Accessing Business Development Support Services by SMEs
Posted by Akada. July 20th, 2007 | | No Responses YetSince the last two years, the Federal Government of Nigeria has embarked upon extensive social and economic reforms aimed at fundamental reorganization of the economy and the polity. As part of its own home grown Poverty Reduction Strategy Paper (PRSP), the Government has formulated the National Economic Empowerment and Development Strategy (NEEDS) and has encouraged or supported the States and Local Governments to develop State Economic Empowerment and Development Strategy (SEEDS) and Local Economic Empowerment and Development Strategy (LEEDS).
The new economic reform programme of the Government is anchored on NEEDS. The goals of NEEDS are fourfold: (1)to create wealth (2) to generate employment, (3) to reduce poverty and (4) to re-orient values
As part of the process of generating employment, the NEEDS document articulates the importance of private sector to create wealth, generate employment and reduce poverty.
NEEDS envisions to create 7 million jobs by 2007 – by training people in skills relevant for the world of work. NEEDS also envisions to strengthen the skills base of the economy by ensuring that funds are spent on providing courses that build the vocational and entrepreneurial skills of the people.
Furthermore, NEEDS envisions a major role for the private sector in the economic transformation of Nigeria. Consequently, it recognizes the private sector as the engine of economic growth. Its role will be the executor, investor, and manager of businesses. The government will play the role of enabler, facilitator, and regulator, helping the private sector to grow, create jobs and generate wealth.
The purpose of the current emphasis is to increase the entrepreneurial skills of people to enable them establish viable business ventures. This purpose or objective cannot be achieved unless there is a concerted effort to ensure that business development support services are provided for the budding entrepreneurs.
Meaning of Business Development Support Services (BDSS)
Business Development Support Services (BDSS) can be defined as a range of support services provided by Business Development Consultants (BDCs) in support of the development of enterprise or businesses. These services are part of the range of services required for the proper growth and development of the business sector in the economy. In Nigeria, most business persons or entrepreneurs do not realize the importance of seeking help and support from professionals to grow or develop their businesses. Consequently, they suffer and die in silence. Knowledge is power; therefore what you do not know can kill you.
There are a range of BDSS which are provided by BDCs in an effort to provide technical, administrative, managerial and entrepreneurial knowledge and skills for business persons. Prominent among the services which might be required in the lifetime of the business are:
1. Feasibility Studies
2. Business Plan
3. Marketing Plan
4. Policies and Procedure Guidelines
5. Financial Management and Accounting Plan
6. Inventory and Stock Control
7. Sales Forecasting
8. Personnel and Human Resources Management Plan
9. Succession Plan
While a detailed coverage of these services in reserved for other sessions, this session will highlight, very briefly, what each of these services entails and the benefits of using them.
Feasibility Studies
Before starting any business, it is important to carry out a feasibility study. A feasibility study is carried out by the BDC to find out how feasible, possible or potentially profitable a business will be. It is done prior to the commencement of the business. It looks are the market forces, the operating and prevailing business climate in terms of government policies and regulations regarding a particular business, the financial projections of the business in terms of its income and expenditure and then gives an opinion about the viability and feasibility of the business.
The feasibility study is an essential requirement of any business because it informs others that we have thought through our proposed business before embarking upon it. This service can be obtained from BDCs depending on the amount of money that the business person wants to invest. The duration of the service could take from one to two weeks.
Business Plan
The Business Plan is often an essential requirement by financials institutions to prospective business persons who want to do business with them. Without a Business Plan, it is practically impossible to do business with any financial institution including banks.
The Business Plan is a mirror of the business from its origin to its future development plans. It shows the basis for the establishment of the business, the relationship between the entrepreneur or promoter and the business, the forecast for the future and the rationale for the direction of the business; the projections for profitability or how long it will take for the business to make profit.
If the business owner intends to open the business to other investors or obtain a loan from a financial institution, what the additional funds will be used for. The Business Plan also shows projections for the return on investments to the business owner or owners.
Since it is a technical document it requires experienced BDCs to undertake. It must however be undertaken in consultation with the business owner who has the vision of what the business intends to deliver to society. The business owner should fully disclose to the BDC all relevant information that might aid his/her understanding of the business as a way of putting together a good business plan.
The Marketing Plan
The Marketing Plan is another important Business Development Support Service. It is a Plan that describes the market environment in which the business operates its marketing strategy and policies as well as marketing activities. Sometimes it is part of the Business or Feasibility Plan but can also be drawn up separately especially for businesses that are already going concerns. For a startup business, it is important that the marketing plan be part of the business plan or feasibility study.
