SME Training and Coaching Loop to support small and medium enterprises
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SME-Loop Logo GIZ
GIZ
Small and medium-sized enterprises (SMEs) are considered an engine for economic and social development. However, framework conditions for their development are often unfavorable and support is not tailored to the context and situation of the individual enterprise.
The SME Loop responds to this need. It is a combined training and coaching approach and aims to enhance competitiveness, income, and the demand for labor. The SME Loop consists of seven phases and is implemented over a six-to-nine-month time span. After their selection, entrepreneurs follow two alternating classroom business trainings and several individual coaching sessions on business analysis, strategy formulation and business linkages among others. The SME Loop was recently adapted to the specific need of women led enterprises, start-ups and social enterprises.
More information and training material is available on the website of the International SME Loop Association e.V. (sme-loop.com).
Last update: 25 Feb 2025
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Contexto
Défis à relever
One key strategy to combat poverty is to support sustainable growth of small and medium-sized enterprises (SMEs). SMEs form the majority of all enterprises in almost all countries worldwide, they employ more than two thirds of the global workforce, and they contribute significantly to economic growth. Nonetheless unfavorable business environments impede the survival of small businesses, as well as investment and growth. On the individual level entrepreneurial skills are often lacking. Promotional measures run by the state or by chambers and associations frequently take insufficient account of the specific needs of SMEs. Even though various approaches for the support of entrepreneurs already exist, the SME Loop is unique due to its combination of training, coaching and other components such as business linkages that lead to fast visible results for the benefit of the entrepreneur, its employees and the society the enterprise is acting in.
Ubicación
Benin
Burkina Faso
Ivory Coast
The Gambia
Ghana
Cameroon
Mali
Malawi
Nigeria
Niger
Togo
Tunisia
Kenya
Senegal
Sierra Leone
Mozambique
West and Central Africa
North Africa
East and South Africa
Procesar
Summary of the process
These bulding blocks lead to a successful and effective training, which responds to the needs of the participants and a sustainable anchoring of what has been learned.
Building Blocks
1. Assessment and selection of entrepreneurs
Potential participants are assessed on their entrepreneurial competencies and motivation on further improvement. The assessment also serves to define relevant training needs of the entrepreneurs and adapt the support accordingly. As a result of this phase, a group of 20 to 25 participants is formed.
The main instrument of the assessment is a questionnaire that covers three areas:
- Entrepreneurial characteristics: (Self-) evaluation of personal characteristics e.g. initiative, risk acceptance and ability for problem-solving.
- Training needs and capacities of the entrepreneur: Analysis of educational level and specific business skills.
- Enterprises profile: Documentation of the field of activity, years of existence, number of employees and other data of the enterprise.
The questionnaire is filled out by the entrepreneurs themselves or together with an interviewer. Ideally, the questionnaires may be complemented by a short interview with open questions. On the basis of the questionnaire results and the interviews, the applicants are ranked and selected.
Enabling factors
- Entrepreneurs are selected according to a transparent set of selection criteria.
- Business owners get the chance to proof their motivation and entrepreneurial potential.
- Information gained through the assessment serves as the starting point for training and coaching and allows for content and methodology to be adapted to the participants’ needs and capacities.
- Data collected during the assessment is used for the monitoring of the programme as well as for (self) evaluation for the trainer and coaches.
Lesson learned
SME Loop trainers and coaches are best to be involved in the assessment of SMEs. The integration of trainers and coaches brings a number of advantages:
- Sharpened understanding for assessment process and collected data leads to an improved integration of assessment results into their coaching/training work.
- More and first-hand information about and experience with the target group assures larger understanding for their capacities and needs. This eases a successful adaptation of training/coaching methodology and content from the very beginning.
- An early first contact accelerates the building of trust between participants and trainers/coaches.
2. First Training: Business Analysis
During this first training, which takes place during three days, the entrepreneurs acquire basic business management knowledge and entrepreneurial competencies. The skills entrepreneurs acquire from this training is the foundation for the further SME Loop phases.
During this training entrepreneurs analyze their businesses and gain entrepreneurial as well as business management competencies while using systematically a number of tools. Two SME Loop certified trainers facilitate the workshop using adult learning principles and the experiential learning cycle concept.
The objectives of the business analysis training are:
- To enable entrepreneurs to identify the strengths, weaknesses, opportunities, and threats of their businesses.
- To enhance and develop business management knowledge & skills and entrepreneurial competencies.
- To reflect on the aspects of marketing, production, and financial management.
Enabling factors
- Use an appropriate mix of tools and exercises to facilitate learning.
- Conduct a short evaluation exercise at the end of each day and take into account needs, expectations and feedback of participants.
- Encourage entrepreneurs to be actively involved and to understand that the responsibility for learning lies with themselves.
- Talk about the privacy and confidentiality policy in the course to create a positive learning environment.
Lesson learned
- Learning contract: To increase commitment of participants, the trainers should introduce the concept of the “learning contract” and set clear house rules.
- Andragogy: To make training contents more palpable for participants, trainers should encourage experiential learning (“learning by doing”)
- Class size: Ideally around 25 and not more than 30 SMEs form a class.
3. First Coaching Phase: Strategy Formulation
During the first coaching phase, which consists of two coaching sessions per month for two months, coachee and coach agree on a work plan, fixing goals of enterprise and self-development. Together they identify adequate strategies for business development.
In the coaching process the coach strengthens the coachee by using suitable questions, techniques, and instruments as well as reflecting observation to reinforce the coachees’ capacities for widely self-reliant problem-solving, enterprise and personality development. The needs, priorities, and capacities of the coachee determine content and methodology of coaching.
