“Sometimes, you just need to clean the house of the entrepreneur to provide them some more structure and clarity.” This was one of the answers of a ‘Business Development Service Provider’ (BDS) during our recent IB Accelerator session in Maputo, Mozambique. We gathered with several BDS providers to present our Business Development Toolkit (beta) and have them test it in the field.
One of the key roles BDS providers play is to ‘wear the hat of the entrepreneur’. Many BDS providers have run or are running their own business and know how challenging it can be to run a business, especially in BoP markets. Having entrepreneurial experience appeared to be one of the key characteristics of a strong BDS provider.
During an open conversation the BDS providers shared what type of clients they consult and what their, often latent, needs are. These are three of the needs that emerged:
1. Structure and strategy: Entrepreneurs often have a relentless drive to work towards their mission, be it selling jam from locally collected fruits to selling clean cook stoves. They often have such an instinctive drive that they hardly take the time to step back and think about the structure and business model of their enterprise.
This is where BDS providers often play a crucial role. They can mentor the entrepreneur and bring clarity and structure using a variety of tools and insights from their own experience. It’s crucial to build trust with the client and get them out of daily operations for some time to focus on strategy; “this might even mean you first have to clean the house of the entrepreneur before you can get started.”
2. Information: Many entrepreneurs don’t know if they’re running a profit or loss. They just run their business and do it with great dedication. They might be putting most of their energy in a loss-making activity. When BDS providers start working with IB entrepreneurs, they often realise that there is hardly any (financial) information available.
BDS providers have to work with whatever information they get their hands on, either through interviews or numbers. Frequently, BDS providers introduce basic financial or accounting practices in order to gather and analyse useful information to adapt strategies.
3. Investment: Like everywhere in the world, entrepreneurs are often in search of funding. In BoP markets this is even a bigger challenge. Financial institutions are often requesting high rates and are difficult to attract. Many BDS providers know this ballgame better. They often have clarity on what business plans the financial institutions are looking for and they can coach the entrepreneur in developing a solid, investment-ready case.
One interesting point was raised regarding investment: As described above, BDS providers often play a crucial role in accelerating inclusive businesses.
They, however, face the same challenge as the entrepreneur: they need investment as well and banks are often reluctant to finance them. “If an entrepreneur needs a truck, he can easily get it financed, if he needs a mentor, the bank will resist”, said one of them.
The toolkit we presented was warmly welcomed and was assessed as being very useful to guide the entrepreneurs in becoming more structured, informed and eventually invested. Let’s see if the entrepreneurs think alike..