Policies and Procedures Guide
This is another important BDSS but often neglected by business owners. Business is not a game of chance. It is an endeavour that requires careful planning and execution. For the business to grow or develop, it must have a set of policies and procedures that ensures that in the absence of the business owner does not jeopardize the smooth functioning of the business. Many business owners are unable to take vacations or be absent from their businesses for more than one day because of the absence of well defined policies and procedures for undertaking its various activities.
Among the areas in which policies and procedures are required are finance, accounting, personnel, inventory, etc. When there is a proper policy and procedure for spending money, for accounting for it, for hiring staff, for compensating them, the promoting them, for granting them vacation or leave, for regulating employment in times of illness, etc, the business does not require the daily presence of the owner to move on.
The business owner can hire the services of a BDC to develop these policies and procedures to guide the operation of the business especially at its formative stage. Once the policies have become institutionalized, they will then to self regulate the business without the frequent intervention of the business owner. He or she can then focus on dealing with eventualities and issues not covered by the policies and procedures.
Financial Management and Accounting Plan
The Financial Management and Accounting Plan set the guidelines for managing finances of the business and how to account for them. It describes the procedures and policies guiding the acquisition and utilization of funds in the business. It also defines the spending limits for all management staff of the business if any.
It will also include the Cash Flow Management Plan of the business. Managing cash flow is an important component of BDSS. While the may be enough money to start the business, if the cash flow projections are not properly done, the business will always suffer from lack of cash to run the day to day activities. This will put a lot of strain on the business owner and might lead to business failure despite its huge capital investment.
The Accounting Plan will also show the accounting policies and procedures, the financial year, the system of accounts to be adopted and how often they will be audited. It will include information about what internal financial controls should be in place to prevent fraud, misappropriation and misapplication of funds of the business.
Inventory and Stock Control Plan
Improper inventory management and stock control can ruin a business. The BDC can help develop a plan that guides the business owner on inventory management and stock control to avoid out of stock syndrome and loss of valuable customers. The single most annoying business phenomenon that drives customers away from businesses is finding that the business does not have the goods or services it promises to deliver to its customers. Dissatisfied customers will never return to the business. Therefore, proper inventory management and stock control are essential for keeping their clientele and for the success of a business.
Sales Forecasting
Sales are the lifeline of any business. Not knowing how much sales is required to breakeven or make a profit is a bad business practice. Therefore, it is absolutely essential that the business owner should engage the services of a BDC to help him/her develop a sales forecast to guiding their marketing effort.
Without a sales forecast, it is difficult to design a marketing plan. The level of sales required will help determine what resources to deploy in targeted markets or segments of the market.
Some businesses include the sales forecast as part of their marketing plan. Whatever approach is used, it is important that you develop a sales forecast for your business.
Personnel and Human Resources Management Plan
People are the most valuable assets of any business. If they are not appreciated they depreciate. In order to avoid the depreciation of the human resources of a business there should be a personnel and human resources plan.
This plan shows the number, the quality, the level of education and qualifications required of the personnel of the business. It shows where the business is at a given time and what plans it has for moving forward by acquiring more people.
The Plan will also show the policies that guide the staff of the business in respect of their terms and conditions of employment, their deployment, the benefits and allowances, their retirement plan, etc. Everything that has to do with the welfare of the staff is included in the Plan.
For many businesses, part of the Plan is used as the Personnel Handbook and shows the conditions of employment and the terms of staff engagement. The responsibilities of the employer to the staff and the duties of the staff to the employer are included.
The Succession Plan
The Succession Plan is a very important plan developed by the BDC to guide the development, institutionalization and sustainability of the business beyond the founder or owner. It focuses on how the business will grow at every stage of its lifecycle, what it needs to do to be there and how to sustain it.
It also points out what plan is in place to grow the management of the business beyond the founder/owner and what mentoring activities need to take place to realize the vision of succession and sustainability.
Conclusion
From the foregoing, it should be clear by now that one can start a business and grow it to maturity and even leave the business to develop after he/she has left it or died. The secret to this is through the utilization of business development support services which are available throughout the country. The time for starting and running business by rule of thumb methods is long gone and only the foolish will continue in this tradition which has been shown to be responsible for various business failures.
If you want your business to grow, develop and outlive you, then you had better seek help at every stage of its growth from Business Development Support Services organizations and consultants.