5 x 5 Approach to Business Development Services (BDS) for promotion of micro Enterprises 040409
Approach to Business Development Services (BDS) for
promotion of micro Enterprises
(5 X5 Approach)
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.
Vrutti – A Livelihoods Resource Centre, Part of Catalyst Group;
19, 1st Main, 1st Cross, Ashwath Nagar, RMV 2nd Stage, Bangalore 560094, India
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