SMMEs. In addition to this, as statistics have revealed, a large proportion of SMMEs are women-owned and therefore having gender sensitive policies in place is critical. Further to this, Maranto-Vargas and Gómez-Tagle (2003) believed that training and development has been identified as a key strategy that would assist in increasing the firm's competitive advantage by having highly skilled and committed employees. Another strategy outlined was the introduction of technology which has been identified to improve the overall operation of SMMEs. Soft technology (that is, technical knowledge, administrative processes and organisation procedures) more than hard technology (that is, state-of-the-art machinery) contributes to the development of competitive advantages. Maranto-Vargas and Gómez-Tagle (2003) contended that even though financial resources are important for a firm to leverage performance it was found that development of internal capabilities has been more important than limited financial resources to develop competitive advantages to compete with larger and multinational competitors.
benefit of society as a whole. While an entrepreneurial spirit is a necessary condition for running a successful business, it is not sufficient in itself. It is as a result of the fact that governments, development practitioners, and researchers have recognised the importance of small business development in increasing employment and income among poor and low-income people that they continue to look for ways of providing support and assistance through the development of support programmes (Miehlbradt and McVay, 2003a). These researchers have highlighted the point that successful microfinance programmes and institutions have shown that services tailored to meet the needs of very small businesses can be financially viable and effective in reducing poverty. Over and above this, according to Miehlbradt and McVay (2003a), small businesses are also inhibited by non financial factors such as little or no education, incompetent skills, insufficient access to markets, lack of information and unreliable infrastructure. It is as a result of these factors that businesses often fail at an early stage although they have access to finance.
The dire need expressed for both financial and non financial services resulted in the development of the concept of Business Development Services. According to Miehlbradt and McVay (2003a), the term Business Development Services (BDS) encapsulates and refers to the numerous services used by entrepreneurs to help them function proficiently and to increase their businesses with the ultimate purpose being a contribution to alleviating poverty, generating employment and growing the economy. They assert that business development services are created for the purpose of helping SMMEs to overcome the challenges they face and ensure high levels of profitability and productivity resulting in accessing sizeable markets. Miehlbradt and McVay (2003a) indicated that SMMEs will be in a position to not only in this way realise their potential but also lock them out of the poverty cycle and also make a meaningful contribution to economic growth.
They further point out that this area of business development had been subject to experimenting for years with programmes that were done on smaller scales and were highly subsidised, however, this area of business development has changed its approach to looking at sustainable, high impact strategies that have wider reach.
4.6.1. What is Business Development Services?
From fair trade marketing to rental of cell phones, from entrepreneurship training to the publication of trade magazines, ‘Business Development Services’ (BDS) refers to the wide range of services used by entrepreneurs to help them operate efficiently and grow their businesses with the broader purpose of contributing to economic growth, employment generation, and poverty alleviation.
(Miehlbradt and McVay, 2003a: 7)
According to Lusby (2004), the term Business Development Services was coined in the late 1990s which arose from a search from the donor community for an alternative term for non- financial services conceived as too narrow a definition of the term. According to the World Bank (2001), the notion of BDS is seen to entail services that are all encompassing and designed to improve the overall efficiency and competency of the SMME as well its ability to compete on a broader scale. According to Hitchins, Elliot and Gibson (2004), it is important to note that BDS are provided in the market in at least three different contexts. Firstly, they highlight the fact that there are the very visible BDS that are offered to small-scale enterprises as distinct services for which fees or a commission is paid, for example, accounting services, and advertising, legal advice and product design. Secondly, they highlight the fact that there are embedded services that are included within a commercial transaction for another produce or service, for example, quality control an exporter provided to a small processor amounts to an embedded service.
Thirdly, services such as information, knowledge and advice are provided to small-scale enterprises through various networks, whether social or business (Hitchins et al., 2004).
According to Tanburn, Trah and Hallberg (2000: 6), a further distinction is made between
“operational” and “strategic” business services. They pointed out that “operational” usually refers to those services that are required for day-to-day operations, such as information and communications, management of accounts and tax records, and adherence to labour legislation.
