BDS+ Special Focus 3: BDS Providers & Challenges in the eco-system
BDS providers provide crucial help eco-inclusive, micro, small, and medium enterprises to overcome day to day challenges around fundraising, direction or finding talent. By fortifying their business plans to be sustainable and prepare them to withstand challenging socio-economic and environmental threats that affect business. A business’s challenges are also a BDS provider’s challenges, as told to us by a few who BDS providers have joined us at the ToTs.
Are you a BDS provider? Read on to find out if you share similar challenges with others.
Emmanuel (iCode GH)
Here in Ghana, for most start-ups, compared to investing in planning or strategizing, they’d rather invest in buying inventory or machines. For us BDS providers, we would tag along with donor agencies as providers of non-financial business development service support.
However, when we talk about SMEs procuring our services on their own, only the large scale ones understand the value that we can provide. Smaller businesses are less likely they come to us, due to lack of understanding of our added-value, and because funding is an issue.
To help SMEs overcome the financial blocks, I find the funding aspects of the (SEED) toolkit really helps me to help the businesses measure where they are at and where they want to head to.
In general, entrepreneurs in Africa faces big risks when making investment decisions because if you fail, you will return to zero. There are no social securities like unemployment benefits or welfare programmes to support you. So this makes being an entrepreneur very risky. The survival rate of businesses are not very high, so people hesitate to start businesses in the first place.
There are also enterprises that become grant dependent, where they move from one donor to another to support themselves. When you are dependent on grants it means that you do not have time for your business, but need to spend time with donor reports and meetings with donors. This is time lost that could have been invested in value chain production, your clients’ needs and others. So grant dependency is a problem amongst young entrepreneurs.
For us when it comes to supporting enterprises, where we lack expertise and skills we consult organisations like SEED and attend training like the ToT. Sometimes we also need to seek funds from donor organisations to fund the support programmes we run.
Callum (Yunus Centre AIT)
So there is always the challenge of funding. We operate as a social business ourselves. Providing quality consultancy to a social enterprise is challenging because the business would not always be able to afford to pay the cost.
In our “Engage” programmes (where we get people involved and inspire people to take up social business), there is the challenge of measuring the real impact of the programme itself. It’s good to get people excited and interested in social business but how many actually go on to start a social business? In reality, only a handful.
Manjunath (Sandbox Startups)
A big challenge for us BDS providers here is changing the mindset of entrepreneurs. Many entrepreneurs are looking for financial growth. However, in the regions we work in, many entrepreneurs are not visionaries and lack the motivation to grow their business. This makes it challenging to find enterprises that we can take up and help grow.
Unless there are success stories in the local region, people are not motivated to start companies. This motivation comes only when they see local success stories being highlighted for example in the news. The challenge for us is how to awaken the entrepreneurial mind-set.
Another challenge for us is finding good mentors in Tier 2 and Tier 3 cities*. Currently, we bring in many mentors from Tier 1 cities to provide training and workshops for the locals.
*Population classification in India. Tier 1 cities have population of 100,000 and above, Tier 2 cities 50,000 to 99,999 and Tier 3 cities 20,000 to 49,999 population.
Vivian (Challenges Uganda)
A challenge for us is making entrepreneurs aware of BDS as something that brings value to their enterprises. Usually, they see it as an extra, unnecessary cost, with value only be seen in the long term. But for businesses that have seen the value of receiving BDS support they would be more open to this. For example, they would come to us to help them obtain a grant.
Generally, in the eco-system, awareness of BDS is still lacking. Most BDS providers either advance their own education to add value to the services they provide or take advantage of opportunities like the SEED ToT which is very rare. So far, I only know 2 types of training for BDS providers.
There is also the issue on awareness of TBL aspects or what we call the Triple P (people, profit and planet). A lot of enterprises here run operations that have a social and environmental impact, but they do not know that if they put it into writing it could help them attract investments from impact investors.
Martina (Kinara Indonesia)
SMEs in Indonesia still face challenges to access to funding; they are also having difficulties in recruiting good quality manpower to join their companies, especially social enterprise because of competitiveness. Without good quality manpower to deal with strategic planning, finance, operations, marketing, etc it would be difficult for the enterprise to grow, and later get access to funding.
But in recent years, the government is becoming more aware of the needs of SMEs and social enterprises. While there are still a lot of challenges, there are also a lot of improvements, for example, support for capacity building and tax reductions. There are greater understanding and movement towards innovating and improving the ease of doing business for SMEs.
Examples include extending the time entrepreneurs need to register their business, and providing training to help SMEs navigate the system. The approach is not to blindly impose compliance but help enterprises get the certification they need so they can grow and eventually enter the international market. Something which is quite new as well is SMEs can also be listed in the stock market and get public funding as a way to tackle issues of lack of funding.