PROUT + LETS = Domino Business

In 2014, AMURT Romania received the Norway EEA Grants for 22 months (ending in April 2016). The project aim was to reduce poverty among Roma and other ethnic groups by practicing democratic citizenship, multicultural dialogue, and employment opportunities. One of the activities was to provide entrepreneurial skill training. Knowledge in PROUT cooperative system and LETS (Local Exchange Trade System). When combining the two systems, it was called “Domino Business”.

PROUT Cooperatives

Shrii P.R. Sarkar describes the “co-operative industries are the best means of organising people in an independent manner so they take collective responsibility for their livelihood.”

A successful co-operative is based on three concepts: moral base, strong administration, and whole-hearted acceptance. A well-balanced structure of suppliers, cultivators, producers, retailers, and incharges. One common plan to motivate the members, and lastly a ready market for the goods produced.

LETS (Local Exchange Trade System)

LETS is also called local employment and trading system, is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community information service and records transactions of members exchanging goods and services by using the currency of locally created LETS Credits.

Domino Business

Domino Business” is an invention of AMURT Romania when combining PROUT and LETS. The word “domino” relates to the classical situation in which one event causes a series of similar events to happen one after another. For example the formation of the ancient economy, thousands of years ago, there was a domino effect based on the people’s need for survival. When the tribes discovered that each one has something in their community or area that didn’t exist in others, it created a mutual exchange (barter trade) and later turned into the value-oriented exchange.

PROUT + LETS = Domino business

To be able to guarantee the provision of minimum requirements like food, clothes, housing, medical care and education is to increase the purchasing capacity. With local currency people themselves create employments within a structure that fulfills the important elements from raw materials to final product. Products that are necessary for everyday consumption. They sell the products to themselves, thereby creating a ready-made market. Each member is both a producer and consumer. Domino business is a highly innovative and empowering concept that can succeed if there is a moral base, strong administrator, and whole-hearted acceptance by all participating members.

Application

This model is implemented in a close circle of a minimum of 30 members, where everyone is both a producer and consumer. There are 10 products/services that every member is consuming daily or regularly (potato, bread, clothing mending, house repair, after school, etc.) and each product/service has 3 domino effects.

Example: bread – from a bread shop, the shop from a bakery, and a bakery from a wheat farmer.

The price of the product is the same as in the common market. The tax (3%) of total income is paid but VAT is not (as long as the annual sales are lower than Euro 65,000). The owner of a business product/service is three domino affected members who are sharing the profit end of the month.

The starting idea of each product/service is to have a minimum monthly share of RON 1,350 (450 per member) and a bonus of RON 100. This requires also to have sales (export) to non-members. The value of RON 1,350 is not given in cash but the equal amount of daily consumed 10 products, thereby guaranteeing the everyday basic requirements. The bonus, equally shared with all 30 members, is in cash.

Here below is a suggested model example.

EXAMPLE

1. Bread – sales price 1.00 lei

1.5 loaf x 30 members = 45 loafs/day + extra 55 loafs to outsides = 100 loafs/day

Sales: 1.00 lei x 100 loafs x 30 days = 3,000.00/month

Jobs: 1x seller, 1x baker and 1x farmer

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 90.00/month

Cost of materials and energy: 560.00

Cost per member purchase: 1.50 x 30 days = 45.00/month

Bonus to all 30 members: 1,000 (33.00/member)

2. Potato and other vegetables – sales price 3.00/kg

500g x 30 members = 15kg/day + extra 15kg to outsiders = 30kg/day

Sales: 3.00 lei x 30kg x 30 days = 2700/month

Jobs: 1x seller and 2x farmers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 81.00/month

Cost of materials, seeds and energy: 269.00

Cost per member purchase: 1.50 x 30 days = 45.00/month

Bonus to all 30 members: 1,000.00 (33.00/member)

3. Beans – sales price 8.00/kg

150g x 30 members = 4.5kg/day + extra 7.5kg to outsiders = 12kg/day

Sales: 8.00 lei x 12kg x 30 days = 2,880.00/month

Jobs: 1x seller and 2x farmers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 86.40/month

Cost of materials, seeds, packing and energy: 443.60

Cost per member purchase: 1.50 x 30 days = 36.00/month

Bonus to all 30 members: 1,000.00 (33.00/member)

4. Milk– sales price 3.00/liter

0.5 litre x 30 members = 15 litre/day + extra 15 litre to outsiders = 30 litre/day

Sales: 3.00 lei x 30 litre x 30 days = 2,700/month

Jobs: 1x seller and 2x dairy farmers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 81.00/month

Cost of materials, packing and energy: 269.00

Cost per member purchase: 1.50 x 30 days = 45.00/month

Bonus to all 30 members: 1,000.00 (33.00/member)

5. Egg – sales price 0.60/pic.

2 pic x 30 members = 60 pic/day + extra 20 pic to outsiders = 80 litre/day

Sales: 0.60 lei x 80 pic x 30 days = 1,440/month

Jobs: 1x seller and 2x farmers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 43.20/month

Cost of food and packing: 46.80

Cost per member purchase: 1.20 x 30 days = 36.00/month

6. Seitan (vege/gluten meat) – sales price 5.00/pkg

0.4 pkg x 30 members = 12 pkg/day

Sales: 5.00 lei x 12 pkg x 30 days = 1,800/month

Jobs: 1x seller and 2x bakers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 54.00/month

Cost of materials and packing: 395.00

Cost per member purchase: 2.00 x 30 days = 60.00/month

7. Tailor – mending clothes 5.00/cloth

0.4 clothes x 30 members = 12 clothes/day

Sales: 5.00 lei x 12 clothes x 30 days = 1,800/month

Jobs: 1x seller and 2x tailors

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 54.00/month

Cost of materials and packing: 395.00

Cost per member purchase: 2.00 x 30 days = 60.00/month

8. After school teacher – 2.50/child

1 child x 30 members = 30 children/day

Sales: 2.50 lei x 30 children x 20 days = 1,500/month

Jobs: 3x teachers

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 45.00/month

Cost of materials/rent: 105.00

Cost per member purchase: 2.50 x 20 days = 50.00/month

9. Transport – home delivery of items 3.00/member

1 member x 30 members = 30 member/day

Sales: 3.00 lei x 30 members x 20 days = 1,800/month

Jobs: 3x deliverer

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 54.00/month

Cost of rent: 395.00

Cost per member purchase: 1.50 x 20 days = 30.00/month

10. Administration – 2.50/member

1 member x 30 members = 30 member/day

Sales: 2.50 lei x 30 members x 20 days = 1,500/month

Jobs: 3x admins

Profit share: 3x 450.00 lei (total 1,350.00)

Tax (3%): 45.00/month

Cost of stationary: 105.00

Cost per member purchase: 2.50 x 30 days = 75.00/month

SUMMARY

Cost of each member: 16.00/day x 30 days = 482.00/month

Bonus to each member: 120.00

Total value: 482.00 (products/services) + 120.00 (cash) = 570.00/month

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By AMURT Romania

http://www.amurt.ro/situ/