The Importance of Business Development Services for Microfinance Clients in Industrialized Countries

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Global Microcredit Summit paper - The Importance of Business Development Services for Microfinance Clients in Industrialized Countries

Global Microcredit Summit paper - The Importance of Business Development Services for Microfinance Clients in Industrialized Countries

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  • 1. 2011 Global Microcredit Summit Commissioned Workshop Paper November 14-17, 2011 – Valladolid, SpainThe Importance of Business Development Services for Microfinance Clients in Industrialized Countries Written by: Connie E. Evans, President & Chief Executive Officer, Association for Enterprise Opportunity USA
  • 2. TABLE OF CONTENTSIntroduction….…………………………………………...…..……………………………3Section 1: Three Trends Driving the Importance of Business Development Services 1. Renewed urgency about the growing wealth gap and increasing poverty………..4 2. Current Focus and Push to Entrepreneurship for Job Creation…………………...7 3. Technology’s promise for changing the world………………………………..…11Section 2: Conclusion .………………………….…….………………………………....16Bibliography……………………………………………………………………………..17Acknowledgements….……….………………………………………..…...…………....18 2
  • 3. The Importance of Business Development Services for Microfinance Clients in Industrialized CountriesIntroductionWhat are the trends driving the importance of business development services tounderserved business owners and aspiring entrepreneurs in this period of globaleconomic upheaval? What challenges will they pose to current practice in themicroenterprise development industry? And what opportunities will these big trendscreate for new approaches that dramatically increase the reach, effectiveness andefficiency of business development services?This paper is inspired by and uses the work and research, in part, conducted by theAssociation for Enterprise Opportunity (AEO), the national association for U. S.microenterprise development, where our focus is on unlocking the potential of microbusinesses for job creation. The potential is great but constrained by the complexchallenges faced by the nonprofit organizations, and other institutions that seek toserve them. These challenges are significant but not insurmountable. They exists withinan entrepreneurial ecosystem and to achieve real game change, must be addressed withcoordinated actions among by all actors in the ecosystem—individuals, companies,nonprofits, foundations and government.There is no shortage of determined, committed, and capable entrepreneurs who needto be appropriately capitalized and coached. However, there is an availability, access,and impact problem—not just access to capital (often what receives the most focus) butaccess to business development services and opportunities. Business developmentservices (BDS), also referred to as non-financial services, are designed to assist microbusiness owners and aspiring entrepreneurs to start, operate efficiently and grow theirbusinesses with the goal of job creation, poverty alleviation and/or economic growth.The array of services is wide and includes training, consulting, and marketing services,business information, and promotion of business to business linkages, technologyassistance, and other non-financial services. In the context of the United Statesmicroenterprise development industry, evidence abounds that many more individualsreceive business services than micro loans.By framing the importance of business development services in the context of the threedriving forces described herein, it emphasizes the urgency for new solutions, newpartnerships and faster adoption of innovations that work. Here are the three trendsthat challenge us to move forward for collective impact. 3
  • 4. SECTION I: THREE TRENDS DRIVING THE IMPORTANCE OF BUSINESSDEVELOPMENT SERVICES 1. Renewed urgency about the growing wealth gap and increasing povertyThe global economic crisis and its aftermath mean the world faces the prospect of aprolonged increase in unemployment, deepening poverty and inequality. You addskyrocketing pay for CEOs, and increasing assets for those at the very top income brackets, you’ve got a record high divide between the rich and the poor. With the gap between the wealthiest few and everyone else, there is a renewed urgency for equality and opportunities and stories of strikes and protests are increasingly commonplace. A survey by the World Economic Forum says its members see widening economic disparities as one of the two main global risks over the next decade.Income and earnings inequality has been on the rise over the past two decades in mostOECD countries. Although there are large differences between countries, in 2008, theincome of the richest 10% was, on average in OECD countries, almost nine times that ofthe poorest 10%.The number of people living in poverty has risen in the United States for the last fourconsecutive years. There were over 46 million people in the United States living inpoverty in 2010; the largest numbers of Americans in poverty since such estimates havebeen published by the U.S. Census Bureau.While America is facing its largest wealth disparity in ageneration, it’s pushing minorities to the economicmargins. That’s the finding of a new study by the PewResearch Center. The median wealth of whites is now20 times that of black households and 18 times that ofHispanic households. Hispanics and blacks are thenation’s two largest minority groups, making up 16%and 12% of the U.S. population respectively. Theincome and wealth gaps are most severelyexperienced by women of color, who face thecompounded effects of gender and racial economicdisparities.We know that the recovery is underway, but it is not arecovery that is strong enough to bring the millions of 4
