This Business Development Services for Micro and Small Enterprises (MSEs) manual is produced as part of OCCCI’s financial services policy and Poverty Alleviation Program in Eastern Visayas, where it primarily operates.

Background and Context

The success of an enterprise, in terms of growth and competitiveness, is first of all the result of the entrepreneurial spirit of its owner. This implies the ability to take calculated risks, striving to acquire more knowledge and skills required for a more effective business operation, keeping abreast of new developments in the industry, being responsive to client needs and wishes, and being concerned about the quality of the goods or services offered.
These entrepreneurial characteristics are not shared equally by all individuals. Some are what is often referred to as inborn entrepreneurs while others might never succeed in business, whatever their efforts. To achieve the greatest effectiveness and impact, these programs should aim at providing support services mainly to those who can make the best use of them for the benefit of their enterprise, as well as for the benefit of society as a whole. The limited financial and other resources available for enterprise development programs should first target those exhibiting and demonstrating the required entrepreneurial characteristics. This manual will provide some guidance on how this can best be achieved.
While an entrepreneurial spirit is a necessary condition for running a successful business, it is not sufficient in itself. External factors also play an important role.

• First, the macro-economic environment affects all enterprises, as illustrated by the recent financial and economic crisis of the country.
• Second, the policy and regulatory framework (fiscal and monetary policies, trade policies, and business regulations) can inhibit the growth of enterprises or, on the contrary, allow them to achieve their full potential.
• Third, public investments (e.g. for infrastructure development, education and training) play a major role in facilitating the creation and growth of enterprises. The availability of a large pool of educated and trained labor will help contribute to increasing enterprise productivity and competitiveness. In this way, a good road network and efficient transport facilities will help enterprises establish themselves in most parts of the country, as well as expand their market. Similarly, a good telecommunication infrastructure will facilitate communications with clients and suppliers.
• Fourth, finance is needed for starting a new enterprise or expanding an existing one. Banks are supposed to be the main source of financial services, and this is the source used by most medium and large enterprises. On the other hand, banks are often reluctant to lend money to micro and small enterprises. Thus, the owners of these enterprises are often obliged to depend on their own savings, borrow from friends or relatives, or rely on money-lenders who apply very high interest rates. Consequently, even those exhibiting an entrepreneurial spirit may not be able to establish a business or expand an existing one for lack of investment funds.
• Finally, all enterprises need a variety of services for the optimal performance of their business. The owners of enterprises need access to information on new products and processes, on market trends, on new policies and regulations, etc. They also need specialist advice (e.g. consulting services) on how to increase productivity, access new markets, diversify production, manage the business, etc. Similarly, their workers may need further skills training and the owners themselves can benefit from business training. In general, most medium and large enterprises have in-house expertise in all these areas so they can afford the services of consultants if they lack expertise in some highly specialized domains. On the other hand, micro and small enterprises often depend only on the knowledge of the owner and/or some of the workers and frequently cannot afford the full cost of services of private consultants. This lack of access to effective business development services thus can constitute a constraint to the further growth and competitiveness of the business.
  

In summary, while an entrepreneurial spirit is a pre-requisite for running a successful business, factors external to the enterprise and the entrepreneur can also play a very important role in achieving success - the macro-economic environment, the policy and regulatory framework, the available physical infrastructure, and access to business and financial services. This manual has been prepared as part of support services policy on Micro and Small Enterprise Development of OCCCI.