Helping MSMEs grow

Making businesses grow need not always require huge investments. This is what we have learned when we studied nine out of some 350 micro, small and medium-scale enterprises currently assisted by the Business Advisory Program (BAP) of Philippine Business for Social Progress (PBSP).

BAP is one of PBSP’s major programs to promote the development of Filipino businesses and creation of jobs especially among the poor. Then called Corporate Volunteers for Enterprise Development (CVED), it was a Canadian brainchild through the Canadian Executive Service Organization (CESO) with funding support from the Canadian International Development Agency (CIDA). CVED/BAP was turned over to and is now almost entirely funded by PBSP.

Classic were the lessons we learned from the study. For MSMEs to grow, sound, results-oriented business advice from experts is invaluable. The willingness and commitment of the entrepreneur to bite the painful process of organizational change were also crucial.

Even when the business is in trouble, some entrepreneurs hesitate to avail themselves of advice because such services were viewed as expensive.

In the study we conducted, however, entrepreneurs summed up that they were able to obtain “affordable assistance from experts at the least possible cost.” PBSP’s service to MSMEs involves face-to-face, on-the-job and on-site assistance, in contrast to the typical classroom setup, academic training, or expensive advice from management consultants. We deploy volunteers who are practitioners and experts rather than “pure academicians” who lifted their advice from books.

Needs-based and customized assistance also characterizes PBSP’s business advice, according to the entrepreneurs. I was not surprised to see that majority of volunteers deployed helped in the areas of product development, productivity improvement, and accounting and financial management. After all, around 70 percent of PBSP’s clients are businesses run by owners who double as workers, and are engaged in food processing, manufacturing of fashion accessories, home furnishing and holiday decors, and export of furniture.

The entrepreneurs also agreed that the interest, commitment and empathy of the volunteer advisers motivated them to adopt the recommendations because they sincerely believed that their advisers took their business’ interest to heart. Some of PBSP’s volunteer advisers travel long distances to reach a client. Others are chief executive officers of established businesses, such as Philip Tan of Cebu-based Wellmade Motors and Development Corp., a PBSP member-company, who also volunteered his executive time to help firms in the Visayas.

Because of demonstrable results such as improved access to markets, increased sales, and more motivated workers, enterprises sought further assistance from PBSP-BAP to help solve other business areas of concern.

Certainly, our organization needs to think beyond assistance at the enterprise level. To be able to create jobs and address poverty widely, PBSP expanded its support from individual enterprises to clusters of enterprises. The clustering approach involves several individual businesses within a sector. PBSP has assisted, among others, businesses in the home décor sector, enabling several entrepreneurs from a specific community to reach export markets in Europe.

Perhaps a differentiating feature of PBSP’s business development service is the nature of PBSP itself. Entrepreneurs agree that PBSP is “a local organization with the expertise, organizational system, the financial means, the pool of resource persons, and the network of corporations that it could tap to help them.”

Many of our volunteer advisers come from PBSP member-companies. Among them, Jose Tayag Jr., then Managing Partner of Isla Lipana & Co./Pricewater house

Coopers, who assisted a national federation of persons with disabilities in negotiating a contract to manufacture and supply school chairs and desks. With Tayag, the cooperative-federation of the differently-abled won a job order from the Department of Education to supply 120,000 school desks with a total contract price of P90 million in 2006. Armed with knowledge about proper pricing and skillful contract negotiation, the federation won another P90 million in 2008. These assure persons with disabilities jobs and income, which are, ultimately, PBSP’s goals.

Some PBSP member-companies are also willing to share their markets with MSMEs. SM Malls, for example, lends its commercial spaces so that PBSP-BAP enterprises can showcase and sell their products there. This is part of SM’s Kabalikat sa Kabuhayan, one of its corporate social responsibility (CSR) initiatives.

Finally, PBSP links social enterprises to local and international investors through the PBSP Business in Development Challenge.

Rowena Sugay holds a Master in Business Administration degree from the University of the Philippines. She writes about corporate citizenship, social enterprises, and culture-in-development, and is a manager at PBSP, which is a partner of The Manila Times in encouraging entrepreneurship among Filipinos and promoting the growth of SMEs. PBSP may be reached at pbsp@pbsp.org.ph. –Rowena Basco-Sugay, Manila Times