  • 5. new unemployed back to work. What can create wealth and alleviate poverty? For themillions of people living at or below the poverty line in industrialized countries, self-employment and business ownership through microenterprise is likely to be their mostviable option.In the US, the median net worth of business owners is almost 2.5 times higher than non-business owners. For a black woman, the difference is more than 10 times. For a Latinoman, the difference is 5x.How valuable is business development services to starting a new business? In the EUcontext, business development services, such as training and technical assistance areconsidered to be critical elements of success for setting up a new business. According tothe 2008-2009 EMN survey of the microfinance sector in Europe, of which 170institutions responded, the majority of institutions offer business development services(57%). Another 27% offer referrals to other service providers. Only 19% of theinstitutions did not provide any kind of business development services.Women’s Initiative for SelfEmployment, in the UnitedStates, provides training tolow-income women to help instarting a business. This hasbeen a highly successfulstrategy for increasinghousehold wealth as well asincome through the start-upof microbusinesses. Theyprovide a 20-session business management course, Simple Steps to Business Success toprimarily Latina and African American women clients. Women’s Initiative conducted adecade-long study of their clients’ asset growth after completing the businessmanagement course. The study collected and analyzed empirical data which shows thattheir clients more than triple their overall household wealth and increase their businessequity six-fold on average of two years after participating in the business training. Theyreport a positive relationship between a client’s business development and theirhousehold financial well-being. For every dollar of business equity owned, Women’sInitiative clients have more than nearly two dollars of overall household wealth. Despitefinancial risks associated with business start-up and ownership, Women’s Initiativeclients who are in business have 40% higher average household incomes and 48% morehousehold net worth than clients who have not started a business. After participating inthe Women’s Initiative program, one in five (20%) clients reported owning their ownhome. Homeownership rates increased most dramatically for Latina clients, growingfrom 11% before training to 32% after. African-American women and Latinas whoreceive business management training through Women’s Initiative had the highest 5
  • 6. increase in their business equity and their overall household wealth among all clients. Despite starting with fewer business and household assets, two years after training these two groups accrued the highest business and overall household wealth. In spite of such positive outcomes, the delivery and provision of business development services to microfinance clients is far away from reaching the numbers of people affected by the widening wealth gap. Why does this remain so? One keyreason is because so few programs are able to report their impact. AEO randomlyselected 460 organizations among the more than 800 programs we identified to assesswhether they report impact and if so, using what metrics. We found that 67% did notreport their impact using quantitative measures and only a handful of organizationspresent their impact through longitudinal reporting of activities, reach, return oninvestment, or other metrics.Increasingly demanding funders and investors are eager to deploy scarce resourcesagainst their highest potential uses. Yet meaningful information about the impact of anorganization or its interventions is often hard to find. A holistic and standardmeasurement approach would permit investment in local approaches that work andnew models that can scale. Across Industrialized Countries, nonprofit organizationsengaged in business development services are typically operating with low budgets andimpact tracking and reporting is resource intensive and hard to do. Most solutions todaytend to be labor intensive and expensive. They are also scoped in ways that do noteffectively encourage experimentation and/or collaboration. To further complicate thematter, definitions of impact and resulting measures are not standardized. As a result, itis nearly impossible to make meaningful comparisons across different interventions at alevel that is granular enough to be meaningful. Will better assessment of business development services open up new opportunitiesfor greater investment? A new approach to impact assessment is necessary andpossible. At AEO, we believe that to be successful, an approach must be: Standardized components that are easy to tailor to nearly any organization or intervention Created with incentives for all stakeholders to participate and benefit Integrated into an organization’s ongoing operations Accompanied by resources and support for nonprofits to execute 6
