|Training Entrepreneurs for Small Business Creation: Lessons from Experience (ILO, 1988, 154 p.)|
While the methodology of successful training of entrepreneurs for business creation has not been widely disseminated in the form of coherent workable packages, the field has matured in the last decade. Enough programmes with 60-70 per cent of their trainees successfully starting new businesses exist to establish that entrepreneurs can be trained. Programmes, albeit with a lower success rate, have also improved business creation among disadvantaged people and those with non-business traditions. Differentiating the principles and practices of these successful programmes has been the subject of this monograph.
There are few examples of programmes that have gone beyond successful pilot projects to significant national efforts. The activities of the Entrepreneurship Development Institute of India and of the Manpower Services Commission in the United Kingdom show, however, that this can be done. These organisations began with pilot projects and, based on their success, continue to expand their already significant accomplishments. New technology (as demonstrated by the efforts of the Entrepreneurship Institute in the United States which has established a computer-linked network of entrepreneurs and entrepreneur support personnel) holds promise for even greater effectiveness in the future. The task for training organisations is now to incorporate the lessons from the successful programmes and go beyond isolated programmes to national development efforts.
National efforts call for government intervention, not only in establishing the appropriate policy environment but in facilitating the formation of the appropriate institutions. Here the experience in a developed country (the United Kingdom) and a developing country (India) is instructive. In both cases, the national government has established policies for training entrepreneurs and has contributed financial support to the programmes. However, the delivery organisations are not government institutions. In India, autonomous bodies with their own governing body exist, while in the United Kingdom the formal education system as well as private subcontractors are used.
In developing countries, the target sectors for business creation must be chosen with care. Those sectors which depart dramatically from the wealth-generating base of the country will encounter significant raw material and equipment supply problems and a shortage of domestic markets. The more the sector relies on an export market and involves a technology that departs from indigenous skills, the more difficult it will be not only to start but to survive. Programme activities to identify business opportunities and training in the evaluation of business proposals are important ingredients in success.
Successful training programmes can be designed for all target groups. Standards of success, however, will vary according to the target groups prior possession of personal entrepreneurial characteristics and business traditions, and to the nature of the supporting environment. It is essential to define the target group with respect not only to the measures used to evaluate a programme but also, and perhaps more importantly, to the standards of performance set as objectives on those measures.
While there has been an improvement in the predictive validity of selection instruments, there is still considerable room for error. While a rejected applicant who did or would have started a business represents an opportunity foregone (an opportunity cost), accepting a candidate who subsequently fails can be considerably more costly to both the trainee and the institution, not only in terms of training resources and the credibility of the institution but also in the wastage of support services such as counselling and credit. In developing countries in particular, trainees who subsequently fail not only bear financial costs to themselves and their families but also suffer significant psychological and social ill-effects. The best selection techniques developed from practice, as indicated in this monograph, should be used to minimise these errors. However, training programmes must continually monitor and seek to improve the adaptation of these techniques to the particular situation.
In most training programmes for entrepreneurs, the degree of entrepreneurship (in the sense of a highly innovative individual creating a growth company that will have a significant impact on the economy) is not large. The businesses to be created usually employ low technology, and the format of the business is to a large degree imitative of those that exist elsewhere. Familiarity with the industry, its technology and its operating practices, and a knowledge of how to manage its operations are relatively more important. This is not to deny the significant difference to success that can be made by the motivation and behaviour of the entrepreneur. However, this training need be neither costly nor time-consuming owing to adequate knowledge about the behavioural profile of entrepreneurs and how to develop it. The issue is one of the proportion of total training devoted to each training programme component, and we recommend greater attention to confidence-building derived from greater knowledge of the industry and the activities required effectively to operate and manage a business within it.
The most successful programmes give considerable attention (160 hours of training on average) to the management practices that will be necessary to sustain the business once it is started. Usually this is given in the context of a business planning activity. Thus marketing is taught when trainees are making sales projections and attempting to determine how they will obtain and retain customers, production management is taught when they are forecasting the cost of goods sold, and so on.
The single most indispensable element of a successful entrepreneurship development programme, based on the experiences cited here, is an intensive, comprehensive business planning activity wherein prospective entrepreneurs are subjected to the discipline of collecting, analysing, presenting, defending and promoting all aspects of what is necessary to start and operate their businesses.
The design of training programmes within this framework is discussed and illustrated in the following sections. Numerous further examples are cited in the bibliography. Appropriate design and supervision of programmes is not a job for amateurs. Expertise at this level, however, can draw upon many resource people from diverse backgrounds who are not necessarily professionals in entrepreneurship development. The training of entrepreneurs now represents a substantial body of knowledge derived both from theory and practice. The implementation of successful programmes can be substantially enhanced through using the best of these methodologies. This monograph has been written to assist in that effort.