Business consulting isn’t the only way to provide SMEs with access to specific expertise to boost performance. Partially subsidising the costs of hiring a worker with the right expertise or outsourcing specific tasks to external professionals can be effective and cheaper alternatives.

What’s the rationale behind this?

Improving business practices across all the dimensions that are relevant for business growth requires time, attention and a variety of skills that individual entrepreneurs might lack. Consequently, business owners might benefit from using the market to access expert knowledge on specific areas about which they’re less knowledgeable to boost their businesses.

Business consulting is one option for accessing expert knowledge in which the burden of implementing better practices relies on the entrepreneur. An alternative option is for the owner to relinquish control over some specific business functions and hire someone with the adequate skills to be in charge of a specific area or set of tasks, either as an employee within the firm or as an external service provider.

Target population

Micro and small firms 

Outcomes of interest

Business practices, business performance

Does it work? Here’s what we know so far…

Business practices

• Business consulting, insourcing a specialist worker and outsourcing specific tasks have similar effects on triggering the adoption of desirable business practices by micro and small firms, and all outperform training the entrepreneurs themselves.

Business performance

• The three market-based approaches can improve business performance in terms of increasing the number of employees, sales and profits.
• Outsourcing tasks seems to have the strongest effect on business performance, while hiring a worker has the weakest effect. Business consulting lies in-between.

Cost-effectiveness

• Partially subsidising the costs of insourcing a worker or outsourcing tasks can have comparable effects to those of providing one-on-one consulting services. The lower cost of such subsidies makes it a more cost-effective strategy. 

Ideas worth trying

• If aiming for a cheaper intervention than free one-on-one consulting, try offering SMEs partial subsidies to hire a worker with the required expertise or to externalise specific tasks.

What to avoid

• Avoid trying to train the entrepreneurs themselves in all the areas relevant for firm growth instead of helping them access professionals with the right expertise to support them.

Studies reviewed

This summary is based on experimental evaluations of the following programmes and tweaks:

• Comparing training, consulting, insourcing and outsourcing

  programme

  tweak