Enabling factors
- The coach and the coachee have a relationship on equal terms.
- The coachee has all required resources, skills, and experiences to improve their situation and to fix a problem themselves.
- The coach doesn`t try to solve the coachee’s problems but rather provides support, feedback, and guidance.
Lesson learned
- The coachee’s needs, priorities and capacities determine content and shape of the coaching process.
- The coachees themselves are responsible for the results of the coaching process and the attainment of their goal(s) and therefore need to be motivated or facilitated enough to follow their goals.
- The coach should not advise, preach, criticize or lecture the coaches. Instead, they should be accommodative and attentive.
4. Second Training: Business Improvement Planning
During the second training which takes place during 3 days, the group focuses on the preparation of the Business Improvement Plan (BIP) based on the already defined business improvement strategies.
The training delivers a number of themes such as identifying business improvement strategies, formulating a business improvement plan, identifying sources of financing and business support structures, as well as additional topics relevant to the entrepreneurs such as record keeping and costing. Two SME Loop certified trainers facilitate the training while taking into account adult learning principles.
The objectives are:
- To enable entrepreneurs to elaborate business improvement strategies and planning.
- Introduce business planning tools such as the business model canvas.
- To enhance the knowledge of various sources of financing and their implications on business operations and profit margins.
- To create an understanding of necessary supporting functions in the business such as record keeping, costing, business registration, etc.
Enabling factors
- Use an appropriate mix of tools and exercises to facilitate learning.
- Conduct a short evaluation exercise at the end of each day and take into account needs, expectations and feedback of participants.
- Encourage entrepreneurs to be actively involved and to understand that the responsibility for learning lies with themselves.
- Talk about the privacy and confidentiality policy in the course to create a positive learning environment.
Lesson learned
- Learning contract: To increase commitment of participants, the trainers should introduce the concept of the “learning contract” and set clear house rules.
- Andragogy: To make training contents more palpable for participants, encourage experiential learning.
- Class size: Ideally around 25 and not more than 30 SMEs form a class.
5. Second Coaching Phase: Business Improvement and linkages
The second coaching phase consists of three sessions per month for a duration of three months. After finalising their Business Improvement Plans, the entrepreneurs get in touch with other Business Development Services and prepare a presentation to financial institutions for credit assessment and business finance.
In the coaching process the coach strengthens the coachee by using suitable questions, techniques and instruments as well as reflecting observation to reinforce the coachees’ capacities for widely self-reliant problem-solving, enterprise and personality development. The needs, priorities and capacities of the coachee determine content and methodology of coaching.
Enabling factors
- The coach and the coachee have a relationship on equal terms.
- The coachee has all required resources, skills, and experiences to improve their situation and to fix a problem themselves.
- The coach doesn`t try to solve the coachee’s problems but rather provides support, feedback and guidance.
Lesson learned
- The coachees’ needs, priorities and capacities determine content and shape of the coaching process.
- The coachees themselves are responsible for the results of the coaching process and the attainment of their goal(s) and therefore need to be motivated or facilitated enough to follow their goals.
- The coach should not advise, preach, criticize or lecture the coaches. Instead, they should be accommodative and attentive.
6. Graduation Ceremony
This ceremony marks the official end of the cycle. The graduates receive a certificate to value their successful participation. The Graduation Ceremony can be combined with a pitching event where a jury composed of representatives of financial institutions and other relevant stakeholders evaluate the entrepreneurs’ Business Improvement Plans and assess the possibility of business financing applications.
If needed, additional coaching through coaching vouchers can be offered to entrepreneurs. The vouchers allow the entrepreneurs to demand additional coaching sessions during the next three months.
Enabling factors
- The Graduation Ceremony serves as an opportunity to strengthen linkages between the entrepreneurs and financial institutions or other relevant stakeholders. This increases the probability of successful financing and implementation of the entrepreneurs’ Business Improvement Plants.
- Opinions and comments of jury members concerning the Business Improvement Plans can help entrepreneurs to further optimize their planning. The additional coaching can be used to support entrepreneurs to take these comments into account.
Lesson learned
- Depending on the institutionalization of the SME Loop in the respective country of implementation, representatives of relevant stakeholders (e.g. chamber of commerce, ministry of commerce or other) should be associated during the Graduation Ceremony.
- At the end of the SME Loop the coach should encourage the entrepreneurs to create a (digital) network to facilitate contact after the duration of the SME Loop.
Impacts
- Implementation of the approach via GIZ and numerous partner organisations in 16 countries and 23 projects and training of more than 400 SME Loop Coaches.
- More than 7.500 entrepreneurs completed the SME Loop including 60% female and 36% young entrepreneurs.
- More than 8.000 new full-time jobs have been created.
- More than 3.600 businesses were formalized and officially registered.
- Almost ¼ of all trained entrepreneurs accessed a loan to expand their businesses.
- ¾ of the enterprises improved their annual turnover.
Beneficiaries
Entrepreneurs, Small and Medium-sized Enterprises
Sustainable Development Goals
SDG 1 – No poverty
SDG 2 – Zero hunger
SDG 5 – Gender equality
Story
Annielle Houngbo from Porto-Novo, Benin tells us how the SME-Loop coaching and training program helped her with her business of processing agricultural produce.
“Thanks to the SME Loop Coaching and Training Program, I improved the performance of my business. I now have a trade register that allows me to operate in the formal sector, I have taken out operating loans thanks to which I have increased my production capacity and I expanded my store. In addition to this I improved the visibility of my business and started networking with other entrepreneurs.“
