(STICKY) (SUNDAY MAIL ZW) Building effective SMEs support in Africa

Building effective SMEs support in Africa
Sunday, 14 October 2012 00:57
Dr Francis Neshamba

This is the first time such a conference has been held in Africa. The role of business support institutions to small and medium enterprises (SMEs) is increasingly becoming complex and government policy will always have a role in shaping the support offered to SMEs.

The key requirement is the need for business support institutions to be more sensitive to client needs and to be more client-driven.

There is a need for business sup­port institutions in Africa and their advisers to develop a more transfor­mational approach when working with business clients by becoming more dedicated towards supporting SMEs and truly understand the complex needs of SMEs and can increase effectiveness and take-up of support.

Small businesses and the management skills of owner-managers are critical for economic growth and employment creation in Africa and elsewhere.

However, a high proportion of owner-managers of small businesses do not see small business support institutions as offering “real” solutions to their business problems — hence the low up-take in management development programmes.

This is a clear and real challenge to small business support institutions, most of whom are providers of formal management development programmes to owner-managers of these firms. Very little is known about the effectiveness and quality of the management development programmes offered by small business support institutions.

There is little empirical research evidence as to how to build effective and results-oriented small business support institutions in Africa and elsewhere.

This includes the degree to which these institutions are capable of giving effective and results-oriented man­agement development programmes and advice other than that which is given in pursuit of their own rela­tively “narrow” goals.

The research results indicate that business support institutions’ programmes should be delivered in ways which suit the clients or SME owner-managers and not the small business support institutions themselves.

In other words, the programmes should be “cus­tomer-driven” and not “supplier-led”. The results also indicate that owner-managers of SMEs often learn bet­ter from networking and from transactional relation­ships with family, friends, trusted advisers, customers, suppliers, bankers, internal staff and from experience of their peers or other entrepreneurs.

This involves learning effectively by a process of doing, experimenting and making mistakes, copying others and watching competitors, solving problems and discussing with friends and relatives who are in busi­ness.

Contribution

The low uptake of structured management develop­ment programmes or formal training among SMEs has triggered numerous studies to investigate the reasons that prevent or hinder owner managers of small firms from participating in these programmes.

Previous studies indicate that owner-managers’ small firms rely heavily on informal management practice-based learning such as peer groups, networks, family, friends, trusted advisors, suppliers, customers and other entrepreneurs. Whilst it appears there is a great deal about a variety of factors associated with business support institutions in Africa and elsewhere, however, very little, if any­thing, is known about the effectiveness of the small business support institutions.

Also very little is also known about the actual causes for low uptake of the small business support pro­grammes or services by owners and managers of small businesses; the types of services available ; the delivery methods used and how the low take-up can be over­come.

Who needs to learn ?

Research found out that very little is known about how much the SBSIs themselves know practically about running a SMEs and the degree to which they are capa­ble of providing effective advice other than that which is given in pursuit of their relatively “narrow” goals.

Very little is known about the direction and quality of the service provided by SBSIs. The results of this research indicate that this is one of the major reasons why most owner-managers do not participate in the management development programmes.

Contrary to the above, the research also established that owner-managers of small firms tend to be reactive and not pro-active in their learning process. This means that they cannot plan in advance and always want specific information to solve a specific problem when it has already occurred and not general informa­tion about future problems.

Owner-managers also want the management devel­opment programmes to be presented in the context of the environment in which they operate. They do not appreciate examples of foreign-owned companies who are usually subjected to completely different business environment. They want to learn from their own peers or other entrepreneurs who have experienced situa­tions similar to theirs. Thus, they prefer to be trained by other entrepre­neurs or their peers whom they can refer to as “role models”.
The policymakers’ role is to facilitate or pro­mote programmes that build the relation­ships between owner-managers and their friends, men­tors, trusted advisors, suppliers, customers and other entre­preneurs.

Finally, for business support services to be effective and beneficial to small firms, there is a need to put in place support services which improve the skills of owner-managers of these firms to learn better from their transactional relationships with customers, sup­pliers, bankers, internal staff and from experience of their peers through networking.

In other words, there should be greater intimacy between the owner-managers of small firms and the providers of these services.

Even if the owner-managers were not from the same sector, the results show that there is very little differ­ence in the nature of the problems and experiences they face.