  • 7. This issue of impact cannot be taken lightly. Because Women’s Initiative has been ableto present their program’s impact, they have been able to secure the necessary funds toscale (reach greater numbers of clients) their program significantly. Can other businessdevelopment service organizations emulate this organization’s commitment to impactassessment? Can the industry play an increased role in closing the wealth gap andalleviating poverty? The path may not be easy, but documenting outcomes and beingable to demonstrate asset and wealth development is imperative for the industry.Reaching more of the poor with financial services is important, equally important ismeasuring the results. 2. Current Focus and Push to Entrepreneurship for Job CreationSince the beginning of 2008, Spain, South Africa and the United States had experiencedthe biggest falls in employment among the G20 countries. Spain and the United Statesalso saw the biggest rises in unemployment rates, followed by Britain. The new “Worldof Work Report 2011: Making markets work for jobs”, published by the InternationalLabour Organization (ILO) states that based on current trends, it will take at least fiveyears to return employment in advanced economies to pre-crisis levels, one year laterthan projected in last year’s report.No one can be happy with the painfully slow recovery of jobs resulting from theeconomic crisis and weakened economy. With this high unemployment, the number ofindividuals motivated to become entrepreneurs is on the increase. For example, lastyear, more Americans became entrepreneurs than any time in the last 15 years. Smallenterprise is the true back-bone of both the U. S. and the European economy, beingprimarily responsible for wealth and economic growth, next to their key role ininnovation and R&D. In the EU, nine out of ten small businesses are micro enterpriseswith less than 10 employees. If the economy of industrialized countries is going tobounce back, it must happen on Main Street. Micro or very small businesses representmore than 80% of all businesses in the US. In fact, they are so prevalent, If one in three micro businesses hired just one person, the country would be at full employment.A key question is where will business owners turn for help to grow their businesses? Theprovision of business development services is fragmented and spread across all types oforganizations. Language is confusing depending on the provider. Many microenterpriseprograms that provide business development services focus on helping the underservedto start businesses, but are not equipped with staff, products or services to helpbusinesses to grow. 7
  • 8. “As a funder and supporter of organizations that provide intensive business training for start-ups, we’ve noticed that there’s so much demand in the market for businesses that have already formed and are now just struggling to survive… Maybe it’s someone who needs to re-work their product mix and bring it to market. In many cases, their needs are not well aligned with the training services provided by these traditional models and approaches. How can we collectively keep those folks in business and position them for growth?” – Daniel Delehanty, Capital OneIs there enough attention being given to helping microenterprises grow? Most microbusiness owners and aspiring business owners don’t get what they need to succeed.This is unfortunate because where microenterprise development organizations servebusiness owners, outcomes, such as improved survival rates, job creation, and economicimpact can be impressive. From our analysis, higher than necessary costs to servecoupled with capacity constraints prevent Main Street business owners and aspiringentrepreneurs from getting what they need to grow and to hire. There are not enoughservices, products, or opportunities that meet the unique needs of these businesses andtheir owners and that results in an availability problem.In addition to products and services not being available, underserved entrepreneursmust overcome additional hurdles of access, typically as a consequence of their startingwealth. If these businesses are going to grow and hire, they will need fairly pricedcapital and high impact services to support management and growth. If themicroenterprise industry can solve the twin problems of availability and access, we willincrease the impact of microfinance clients and moreover, unleash new economicopportunities for millions of business owners and aspiring business owners who wouldbe able to take advantage of services.Within the context of the US, the current microenterprise industry structure presentsnearly insurmountable challenges to effectively and efficiently reach micro businessowners and aspiring entrepreneurs with access to the right mix of capital and businessservices to increase their odds of success. Current cost structures preclude nonprofitorganizations from meeting these needs. Reaching ~80% of underserved businessowners at current costs would require more than $20 billion, which represents justunder half of total giving by U.S. foundations in 2009. As demand for capital and servicesincreases, expense is generally growing much faster than revenue. As a result, marginsare decreasing across the board. This puts serious constraints on operating liquidity andin the near term will put some organizations at risk. We see that liquidity constraintsthreaten both large and small organizations. Although large organizations may be moreaccustomed to managing against these constraints, neither big nor small organizationsare well-positioned to invest in capacity building and growth. Business developmentservice providers are by far the most precarious with median months of unrestricted 8
