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Study summary

Complementing business training with individual consulting and role models

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At one-tenth of the cost, a one-hour in-class talk by a role model can have the same impact on microentrepreneurs’ income as a more expensive one-hour one-on-one consulting session.

General description

A traditional intensive training programme for microentrepreneurs that includes a group consulting session is complemented with a visit from a role model, upgraded to having individual instead of group consulting sessions or both. The individual consulting session can take place either in the classroom or at the business location.

Benchmark programme

Entrepreneurs are offered 12 to 14 weekly training sessions (each lasting four hours) by a professional trainer with experience of working with small companies. Participation is free and partial funding is provided for out-of-pocket expenses, including transportation.

Aim

  1. To increase business knowledge
  2. To improve business practices
  3. To improve business performance

Context

A country where micro firms are an important source of work and income, particularly for women. Micro firms there perform poorly and often not a priority for their owners, who might own more than one business or combine running their business with household chores or another job.

Participants

Microentrepreneurs from low-income households that have either a business (80 per cent) or a business idea (20 per cent). The majority are women (92 per cent), and the average age is 45 years old. Around 20 per cent have not completed secondary school, 50 per cent have a secondary school degree and 30 per cent have some tertiary (mostly technical) education. 

Most don’t work full-time on their business, and they likely have other sources of earning. Only a third declare paying VAT and only a few employ workers. In general, they have poor managerial and financial skills.

Tweak

On top of the main training, some participants are offered:

  • A talk by a role model: A one-hour talk by a successful programme alumni who shares their testimony with the class. The role model explains how the knowledge acquired during the course has contributed to the success of their business project and provides practical information. The role models are similar to the participants in terms of age, gender and sector of operations.
  • A consulting session: A teaching assistant (usually a business school senior student) provides one consulting session to participants to help them to translate the course material into concrete actions and practices. The consulting is provided: 1) in groups and in-class, 2) one-on-one in the classroom or 3) one-on-one at the business location. 

The one-on-one formats cost ten times as much as the group consulting or the role model visit.

Results

  • Access to the one-on-one consulting session led to improvements in some business practices and business knowledge, whereas exposure to the role model left those unaffected.
  • Having access to the role model session or the one-on-one consulting led to higher business survival rates and, consequently, to higher business ownership rates one year after the programme (3 to 5 percentage points increase).
  • Sales and profits also increased, especially for the group exposed to the role model.
  • Receiving a one-on-one consulting session instead of the group consulting session didn’t lead to increases in the number of employees, hours worked or access to credit or banking.
  • One year after the programme, access to the role model session or the one-on-one consulting session had increased monthly household income by an average of around 15 per cent. This increase was concentrated among those who already had a business at the start of the programme.
  • Exposure to the role model was relatively more effective for newer businesses, while access to one-on-one consulting was especially valuable for older businesses and more educated individuals.
  • The results of the one-on-one consulting didn’t depend on whether the session took place in the classroom or at the business.

Policy implications

  • Adding a talk by a role model or changing the format of a single consulting session from group to one-on-one can make an intensive business training course more impactful.
  • The session with the role model is a more efficient and scalable strategy. It achieves similar results at one-tenth of the cost.
  • The role model session is particularly impactful for newer businesses, while one-on-one consulting can work better with more mature businesses and highly educated entrepreneurs.

Full study