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5 x 5 Approach to Business Development Services (BDS) for promotion of micro Enterprises 040409


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5 x 5 Approach to Business Development Services (BDS) for promotion of micro Enterprises 040409

  1. 1. Approach to Business Development Services (BDS) for promotion of micro Enterprises (5 X5 Approach) Jitesh Panda1 Promotion and strengthening of micro Enterprises is an integral part of inclusive livelihood promotion agenda. This contributes towards eradication of poverty. However, it is not so easy to promote and strengthen micro enterprises. Access to BDS is critical for sustenance and growth of micro Enterprises. Typically, Business Development Services in context of micro enterprises refers to range of support services that helps in promoting and strengthening micro Enterprises. This includes enhancing access to technology, markets, raw material and also finance. Mode of delivery of BDS services could be just providing information, hand holding and counselling. Historically, promotion of micro Enterprises (Income Generating Activities) centred on provision of training inputs. When stand alone training inputs did not yield much result, the focus shifted to training cum production. Meanwhile, there was emphasis on awareness building, as a prerequisite for providing other inputs like training and credit. Inadequate access to credit (more so formal credit) has always been recognized as a critical missing link. There have been efforts in enhancing access to formal credit services, but such efforts have not been integrated with other support services. In recent years, there is also increasing emphasis on promoting market led micro Enterprises. This includes linking existing products to markets and producing market led products. There have been very limited efforts on technology for micro Enterprises. Overall, this implies that there has never been a concerted effort towards providing systematic Business Development Services for promotion of micro Enterprises. Review of literature reveals that, in recent years there is increasing emphasis on BDS for micro Enterprises. However, most of the literature that have documented the experience in BDS for micro Enterprises, is silent on specific relating to “What comprises BDS” and “How to provide BDS”. This document makes an attempt to provide a broad approach by specifying “What and How” of BDS for micro Enterprises. Typically, micro Enterprises are small and informal entities. These enterprises are associated with low investment, few employees and many a times entrepreneur is the key employee of the enterprise. However, a close look at a micro Enterprise would reveal that these enterprises are not quite different than any other size or form of enterprise. Hence, it may be obvious that micro Enterprises would require same set of BDS services like any other enterprise. This may include support in accessing inputs, organizing business processes, facilitating marketing of outputs, accessing credit and in deciding appropriate form of organization. 1 Vrutti – A Livelihoods Resource Centre, Part of Catalyst Group; 19, 1st Main, 1st Cross, Ashwath Nagar, RMV 2nd Stage, Bangalore 560094, India
  2. 2. However, in context of micro enterprises, it is difficult to distinguish these support services. For example, in most of the traditional micro Enterprises, credit service moves together with market linkage services. In certain micro Enterprise, like informal commission agent, which relies only on critical information, it is difficult to distinguish input, process and outputs. At times it is difficult to distinguish if provision of equipments/technology is input or part of process. Despite these complexities, it may be desirable to distinguish the BDS Services into five different themes viz. services related to inputs, processes, outputs, finance and organization. Unlike large enterprises, wherein BDS is generally required in form of specific assignments like providing training inputs and developing market strategy; in case of micro enterprises it is generally required on a continuous basis, more so in a flexible or informal mode. This would depend also depend on the profile of micro Enterprises. A start up micro Enterprise in a new sector may require more of hand holding services, while a proven traditional micro Enterprise would require only information. Mode of BDS services (how) could be informing, training, linking, counselling or even managing (service directly provided by BDS provider). Review of literature relating to BDS for micro Enterprises emphasizes on either counselling or information services. However, it is also desirable to include training, linkage and even managing under purview of BDS services for micro enterprises The above matrix further clarifies on what (themes) and how (mode of delivery of BDS while promoting micro Enterprises. For example while providing BDS to specific micro Enterprise, the BDS provider may be just providing information (how) relating to inputs (what); BUT would be managing (doing him self - how) in context of marketing outputs (what). Currently, most of the BDS providers in rural areas provide services informally and on a part time basis. Unlike management graduates associated in providing BDS services to large enterprises, they do not adequate professional skills relating to promoting/managing micro Enterprises. This tool has potential to be used in a flexible manner to assess the current status, need/demand for BDS, in develop baseline/end line for BDS and for planning/strategising BDS services for promotion of micro Enterprises.