Five Ways for Entrepreneurship Support Programs to Become More Effective
In a recent study, the Argidius Foundation tracked the performance of enterprises that received support from over 50 business development support organizations (BDS organizations) in order to understand if, why, and how these programs’ support changes the performance of their enterprises.
Argidius revealed five main ways for BDS organizations to be more effective. Each of these is described in a video series that can be accessed here.
- Selecting the right enterprise.
The highest performing BDS organizations in this study incorporated multi-stage selection processes and regularly assessed partnerships with their enterprises to make sure they were meeting expectations. The organizations also segmented their portfolios and made sure to customize their services depending on the type of company. BDS organizations should have a clear understanding on what they have to offer for entrepreneurs, what level of interaction will take place, what will and won’t be included, and what they hope to achieve.
- Charging enterprises for services, which improves performance.
Programs that charged even a nominal fee for their services performed better than those that were offered for free. Charging a fee was found to improve the quality of applicant pools by attracting enterprises that see the value of what the support program has to offer. These improvements were also seen by programs that did not previously charge a fee, then switched to a paid mechanism. They reported that the quality of their applicant enterprises improved during selection, that selected companies were more committed and motivated throughout the program, and they were also more willing to share and work through their problems.
- Addressing problems: Entrepreneurs learn best through problem solving.
According to the study, entrepreneurs learn best when addressing problems as they come in day-to-day operations. The most effective business education involves focusing on defining existing problems, and helping enterprises identify their challenges and needs going forward. Facilitating learning between peers who have faced and overcome related challenges is also key. One study mentioned in the videos found that entrepreneurs who worked on problem solving with peers outperformed those who didn’t.
- Learning by evaluating enterprise performance.
The highest performing BDS organizations regularly collected and analyzed data on the performance of their enterprises. While many programs treat this as an afterthought, the study stresses that this needs to be built into the value proposition of the BDS organization by helping the entrepreneurs themselves assess their own operations. Argidius recommends that BDS organizations measure their impact on an enterprise’s revenues, employment, and investment outcomes, since these are core metrics that every entrepreneur should be tracking. Some of the highest performing BDS organizations invest up to 30 percent of their total program cost on this process.
- Leading by example: improving the organization itself to better serve enterprises.
In order to effectively support enterprises, BDS organizations need to build functional and qualified governance themselves, ideally including the involvement of successful entrepreneurs who know what it takes to grow a company. Like enterprises, BDS organizations need a clear strategy that is easy to understand and replicate. They also need a solid structure for consistently delivering quality programs, including the ability to plan well in advance and have an organized, capable team.
In conclusion, the study emphasizes that entrepreneurship support is not about passing on what BDS organizations think founders should know. Instead, some key questions for organizations to reflect on are:
- How do people actually learn?
- How are you designing your program around this?
- How are you continually learning yourself to better serve enterprises?
The full video series can be found here.
Contributed by Maha AbdelAzim