Recommendations for building effective and results-oriented business support institutions (BSIs) for SMEs in Africa:

1. Ensuring that BSIs offer or solves specific business problems (such as accessing resources, coping with competition, making it easier to deal with stakeholders and so on);

2. Relying as much as possible on peer recommenda­tion for attracting attendance;

3. Using entrepreneurs’ own networks by working with them and getting them to endorse formal business support programmes;
4. Establishing greater intimacy between SMEs and BSIs. Exciting them by offering Know Who — chance to meet people useful to them that they would not nor­mally have the opportunity to meet;
5. Promoting an enterprise culture and ensuring that the macroeconomic environment is not hostile but friendly to the SME sector;
6. Recognising the contrast between “the world of owners and managers of SMEs and that of corporate or bureaucratic world” — some support institutions often incorporate the corporate business model into the life of small firms during training;
7. Using knowledge and experience acquired by trainers or advisors from large firms may be helpful but at times is counter-productive as the knowledge may not be easily transferred to SMEs;
8. Recognising the experience of owner-managers and give meaning to that experience. It is possible for all of us to have the experience but can miss the mean­ing.
9. Pedagogical competency and targeted pro­grammes — “teaching” entrepreneurs can be problem­atic. A classical entrepreneurial “teacher” should be a facilitator of learning rather than deliverer of knowl­edge.
10. Providing “specialised” and targeted rather than general training programmes — participation is higher if the business support programmes are viewed as rele­vant and targeted at owner-managers who indicate high degree of interest towards learning.
11. Working closely with established trusted net­works of business advisors and peer mentors — could include developing effective Personal Business Advi­sors (PBAs).
12. PBAs should be individuals who own or have previously operated their own businesses — helps in building confidence as they will see PBAs as ‘one of their own’.
13. Recognise that effective delivery of management development programmes result from ‘learning-part­ner relation­ships’ between owner-managers and small business institutions or support agents.
14. Work closely with owner-man­agers and recog­nise their firms as ‘learn­ing organisations’.
15. Must not assume that all small firms would like their firms to grow — should find out what owner-managers’ personal motivations are and their long term aspirations.

16. Should not assume that owner-managers are unprofessional amateurs who have nothing to teach or have no interest in learning.

17. Must appreciate the need for multi-skilling in order to manage all ele­ments that impact on SME ven­tures.

18. Serendipity — delivering pro­grammes when the owner-managers need the services at the right time and at the right place.

This is often difficult to determine when and what type of sup­port is needed as owner managers tend to be reactive and not pro-active in their learning process

19. Reputation of business support institutions cru­cial — in terms of credi­bility and professional standing e.g. pro­file of individual business advisors or presenters during business development programmes.

20. Supplying sufficient and relevant information on real value and benefits of the services to their business, is bene­ficial and can arouse interest to partici­pate;

21. Avoiding ‘supply-led’ or ‘product-driven’ services rather than ‘needs-based’. Support institutions tend to offer what they have rather than conducting market research to determine what the actual needs

for small firms are.

22. Staff of Business Support Institu­tions should acquire appropriate profes­sional skills which can effec­tively sup­port the needs of SMEs.

The Certificate and Diploma in Busi­ness Support are comprehensive quali­fications for busi­ness advisors, coaches and consultants who operate in public or private sectors.

Conclusion

It is also important to take note that the ‘success’ of management develop­ment programmes is dependent on: serendipity; reputation of the training providers; availability of information to owner-managers; meth­ods of delivery and presentation style.

Due to the fact that most of the pro­grammes offered by business support institutions to SMEs appear or are viewed as not ‘needs-driven’ but supply-led, they often receive a low value and not seen as a priority in the esti­mation of the owner-managers of small firms. It is important for BSIs involved in develop­ing programmes for SMEs to build effective and results-oriented sup­port institutions.

The programmes should not be pack­aged, developed and delivered as a duplicate or parody of corporate sec­tor training in large organisations, but as a way of spurring entrepreneurial motiva­tion and improve­ments in SME business processes.

* This paper was presented at the 37 th International Small Business Con­gress held at Sandton in Johannes­burg, South Africa from October 15 to Octo­ber 18.

Dr Francis Neshamba is a senior lec­turer in Strategy and Entrepreneur­ship at Nottingham Trent University’s Busi­ness School and holds a PhD from Cranfield Uni­versity’s School of Man­agement (UK). He has interna­tional experience in working with SMEs and can be contacted on Fran­cis.Neshamba@ntu.ac.uk or Fran­cis.Neshamba@btinternet.com