1. Trends and Challenges in facilitating
Business Development Services for micro Enterprises (BDS4ME)
Some Frequently Asked Questions (FAQs)
Jitesh Panda*
Q. What is Business Development Services for micro Enterprises (BDS4ME)?
Ans. BDS4ME refers to Non Financial Non Transactional Services for sustenance and
growth a micro Enterprise.
Q. What is difference between Business Service and Business Development
Services?
Ans. Business services relates to ongoing Business to Business services while BDS
relates to services for starting and/or strengthening an Enterprise.
Q. What are different types of BDS4ME?
Ans. BDS4ME could be strategic or operational. Operational BDS$ME services
refers to services required for day to day management of a micro Enterprise while
Strategic BDS4ME is required for medium and long term support to micro
Enterprises.
BDS could be village based value chain based i. e. either horizontal or vertical.
Similarly, BDS could be embedded being offered along with business transaction or
independent of business services.
Q. What is difference between traditional embedded BDS and new generation
BDS?
Ans. Traditional embedded BDS is usually offered as part of business transactions.
As they are part of business, they are generally sustainable. However, it has its
limitations in terms of inclusiveness, outreach and likeliness of vested business
interest associated with BDS. New generation BDS is generally offered by
development (both Government and Non Government Organizations), which is
independent of business transactions. In this case, BDS is provided either free or in
subsidized manner. However, with success of sustainability of micro Finance, there
has always been thrust on promoting market led financially sustainable BDS.
Nevertheless, while developing BDS market, there is opportunity to learn from
informal traditional BDS market.
Q. Who are different Actors in provision of BDS?
Ans. BDS Facilitator – focuses on developing BDS Market; Provides services to BDS
Providers which includes developing new BDS products/services and capacity
building, to micro Enterprises on information on identifying potential BDS
services/providers.
BDS Providers – An Institution or Individual that provides BDS directly to micro
Enterprises. This includes those who may be providing BDS as part of broader
business transaction

2. Q. How did BDS evolve over the years?
Ans. Initially, Enterprise development focused on both financial and non financial
services to micro enterprises. As lack of access to credit was considered as key
problem for starting, sustenance and growth of micro Enterprises, the focus shifted
to financial services. In due course, Non Financial Services (BDS) market got
separated from financial services market.
By then, BDS market was very weak (which also continues to remain so). As financial
services market (mainly through micro Finance) got established the focus shifted to
Non Financial Services (BDS). This is mainly because of further realization that stand
alone credit service is not sufficient to promote micro Enterprises.
Q. What has been the focus of donors relating to promotion of BDS?
Ans. Donors do not prefer to deliver BDS directly to micro Enterprises, but work
with existing and/or new BDS providers to facilitate delivery of BDS. The focus has
been on developing BDS market. It is widely acknowledged that there is need for
grant support to facilitate the BDS market.
Q. What are some of the practices in promotion of BDS?
Ans. Some of the practices in promotion of BDS include:
Facilitating development of BDS market than providing BDS
As far as possible, do not provide subsidy to BDS transactions. Nevertheless,
subsidy would be required for designing and developing BDS services.
Promote Facilitators of BDS who are independent of BDS providers
Promoting competition amongst BDS providers
Initiate BDS after proper assessment of BDS Market focusing on both demand
and supply of BDS
Focus on low profile intervention with minimum distortion to existing BDS
providers
Only when tangible benefits are realized by micro Enterprises, fee for BDS
services may be introduced
Focus on including poor than exclusively working with poor
Persons with experience in business sector (in comparison to development
sector) are in better position to provide BDS
Q. What are Key trends in BDS4ME?
Ans. Key trends in BDS4ME include:
Shift in focus from horizontal BDS to vertical BDS.
Focus on market led BDS i.e. financial sustainability of BDS
Emphasis on separating role of BDS Facilitator and BDS Provider
Focus on Making Market work for the Poor (M4P) than pure Market
Development approach, while developing BDS markets

3. Q. What are key challenges for promoting BDS4ME?
Ans. Key Challenges for promoting BDS4ME include:
Proper assessment of BDS Market – Demand and Supply, including
availability of tools and methodologies
Involving micro Entrepreneurs while designing BDS services
Making market driven BDS more demand led than supply led
Designing BDS Interventions based on learning from traditional informal
BDS market
In developing approach and methodologies to work with informal BDS
market
Reaching out with BDS to smaller micro Enterprises through a market based
approach
Ensuring equity and inclusiveness in provision of BDS services
Developing clarity on role of Government in provision of BDS, mainly when
focus is on market led BDS
Involving either development (having limited understanding of business) or
business sector (being less development focused) in facilitating BDS market
Appropriate use of ICT in provision of BDS for micro Enterprises. Unless
carefully designed, it may affect (work in the interest of large enterprises) or
strengthen micro Enterprises
Q. What are key differences between micro Finance and Business Development
Services?
Ans. BDS covers wide range of services while micro Finance is quite focused. Micro
finance can be offered in a generic mode while BDS demand tailor made services.
Q. Should BDS and Financial Services be delivered separately?
Ans. The nature and expertise required for offering financial and BDS services are
quite different. Although sustainability is easy to achieve in case of financial services
and it has potential to cross subsidize the BDS services, combining the two would
affects both the services. As financial services require separate regulation, it is also
desirable to separate both the services.
*Senior Consultant, Vrutti – A Livelihoods Resource Centre, Catalyst Group,
19, 1st Main, 1st Cross, Ashwath Nagar, RMV 2nd Stage, Bangalore 560 094 India
Email: jitesh@cms-india.org