The author begins by suggesting that microcredit needs to be combined with operational support in order to help entrepreneurial clients succeed in today’s market place. It is noted that any entrepreneur has to have a combination of technical, operational and strategic skills. The technical skills come with the commitment, creativity, experience and knowledge they have within their field. The operational skills (including accounting and finance, business planning, quality control, health and safety regulations, marketing and human resource management) can often pose a challenge and necessitate support. Finally, strategic skills can take an entrepreneur from the start-up phase to the next level in business management.
The paper argues that most entrepreneurs believe a lack of ongoing capital is the reason for stagnation within their businesses. While this can be an important factor, a lack of continual operational skills support also plays a strong role in Micro Small Enterprise (MSE) failure, or in MSEs not reaching their growth potential.
The following question is posed by the author: How do we enhance entrepreneurial skills in microfinance institution clients? The bulk of the paper then aims to answer that question by identifying best practices in Business Development Services offered in close partnership or integrated within microfinance institutions.
Five aspects of these services are discussed:
- Education and Awareness: financial literacy
- Asset Building: creating successful savings
- Business Training
Some existing microfinance projects already show how microfinance institutions and business development service providers work together effectively. The final section of the paper talks through three case studies, also highlighting the main challenges faced.