Honing in on business needs – 5 lessons learnt on providing non-financial support to inclusive businesses
By Christian Pirzer and Aline Menden, Endeva
The question 'What works best?' has no simple answer. Incubators, accelerators, technical assistance (TA) facilities and programs, impact investors and consultancies – all provide non-financial support to inclusive businesses and social enterprises.
Yet, in fact, very little is known about the effectiveness and value of the advisory support they provide; how the support should to be structured and delivered and what works best for whom and at what lifecycle stage.
We know that is dependent upon many factors. It depends as much on the enterprise (e.g., its level of maturity, or its capacity to make effective use of the support), as it depends on the type of service provider (e.g., the organisations’ mandate, objective or skills objectives, whether advisory support is given alongside finance or not, or available budgets).
In addition to that, five lessons learnt can provide guidance to fund or program managers when designing support services. They are derived from our soon to be released landscaping report for USAID, which analysed over 40 programs and organisations providing non-financial advisory support to inclusive businesses.
1) Structure advisory support along enterprise needs
Advisory support is most relevant for the enterprise if it is designed to meet their most urgent needs. However, these needs change over time, as enterprises grow. For example, data from the Securing Water for Food (SWFF) program shows that in year 1, 21% of enterprises required input on the business model, 23% on connections to finance and 14% on sales and marketing. In year 2, the focus shifted: support for sales and marketing went up, as did monitoring and evaluation, while business model support went down. Continued needs assessment is therefore critical.
2) Allow for flexibility in timing of support
Flexibility ensures that the right enterprise needs are met at the right time. But how can this be done? IDEO.org's Amplify Program moved from having only fixed-coaching sessions scheduled and driven by the IDEO.org team to splitting coaching into two blocks. In addition to standard quarterly coaching sessions, grantees are now encouraged to initiate at least four coaching and support sessions throughout their 18-month journey. This approach guarantees ownership and allows for a demand-based provision of support.
3) Establish long-term relationships with enterprises
The typical duration of advisory support can range from a few weeks to several years. While time-bound support inputs, such as cohort trainings, events or technical expert consultations are commonly used by most providers, there is a trend towards establishing long-term relationships between support providers and enterprises: One-time events, such as bootcamps or a short-term technical consultancy, are often complemented with on-going mentorship support or board membership. The social impact investor, Yunus Social Business, for example, encourages their investees to establish long-term relationships through board membership or through local service providers, because it is crucial to implement learnings and create long-term value for the enterprise.
4) Leverage your support by playing a facilitation role and brokering linkages to other partners
While the exit strategy for impact investors is well-defined, providers of non-financial support often find it difficult to identify the right time to exit support provision. Linking enterprises to relevant stakeholders, investors or partners that can provide support beyond the duration of the program leverages own support activities and is a more sustainable and smooth way to exit. And it is a useful way to strengthen local support structures. This strategy also reflects growing recognition that enterprise success depends on the engagement within the its wider business ecosystem. The USAID funded LAUNCH accelerator, for example, focuses on referrals and active network events to link their enterprises to relevant ecosystem stakeholders. A key take-away for LAUNCH was that program managers need to know and understand their enterprises well to successfully link them to the right partners and to open doors.
5) Combine different service delivery tools
A combination of personalised support and online training or cohort events is valuable for enterprises and cost-effective for service providers. One can think of it as a funnel of advisory support: online courses are a low-cost way to provide support at an early stage, establishing an initial relationship. Cohort events can be used to identify enterprise needs and may be followed by tailored one-on-one support. If technical experts or mentors have identified common needs among enterprises, cohort trainings can also be a cost-efficient way to provide training and allow for peer-to-peer exchange. The African Management Initiative (AMI), a talent training provider, shifted its methodology from largely online-based towards a blended-learning approach. This change means AMI now combines web and mobile-based learning with in-person workshops and peer-to-peer support, to ensure that entrepreneurs are supported as they translate lessons into results for their businesses.
These trends and lessons learnt reflect one of the wider themes of the overall report: the landscape of advisory support is evolving, with players going beyond their traditional remit and testing new offers and combinations to try to maximise effectiveness of non-financial business support.
For more insights into the recent trends and landscape of advisory support read this blog post. If you are interested in diving into the five top challenges that support providers need to crack, check out this post.
This blog is a part of the June 2017 series on advisory support for inclusive businesses in partnership with USAID and the African Agricultural Fund’s Technical Assistance Facility, both of which deliver advisory support and have new analysis of it just launched (AAF’s TAF) and forthcoming (USAID).
Read the full series for more lessons from seven different providers of advisory support and stories of success from entrepreneurs.