Advisory support for inclusive business: what, how and who pays?
The new report from USAID “More than Money: Mapping the landscape of advisory support for inclusive business” takes stock of the landscape of advisory support for inclusive businesses, teases out the trends and highlights the lessons that have been learnt by service providers around the world to date.
The webinar that launched the report enabled entrepreneurs and service providers to hear from and ask questions of the report authors, as well as founder of social enterprise Reel Gardening, Claire Reed, Securing Water for Food’s Kevan Hayes and Amy Sticklor and Alexis Bonnell from USAID’s Global Development Lab. There were four key themes that really stood out in the discussion that took place:
- Pricing
It might be titled ‘More than Money’ but everyone seemed to have their mind on the finances. Who pays for the support? Should it be subsidised to enable fairer access and support for start-ups in initial phases or should it be paid for by businesses to cultivate buy-in?
The report identifies various pricing models across the different organisation types, from prizes and services fully financed by development partners, some partially paid examples such as match funding and subsidies, to more commercial arrangements where providers take an equity stake or simply charge full fees (see table 10 of the report). In general, there seems to be a gradual trend towards requiring some level of client contribution, although providers are aware that this will affect uptake (skewing towards larger enterprises) and types of support (inputs which more directly drive revenue and return).
There was discussion of whether advisory support needs to shift to being fully financed by enterprises, with all the downsides that implies, or whether it's an obvious case for subsidy. The future is probably between the two: to reach greater scale and sustainability, delayed payment options and reduced cost options are likely to emerge. At the same time, donor or philanthropic funding is likely to continue at least for some time, but will ultimately need a stronger evidence base about the impact of the support on enterprise success and social impact.
- Admitting that the enterprise doesn't always know best!
Claire Reid from Reel Gardening flagged one lesson she learnt on her journey while receiving technical support from SWFF for her gardening business. She spent time in the first 6 months securing the support that she wanted, and only later realised they had good ideas of what support she needed. Her tip to others was to listen and be open to other ideas in identifying needs.
The relationship between clients and providers clearly needs to be built on, and improves with, trust. This was flagged from several angles. Kevan Hayes, from SWFF emphasized the benefits of having an open, honest relationship with their client and listening to their needs. A provider often has to be flexible in the approach they take, as Kevan pointed out that, based on regular feedback from the client, they have often changed and adapted the support plans for the enterprises to meet their changing needs.
- Choosing right provider
Choosing the right provider is key. In Claire’s case, she found that consultants in the United States were simply not able to understand the environment in which her business was operating in South Africa. When she started working with a provider in India, they were better able to understand the challenges of working in a developing economy market. This was also found in the interviews carried out for the report- international providers have invaluable expertise but can lack context and ways of working that are effective. Many providers seek to develop local support capacity and involve clients in the selection process.
- Support content- focus on the basics
When it comes to the substance of the support both Amy Sticklor, from USAID’s Global Development Lab, and Kevan Hayes from SWFF, emphasised the need to focus on the business basics. 'Getting the boring stuff right, rather than spending too much time on the interesting stuff'. By focusing on business planning, financial management, human resources, stock control, logistics, marketing and more, rather than the specialities of inclusive business, an enterprise is able to lay the foundations for their impact.
Find out more about advisory support for inclusive business:
Read the report “More than Money: Mapping the landscape of advisory support for inclusive business” in full here