  • 9. liquid net assets steadily declining since 2006. In 2009, the median value among pure service providers (not lenders) was one month of liquidity. In response to these findings, the team at AEO has asked, “What is the path forward? Where are the highest potential opportunities to significantly increase the odds of success? We think the answer lies in collective impact and thinking about solutions differently than wehave to date. Reaching underserved businesses and aspiring business owners is notabout the size of any single organization but rather impact and total coverage from theecosystem of organizations and resources available nationally, regionally or locally.To date, investments in US micro-business development efforts have focused almostexclusively on support for program development and capacity building within individualorganizations. This approach can and has been successful. However, in order to addressthe urgent and growing needs of underserved business owners and to accelerateeconomic recovery in communities around the country, it is imperative to advance newmodels to deliver capital and services. It is possible to strengthen and build on whatworks today yet fundamentally change the game. AEO, its partners and members arecommitted to reaching one million underserved business owners by scaling provenprograms and using technology for more efficient and effective allocation of resources.Here are two descriptions that illustrate how AEO is applying this new framework.One of the high impact business development service programs that we will scale isMarketLink. AEO is partnering with Oregon Microenterprise Network (OMEN) to bringsophisticated market research services to disadvantaged entrepreneurs. The approachyields results: Business owners that have used these services generally experienceincreased revenues within six months and achieve other business goals. Since 2006,OMEN has provided these services to hundreds of business owners across Oregon. Now,AEO and OMEN are seeking to expand the program to reach underserved businessowners throughout the country. This partnership represents an innovative businessmodel to provide low-wealth entrepreneurs with access to high quality market researchand marketing support services.MarketLink includes a suite of tailored market research services to help microbusinessowners find and reach customers, tap into new markets and make informed businessdecisions. MarketLink services include: Industry analysis and trend spotting Sales lead generation Social media marketing support Competitive intelligence 9
  • 10. Primary and secondary market researchMarketLink was developed by OMEN using the same market research and principles ofcompetitive intelligence utilized by Fortune 500 companies. MarketLink contributes toleveling the playing field for smallest business owners.AEO, along with its private-sector partners, and others are preparing to launch a web-based marketing and matching system to connect underserved entrepreneurs with high-quality financial products and tailored business development services. The system, ashared utility that builds on what works today in communities across the country, willreduce the costs and risks of delivering capital and services to Main Street businessowners without sacrificing valuable personal touch. The system represents a materialopportunity to move the needle on job creation by more effectively and efficientlydeploying resources.The technology platform is proven: to date more than 3,500 Main Street businesseshave used it to borrow and repay in excess of $125 million. All participating businesseswill receive an actionable financial profile and matches to local resources that can helpthem secure capital and grow. At launch, 30% of small businesses presently unable toaccess capital from commercial banks will qualify for a loan from a community lender.Over time, products tailored to meet the needs of additional borrowers will be rolledout.We are preparing to launch pilots in a handful of geographies in order to demonstratethe potential of this marketing and matching system. As a national organization withmembers in every state and relationships with a broad range of stakeholders, AEO iswell positioned to lead the creation of this critical new industry utility. To move the industry forward, microenterprise and microfinance associations in each of the Industrialized countries will need to adopt similar frameworks, and develop innovative partnerships and initiatives, similar to the One in Three framework being 10
