SJI 2.2 Businesses with increased profit

Business:  Any enterprise or company organized to produce goods or provide services with the goal of making a profit. For this indicator, a business is defined as any enterprise where more than one person earns income from the business activity.

Note that increased income for smallholders and self-employed is reported under indicator SJI 2.1. If you are uncertain whether to report the result under SJI 2.1 or SJI 2.2, choose the one that is most relevant (but not both).

Increased profit: Measure the positive change in business’ profit (gross income - costs) between two points in time. Only count changes in profit that are directly due to the project. This means you should subtract any profit changes that would have happened without the project. Clearly define what qualifies as 'increased profit' for your project, specifying what should be included as profit changed due to the project and what should not. Any positive change of at least 10% in profit (after appropriate adjustments) is counted towards the indicator.

• fenale-led, male-led, joint lead business

Optional

• Sector

Businesses that have participated in any formal or non-formal income-generating activity supported (indirectly through MSD approach) by Helvetas. Only include primary stakeholders (businesses) in this measure - do not include secondary stakeholders (indirect stakeholders) such as suppliers.

• Surveys and interviews (e.g. business survey report): Conduct surveys/interviews with business owners to gather data on profit changes.

• Business financial records: Collect financial records from the participating businesses to verify increased profits.

At least Endline (no baseline required), mid-line recommended

Conduct an endline either immediately after participation or several months later (e.g., three to six months). Record the business's average profit over a specific period (e.g., 12 months). Whenever possible, verify self-reported income with administrative records for accuracy.

Keep in mind that many businesses may not maintain precise records and may rely on memory or subjective opinions when reporting profits. Although this data may not be entirely accurate, it still offers valuable insights and can indicate overall trends.

If asking for specific profit amounts is challenging or inappropriate, you can instead ask the business owner or financial manager whether profits have increased, decreased, or remained the same compared to before their involvement in the project. Follow up by asking whether they believe this change was directly due to their participation in the project. While this approach is subjective, it can provide a useful indication of causality and avoids the need for precise monetary figures.

Additionally, collect qualitative data, such as stories and feedback, to understand the reasons behind changes in profit levels. Adjust the reported profit data if the changes cannot be plausibly attributed to the project.

Challenge: Isolating the impact of the intervention from other factors influencing business performance.

Approach:  Compare profit changes between businesses that participated in the intervention and those that didn’t, using a control group or methods like propensity score matching. If this isn’t feasible, gather data on external factors (e.g., economic conditions, seasonal trends, other programs) that could influence profits, and adjust your analysis accordingly. For example: Suppose you find that during the period of your intervention, a new large supermarket opened in the area, significantly increasing local demand for products. As a result, many businesses, both those in the program and those not in it, saw a 10% rise in profits. To accurately assess the impact of your program, you would adjust the profit increase figures by subtracting this 10% to account for the external boost in demand. This helps isolate the true effect of your intervention on business profits. It is important to note that since profit is affected by many factors, attributing the possible increase to the project is wrong, hence it is important to be careful when reporting and state that the project contributed to the increased profit.

Challenge: Accurate data collection is critical but can be resource intensive.

Approach: Plan and allocate sufficient resources for data collection and use digital tools to streamline the process. Train data collectors thoroughly and ensure they understand the importance of capturing accurate data. If it not possible to survey all participating businesses, consider using a representative sample.

Challenge: Businesses may experience no or negative change in profit from baseline to endline. 

Approach: Analyse the reasons behind the lack of profit growth, considering both external factors (e.g., market conditions) and internal challenges (e.g., operational inefficiencies). Gather feedback from businesses to identify specific issues they faced and adjust project support accordingly, such as offering additional training or resources. Implement targeted interventions for struggling businesses and monitor their progress. Document these challenges and the steps taken to address them to refine future projects.