Business Development Services (BDS) – encompassing training, mentorship, access to information, market linkages and a range of other support services – are crucial for the growth and competitiveness of SMEs.
However, in many lower and middle income economies, access to quality BDS is limited, fragmented, and often unsustainable. Instead of directly delivering services, MSD programmes can act as catalysts, strengthening the capacity of existing providers, promoting innovation and creating a more enabling environment for the sustainable provision of BDS.
The value of a functional BDS ecosystem
An effective BDS ecosystem is more than just a collection of individual service providers; it is a network of interconnected organisations and individuals that collectively offer a comprehensive range of support services to SMEs. A well-functioning BDS ecosystem provides several benefits:
- Increased access: more SMEs can access the support services they need to start, grow and improve their businesses.
- Improved quality: competition and collaboration among providers can lead to higher quality and more relevant services.
- Greater efficiency: a well-functioning ecosystem can improve the efficiency of BDS provision by reducing duplication and promoting specialisation.
More recently, practitioners have also started referring to building entrepreneurship ecosystems. These involve a broader approach, encompassing all the elements that contribute to the success of entrepreneurship in a given area. This includes direct business support services as well as encompassing cultural factors, infrastructure, access to talent, policy environment and the availability of capital.
A rough guide to inclusive entrepreneurship ecosystem development provides guidance to practitioners and project teams on how to design and implement inclusive and holistic entrepreneurship programmes that will catalyse change in the overall entrepreneurship ecosystem and encourage sustainable and large-scale growth and job creation.
Strategies and tactics for building a thriving BDS ecosystem
The following offers some strategies and associated tactics for building a robust BDS ecosystem within an MSD programme:
1. Strengthening existing BDS providers
- Capacity building: providing training and technical assistance to BDS providers to improve their operational efficiency, service quality and business development skills.
- Curriculum development: supporting the development of standardised or customised training curricula that meet the specific needs of SMEs in your target sector.
- Accreditation and certification: supporting the establishment of accreditation and certification programmes to improve the quality and credibility of BDS providers.
- Peer-to-Peer learning: facilitating peer-to-peer learning amongst BDS providers to promote knowledge-sharing and best practice dissemination.
Impact with SCALE provides a toolkit and evidence for strengthening the provision of BDS services.
2. Promoting innovation and market-oriented service delivery
- Performance-based contracts: using performance-based contracts to incentivise BDS providers to achieve specific outcomes, such as increased SME sales or job creation.
- Results-based financing (RBF): experimenting with results-based financing mechanisms, where BDS providers receive payments based on achieving pre-defined results.
- Incubator and accelerator programmes: supporting the development of incubator and accelerator programmes to provide comprehensive support to start-up and early-stage businesses.
3. Improving market linkages and access to information
- Business linkage events: organising business linkage events to connect SMEs with potential customers, suppliers and investors.
- Market information systems: developing market information systems to provide SMEs with access to relevant data on market prices, trend and opportunities.
- Online directories and platforms: creating online directories and platforms to connect SMEs with BDS providers.
4. Supporting an enabling environment
- Policy advocacy: advocating for policy reforms that support the growth of the SME sector and promote access to BDS.
- Promoting formalisation: encouraging SMEs to formalise their businesses to gain access to a wider range of financial and support services.
5. Addressing demand-side constraints
- Awareness campaigns: launching public awareness campaigns to promote the value of BDS and encourage SMEs to seek out these services.
- Business skills training: offering basic business skills training to aspiring entrepreneurs and early-stage businesses.
Best practices and lessons learned in the provision of BDS services highlights that improving the sustainability of BDS programmes should involve flexible support criteria for SME participation, with project design shaped by the size and capability of each SME.
Entrepreneurial ecosystem development provides a case study in working with multiple actors in a market system to strengthen the network of support to entrepreneurs.