  • 11. implemented via AEO. 3. Technology’s promise for changing the worldThe third trend offers great potential to improve how we all work, but even moresignificant promise for underserved business owners who might find better availabilityand access to services through technology. With the widespread penetration of mobilephones and other handheld devices that connect to the Web, nearly 4 billion peopleworldwide now have some level of access to computing. At the same time, the Internetcontinues to mature as a gateway for “cloud computing,” in which remote datacentershost data and serve applications over the Web for use across a broad spectrum ofdevices and IT systems.1Moreover, with the introduction of smart-phones and the explosion of video and socialmedia platforms, and rapid changes in the way people consume content, the universe ofonline learners is likely to continue to grow and expand.Clearly, the growth in mobile phones has been explosive, especially in emerging andlow-income markets, where they have been put to use in delivery models for microcredit and banking, health care and education, just to name a few of the applications.Jeffrey Bradach’s article, Scaling Impact, discusses how nonprofits are employing a numberof technology-based strategies to scale their impact without dramatically increasing theircosts (converting ‘bricks to clicks’) through the creation of tools or platforms that users canreadily adopt.2 Applied thoughtfully and in combination, to some degree, with humannetworks, technology can unleash new breakthroughs in business developmentservices.It’s true that understanding new technologies and their applications can beoverwhelming to those of us who are not “wired” to think that way. So here are fourapproaches that provide a sense of how to imagine for the future:The first approach is new business models. Products and services that seemed tooexpensive may find themselves being implemented under a new business model thanksto technology. Just look at MicroMentor (www.micromentor.org), an online end-to-endturnkey solution for business mentoring. To date, this proven mentoring solution hasmatched more than 3,000 entrepreneurs and mentors with impressive results: Morethan 60% of the mentoring relationships contributed to both revenue and employmentgrowth at less than 90% of the industry average cost of delivering these services.Because the business model relies on technology, it opens MicroMentor up to a muchbroader customer base for people seeking to be mentors and those looking for mentorsthan would be possible in a bricks and mortar model used by most local nonprofit1 Unleashing Technology to Advance Social and Economic Development, Microsoft2 Jeffrey Bradach, “Scaling Impact,” Stanford Social Innovation Review, Summer 2010: 27. 11
  • 12. organizations. Additionally, MicroMentor can add to its revenue stream by providingaccess to its mentoring platform for microenterprise organizations implementing locally-managed mentoring programs. Could this be an option for the 19% of microlenders inthe EU Study that provide no business services or referrals to their clients? AEO iscollaborating with MicroMentor to scale its operation on a national and internationalbasis.A second approach for integrating technology into business development services isnew delivery models. Applying new technologies could dramatically lower cost barriersand increase the responsiveness of delivering business information and other content.We hear more about mobile technology applied in microfinance, as well, as smallproducers using their mobiles and text messaging to get better prices in the market orto shop around for inputs as a means to overcome the advantages of not having a fixedlocation. But mobile applications are not as well developed in Industrialized countriesfor the delivery of business development services.There are a number of microenterprise organizations in the U. S. exploring andexperimenting with new delivery models that apply distance learning systems to thedelivery of business development services to clients. Findings from a study conducted bythe Aspen Institute shows that organizations are using online courses and webinars, thephone to provide coaching and counseling, Internet and email, podcasts and videos, aswell as blogs and social networking sites.One entertaining and perhaps more creative use of technology is Grand Café, aneducational video series that features four immigrant women helping each other growtheir endeavors after meeting in a business start-up class. It is a program by CEOWomen, a California microenterprise development organization, whose main goal ishelping women increase their business skills to become economically independent. CEOWomen is using the series to scale their 16-week business training program and over700 women have viewed the telenovela-as-curriculum since it launched. The charactersspeak English and their experiences are cataloged in a Latin Telenovela format, and theprotagonists (including a jewelry maker from Haiti, a handywoman from Mexico, and anaccountant from China) were based on the nonprofits own immigrant and refugeeentrepreneur clients. It is an inventive use of a format for helping women to build a start-up business andlearn English as a second language. Because it is soap opera-esque, there is even a lovestory thrown in. The series and its taped questions for business clients are planned to bemade available through online distribution, DVDs, and possible broadcast.According to CEO Women staff, they have found blending classroom and home learningto be an effective way to reach women who are looking to grow their food, artisan, andimport businesses while managing families and work. Clearly, questions remain about 12
