and supplying electricity through generators to the locals during load-shedding hours. Besides providing the profit as a return to its members, the business has created employment opportunities to its stakeholders. All the staff working at the restaurant are from the 63 shareholder families, and most of them are women – housewives who commit part of their time doing various chores at the restaurant.
Through such contributions to the local community, the business has made space for itself in their day-to-day life. It has become an integral part of their life. For a community business to succeed it has to be in dispensible to its stakeholders. It should earn their respect too. As a socially responsible entity, community businesses are responsible to the community in which they operate, because the business as an entity is considered a member of it. This is more evident in Newa Lahanaa’s policy of not serving alcoholic beverages to youngsters in school uniform.
Embedded in Communal Identity
The restaurant uses locally grown ingredients in its dishes, it uses traditional cooking methods as far as practicable, and its hospitality totally reflects the local identity. This is a strong factor in creating a sense of be longingness. It promotes its member’s culture and identity through its cuisines, decoration of the restaurant, selection of dress code for its staff members, adoption of traditional patterns for presenting and serving Newari dishes. These patterns also play a crucial role in embedding the cultural identity of the business owners into the venture.
For any communally-owned social business venture, a sense of cultural and social belongingness is an important factor for nurturing the feeling of ownership for every individual member towards the business. Many of the development programmes with imported or external structures fail in this, and this is evident in the shift towards adopting existing indigenous socio-cultural associations or institutions as a mechanism for implementing development projects – be it vegetable production, or seed farming, apple farming or fish farming or raising awareness about family planning methodologies. One instance of this is the use of traditional links for procuring raw materials by Newa Lahanaa. The restaurant mostly uses raw materials from nearby settlements and suppliers – these suppliers have been supplying those same materials to Kirtipur homes for ages.
Professional Management Team
Management is an essential part of any business. And when it comes to hospitality it becomes even more crucial. While the whole community supports the business, it needs to be operated by professional managers who take calculated risks, introduce timely changes in the business environment, promote healthy discussion among employees for boosting growth and are apt to take quick and smart decisions. One of the secrets for Newa Lahanaa’s success is its being run by a team of hospitality professionals who have over a decade of experience in the industry. It is this group of team members, who came with the idea to establish Newa Lahanaa using the existing Guthi structure. While the general assembly of the members decides the overall vision and goal of the institution, it is this team that executes the decisions and prepares recommendations for improvising the restaurant’s services. They are efficient communicators and this is evident as they have been successful in communicating their ideas to the general members and getting their support to implement them.
Professional Accounts Management
Finance management is another key element of any privately or communally held business. Establishing a streamlined with a no-or-minimum-loopholes financial flow and management system ensures the sustainability of the organization. Most community groups, rural cooperatives, putting aside big corporate houses, have gone bankrupt without such a mechanism. Having a transparent account is a key to win the confidence of the stakeholders. This is another fundamental system that Newa Lahanaa has been dexterously using. While its front line managers maintain the daily accounts and deposit daily transactions into bank accounts another level of accounts manager monitors transactions on a regular basis. Promoting the use of professional accountants in community owned businesses and ensuring mechanisms that will monitor their activities and hold them accountable to the executive committee directly helps in making accounts transparent.
Adapting to Trends
Though there are some businesses which have sustained themselves because of their unwillingness to make changes, most of the businesses do not survive, if they don't. Despite being an institution that is dedicated to the preservation of Newari culture, the business is equally adaptive in catering to the needs of its customers. In its annual review, the management team proposes new methods and tools the business should embrace to entertain its customer base. It is this adaptive nature that has been transforming it into a cultural hub that also incorporates elements of western culture and modern necessities like TV sets, music systems, and mobile chargers among others.
Understanding these basic needs of metro dwellers is important for the business to survive. While the cost for setting up these facilities may not be great, having these facilities is an important factor in retaining customers. And Newa Lahanaa is quick to cash in on these trends because of its adaptive nature.
Reflecting on these elements that have made Newa Lahaana a success, its mix of indigenous-modern methodologies, community businesses can have a greater impact on alleviating Nepal’s poverty. Home stay, cultural and heritage tourism, among other businesses can further benefit from such approaches. Transforming under performing rural private businesses into community businesses or forming community businesses in collaboration with private actors can boost the economic activities in rural settings. Empowering locals in identifying, developing and operating community businesses and making available micro-credit if necessary are important for addressing the poverty situation on a sustainable basis. For instance, community run banana farming and banana products like banana thread fibres, banana papers, crafts among others can be operated in Gorkha, Chitwan, Kailali and other areas.
Such ventures can form the basis for a community to be self-sufficient and enable it to evolve into other ventures in the days ahead. If we are to develop our community while earning a dignified and a better life for ourselves, it’s time to access not only our natural resources but also our cultural resources that carry the potential to be ethically commercialized. It’s time that one takes up the responsibility of developing their community by coming together instead of waiting for the government and non-profit groups. To encourage undeveloped or developing communities to take development initiatives towards a green economy and preserve their natural and cultural capital to receive benefits from the global community, community businesses should be fostered. This indigenous-modern mix methodology is a tool that has the potential to combat poverty, especially in reviving the economies of communities that have been destroyed by the earthquake.
The writer is a social researcher and development enthusiast. She is presently associated with Social Welfare and Support Organization Nepal (SWASON) – a Kailali based non-profit-group as its vice president and can be reached at firstname.lastname@example.org