Business Growth

While many microenterprise programs provide an excellent introduction to business planning, cash-flow management and other start-up issues, microentrepreneurs face real challenges in day-to-day management, as well as other areas. In fact, microentrepreneurs report a desire for an on-going relationship with the program that evolves with their level of business experience.  FIELD has engaged in two projects aimed at exploring and improving the services that microenterprise programs provide to clients focused on business growth: a Business Growth Literature Review and its grant cluster on Follow-Up Services.

Business Growth Literature Review

One of the challenges facing microenterprise assistance organizations is finding effective ways to help low-income microentrepreneurs grow their businesses. To help practitioners to better understand the range of issues and approaches involved in supporting business growth, FIELD undertook a literature review that explored what is known about the factors that influence business growth and identifies successful strategies for supporting growth. The resulting publication, Bridges to Success: Promising Strategies for Microenterprise Growth in the United States, draws from a wide range of fields, including business development, entrepreneurship education, best practices in microenterprise training and technical assistance, and community economic development.  

Key Findings
For practitioners interested in assessing their own efforts to help clients achieve more successful, growing businesses, the document offers a set of avenues to pursue. Most simply, the research suggests that practitioners should consider:

  • Strengthening client assessment processes: helping clients define their growth goals and assess capacities;
  • Offering additional training tracks or modules for those beyond the start-up stage, building that curricula on the skill sets defined as critical for second stage growth and development;
  • Embedding entrepreneurial education within all curricula to help strengthen the entrepreneurial capacity of all clients;
  • Creating mentoring opportunities;
  • Building networks of entrepreneurs or finding ways to link microentrepreneurs into networks that connect them to others who can expand their marketing opportunities, their connections to industry information and their engagement in the larger community;
  • Exploring how additional services may be added to program services or accessed through partnerships (incubators, access to markets, etc.) that promote and support business growth; and
  • Helping to create more resource-rich networks of service providers across business size and type that will facilitate clients’ access to services beyond the reach of one program.

Follow-Up Services Cluster

To advance the industry's understanding of how to deliver effective follow-up services to clients, in 2000 FIELD issued a cluster of grants to organizations with strategies for on-going technical assistance involving a reasonable level of additional cost and a practical method for testing results.

Key Findings
Organizations used a host of strategies as part of the on-going technical assistance offered to clients, with most centering on technology services and coaching. Among the findings emerging from FIELD's Training and Technical Assistance cluster was the importance of providing ongoing assistance to new and emerging businesses, especially in the first 12 to 24 months after completing business training.

Four of the five grantees offered technology services as a means to advance clients' businesses. Some focused on encouraging microentrepreneurs to use computers and to master a variety of software programs as well as the Internet. Others focused on helping clients use the Internet to access more technical assistance, as well as increase and improve their marketing and networking efforts. FIELD has developed a conceptual framework to help programs think about and design technology service programs, as well as identified a set of Internet-based resources to help them in this process. These findings are available in FIELD forum Issue 11 - Helping Make Entrepreneurs "Tech Savvy": The Experiences of Four FIELD Grantees, and have been further developed in FIELD Best Practice Guide: Volume 5 Business First: Using Technology to Advance Microenterprise Development.
Among the most important lessons for programs are:

  • Business needs must drive technology choices: keep the focus on programmatic or business objectives, and choose the simplest and most appropriate technology interventions that can support their accomplishment.
  • It is important for clients to develop technology plans. And, programs need to mirror this behavior for clients, basing their own choice of technology services and technologies themselves on a studied understanding of their market, their range of potential partners, their own practices and resources.
  • Always consider the total cost of ownership in planning any technology initiative. FIELD grantees, and others, have found that many technology initiatives have both significant start-up and ongoing operating costs. An examination of two grantee programs providing technology services found that their start-up investment in technology infrastructure ranged from $57,000 to $65,000. In addition, the services offered, which included training or one-on-one technical assistance to clients and access to equipment, cost the two programs about $221 per client. Clients paid approximately $35 for these services (16 to 17 percent of overall costs) resulting in an annual subsidy of $185 per client.
  • Helping the client become an informed consumer and user of services is as important as any specific skills that s/he will learn through the program.
  • Microentrepreneurs must learn that an overall marketing plan comes first, and any plan for Web marketing follows that. There are several levels at which they can engage in Web marketing, and it is not wise to skip rungs on the "ladder" of technology complexity.

Two of the grantees experimented with coaching services as a complement to business consulting services. Coaching, as an industry, is new, and its role in microenterprise technical assistance is still not clear. However, in a seminar FIELD facilitated among business consultants, it became evident that these technical consultants often act as coaches with their clients. Therefore, techniques and tools that can sharpen their skills in this respect could be valuable to the field. Grantee experiences and findings relating to coaching are documented in FIELD Best Practice Guide: Volume 4 Keeping It Personalized: Consulting, Coaching & Mentoring for Microentrepreneurs.

More research is required with respect to the costs and value of coaching services provided by FIELD grantees. In the two cases in which it was offered, only one program's clients paid for the service, approximately $50 for a six-month period of service offered through group, monthly meetings. The second organization did not introduce a pricing strategy at the start of the pilot and found price resistance to its introduction afterwards. Focus group research found that the clients valued the services in each case, but there has not been research to isolate the precise benefits of coaching, as opposed to other forms of technical assistance provided by the organizations.

Publications
Several publications and products resulted from this research:

Learning Cluster Members
The five organizations awarded grants to experiment with promising models for providing follow-up services to low-income entrepreneurs are described here.

Learning Evaluation
The learning evaluation for this cluster had two components, which are detailed here.

 
 
The Aspen Institute • One Dupont Circle, NW • Suite 700 • Washington, DC 20036
Phone: 202.736.1071 • Fax: 202.467.0790 • e-mail: fieldus@aspeninst.org