  • 13. the pick up by individuals, cost and return on investment of the series, but the conceptseems to be promising.A third approach to consider is new information exchange models. Micro businessescould become more competitive if they had quicker access to information. As oneexample, each percentage point of procurement spend by the U. S. Federal governmentalone that could flow to small disadvantaged businesses represents $5 billion. Justimagine providing an innovative technology teaming and matching functionality to anorganization’s existing business development service platform that begins to open upvalue chains and access to procurement for participation. Using such a model forbusiness owners searching for other, perhaps smaller businesses, to collaborate onsubmitting a bid to provide services can be quite advantageous in helping microbusinesses to grow.The last approach to integrating technology in business development services is that ofdeveloping new networking models. Social networks such as Twitter, Facebook andYouTube keep many of us connected to a continuous stream of information. Theseplatforms provide tools that can encourage collaboration, discussion and learning fromentrepreneurs and aspiring entrepreneurs. Information is key for any business owner,but especially for the owners of the smallest of businesses and for those who are oftenisolated and underserved. The appropriate networking model can increase bargainingpower and help to level the playing field for micro businesses.Unlocking the next wave of potential for business development services will most likelyrequire a lot of technologies. Will technology be what changes the game for allentrepreneurs? If so, then we must step up the pace in which we not only integrate newtechnology-driven models, but must also work to ensure that broadband access andaccess to affordable equipment is made available to underserved individuals andcommunities. Technology adoption is critical, but not for technology sake. Technology isa tool for microenterprise development organizations to use to give them an advantage.What will it take for organizations to adopt any of these new models using technology?Some will be good at it and others will fail miserably in meeting their goals. Integratingtechnology models with business development services is not an exercise aboutefficiencies or scale. Rather, it is about changing organizational approaches anddiscovering innovation. To infuse innovative thinking into a culture requires thinkingstrategically, rather than tactically. This strategic approach requires more than justencouragement and open-mindedness. It requires commitment to systems andprocesses that can create new solutions to old challenges.Bringing innovation into the workplace is not an easy task. It takes more than, as somepeople believe, sitting around and waiting for big ideas to happen. Innovation takes anopen-minded culture. But not all workplaces offer an environment to challenge thestatus quo. There may be concerns, for example, about a substantial investment in an 13
  • 14. approach that has always been used to solve a particular problem or provide a particularservice. People become comfortable with, and most often unaware of, continuouslyusing the same problem-solving techniques.Years ago, Albert Einstein defined insanity as "doing the same thing over and over againand expecting a different outcome." To change the way you think about problem solvingrequires a paradigm shift. If you seek to encourage innovation, expect resistance. Thestep between individual creativity and organizational innovation often looks more like aleap. One proven method to address a challenge in your organization about businessdevelopment services is to learn and follow an innovation process. Start with somethingsimple by taking on a small issue in your organization. Put together a diverse team andcreate a clearly defined problem statement to be sure everyone understands your goal.Innovation: A Five-Step Approach3Innovation can be a learnable, trackable process that is exciting and enlightening.Heres a process your organization can use to identify new solutions into the oldchallenges in business development service delivery.Step One: Gather Information. The team will need to spend time and devote attentionto gathering relevant data on the project. Asking the right questions, such as who makesup the marketplace and what do they want, will lead research in the right direction.For example, teams will want to read such important information as reports, journals,and meeting notes. They will need to look at the environment surrounding the projectsand note useful insights they observe. They will present their information offering ageneral view of their whole findings.Step Two: Observe the Real Situation. Step two is all about looking. The team needs toact like anthropologists and not only observe the process or system they are about tochange but document findings with notes, photos, and even videos. Beware of makingassumptions that will sabotage the effectiveness of good observation techniques.In this step, teams will observe what confuses and perplexes an end user. They will needto review their information carefully, perhaps often, to catch important details.Videotapes will need to be watched multiple times. The teams can expect to begin tosee common areas of concern emerging within their project research.Step Three: Develop New Concepts. If you approach brainstorming as a "no-brainer,"your team will probably come up with the same old same old. Employing solidbrainstorming techniques will help generate many more solutions with greateroriginality. The team leader needs to be well versed in a variety of approaches to get the3 Rachel Fine, Blue Grotto, Inc. 14