They further pointed out that “strategic” services are used to address medium and long-term issues in order to improve the performance of the enterprise, its access to markets as well as its ability to compete, for example, such services can help the enterprise to identify and service markets, design products, set up facilities and seek financing. While there may exist the market for operational services with the demand and willingness to pay, the demand for strategic services has not been as great (Tanburn et al., 2000: 6). Table 4.2 provided a description of the
different types of BDS available and also defines the service in greater detail, including associated benefits. Such description is very useful to increase SMMEs understanding of BDS as well as its associated benefits.
At the outset of the introduction of the whole notion of BDS, it was envisaged that both the public and private sectors were responsible for developing programmes. The section that follows will discuss the roles of the public and private sectors in as far as being able to make a meaningful contribution to SMME development and the provision of the necessary services required to grow and sustain SMMEs.
Categories Service defined Advisory services relating
to production processes
An enterprise has been advised on the latest techniques that have been developed with regard to producing an item more efficiently or providing a service better.
Environmental
management training and advisory services
Permits enterprises to substantially reduce the cost of production by improving your economic efficiency through the reduction of resources such as water, energy and raw materials.
Facilitation of business linkages
Acts as an agent, broker or middle-man that links small or large firms by helping small firms sell products or services to large firms or win tenders or sub-contracts from large firms.
Quality training and advisory services
Looks at a service or finished product in terms of quality. There is always quality standards or perceptions of a product imposed.
Advertising services Teaches an enterprise how to advertise their products or services, where to advertise, how often to advertise, which media to use , the development of an advert, etc.
Identifying new markets and opportunities
Looks at the current service or product the enterprise is offering and assists in finding new and more worthwhile markets than the ones they have. A new market opportunity will be if a company changed their product slightly to achieve new markets sales.
Assistance with regard to tendering
Keeps up-to-date on what Tenders are advertised. Assists a company/
organisation/business/enterprise in obtaining of the tender document/how to put together a plan to tender/interpret terms and conditions and assist them in completing a tender application on time. They could also provide a service where they put together the physical plan, guide them in ways that could make their tender more competitive.
Accounting services Provides accounting services to a company/ organisation/ business/ enterprise is a consultant/ company/ expert who has studied financial management, accounting, chartered accounting or similar fields and provides financial expertise to companies who do not have it in-house.
Advisory services in business planning/
management and mentoring
A specialist consultant/ company who are skilled in management techniques and management generally, as well as how to plan the future of a business efficiently.
Sometimes a company/ organisation/ business/ enterprise has a good concept/product but is not doing well, because it is mismanaged. It could be sales management, production management and administration management. Shows the company more effective ways of management. Assists a company like that to find the root cause and to plan for it, so that they run more efficiently.
Computer hardware and software services including maintenance and website design
Assists and advises a company/ organisation/ business enterprise on either becoming computerised or improving its current computerisation. Provides training on the relevant software. Identifies particular programmes that could solve some of the company’s problems.
Legal support/advisory in legal services processes
Provides legal support. A consultant who has studied law, or a company who hires people who have studied law. The service provider could have different areas of speciality such as Patent and Copyright Law, Company Law or Employee/ Labour law.
Management and business skills training
Provides the necessary business skills and management training usually in the form of training courses since many businesses start because someone has an idea/concept or a product for which there is a market but have no knowledge of business skills or how to develop skills within their organisation should the company grow.
Financial planning/
business plans for finance
Assists a company/ organisation/ business/ enterprise who has a good product/ service and may also have a very good market or client base, to plan their company on sound financial principles. Also assists the business to develop an asset credit policy or payment policy, how to access funds and how to price goods and services.
Negotiation skills regarding
government/other contracts
Supports a company with negotiation skills which could include either physically hiring the services of a negotiator or being trained to negotiate for contracts successfully.
Successful selling and communication skills could be incorporated in this training.
Table 4.2: A description of different types of BDS available
Cunningham, S. and Trah, G. (2004). Market assessment of Business Development Services in Nelspruit, Paper prepared for the German Technical Co-operation.