  • 15. process off the ground.In this step the team is applying divergent thinking techniques to a wide breath of ideas,some of them even bizarre and impractical. Concepts within ideas will be substituted,combined, modified, adapted, magnified, minimized, eliminated, and rearranged. In theend, the team will have flipchart pages on the wall full of drawings of ideas, from whichthey will now begin the process of choosing three or four possible ideas.Step Four: Convergent Thinking. Take all your big-picture ideas and start convergingthem into real application. Heres where the rubber hits the road, when you take yourbest innovations out for a test drive. Ask yourselves tough questions: How can weimprove? What questions are not being asked? Is the focus in the right place? Timing iscritical. If this step is done too early in the process, good ideas dont have time to reachfruition. If this is done too late, a practical application may have lost its chance toemerge.Contrary to the big-picture brainstorming of the previous phase, the team will now workclosely to bring together several viable prototypes, using drawings, computers, orwhatever building materials are most appropriate. They will both criticize and defendtheir prototypes. They may go back to step three for another quick look at ideas.Step Five: Implementation. In this step the team will focus on their three or four bestideas and start to introduce a critical evaluation of the forces both for and againstimplementation of these ideas. They will identify the blocks and barriers to success andhow to overcome these barriers.Without the right implementation plan, the best innovation will sit in a file drawercollecting dust. Ask: Who will lose if this innovation is accepted? Who will win? What arethe organizational impediments to this action plans success? What is the organizationalreadiness? The final report should include a timetable for trials, tests, and perhaps aninitial market analysis.Innovation and technology applied to business development services offers greatpotential to improve how we work with underserved entrepreneurs and aspiringentrepreneurs. However, bringing these benefits into reality will require support andresources from the private sector, governments, foundations and developmentagencies. 15
  • 16. SECTION II: CONCLUSIONThese three trends, taken along or in combination, really frame the importance ofbusiness development services to underserved business owners and clients of microfinance institutions. These factors drive the deep sense of urgency for investing inbuilding the capacity for the activities that drive impact and coverage from theecosystem of organizations and resources available to entrepreneurs. Microenterprisedevelopment organizations cannot address these complex issues by themselves or evenwithin the silos of its own industry. The path forward will require dialogue andcollaboration among all stakeholders and the support for experimentation and risktaking with big, bold and new ideas. 16
  • 17. BibliographyThe Promise of One in Three: Creating Economic Opportunity for All Americans toBounce Back, Association for Enterprise Opportunity, May, 2011Closing the Wealth Gap Through Self-employment: Women of Color Achieving theAmerican DreamKaruna Jaggar, Director of Research and Public Policy, Elizabeth de Renzy, Researcherand Data Analyst, July 2008Recovering from the crisis:A Global Jobs Pact adopted by the International LabourConferenceat its Ninety-eighth Session, Geneva, 19 June 2009, First published 2009BDS How-to Guide, UNDP (2004)Business-Building Telenovela Launches for Female Immigrant and RefugeeEntrepreneurs [VIDEODistance Learning and the Changing Face of Business Development Services, Authors:Luz Gomez and Joyce Klein, Aspen Institute/FIELD, August 2011EMN Working Paper nº 6: Overview of the Microcredit Sector in the European UnionAuthors: Bárbara Jayo, Anabel González, Casey Conzett, June, 2010 17
  • 18. AcknowledgementsThe bulk of the work that informed the thinking of this paper came from AEO and thework it is doing with many of its members and partners. Leading this work is TammyHalevy, Senior Vice President of Membership and New Initiatives, whose endless hoursof work and dialogue helped in the thinking for this paper. Much of the analysis andsolutions proposed in the paper are documented in a report released in May, 2011 at theNational AEO Conference in Washington, D. C. The report, The Power of One in Three:Creating Opportunities for All Americans to Bounce Back presents the findings of AEO’ssystematic assessment of the U. S. microenterprise sector. The intent of the study is touncover opportunities to better reach underserved businesses and business owners. Thestudy was funded with generous support by the Citi Foundation. Capital One providedpro bono support by its graphics team on the design and graphics of the report. I alsowant to thank Claudia Viek, the Executive Director of CAMEO, the state microenterpriseassociation for California), for her thoughtfulness and profound focus on the needs ofmicroenterprise development organizations that provide business development services.Lastly, I want to acknowledge the work of the many AEO members whose work I soadmire and describe within this document and thank the staff at the AspenInstitute/FIELD for the availability of their publications. 18