Hannover B3 quality business support

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Hannover policy forum background paper


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Workshop objectives

  • To examine how EQUAL has linked specialist expertise and approaches to mainstream delivery
  • To use the experience of EQUAL to explore how business support systems, particularly for start-up, need to change to meet the needs of disadvantaged groups

What is the challenge?

The creation of a vibrant and inclusive enterprise system needs high-quality business support for starts-ups and established businesses to help with consolidation, growth and financial management. But most business support systems fail to engage with disadvantaged people and groups under-represented in enterprise.

Micro businesses in many of the EU Member States have found that the available support is inadequate for their needs. In particular, the systems appear to be too disjointed and inappropriate for disadvantaged groups and those underrepresented in enterprise such as women and young people. Aspiring entrepreneurs from these groups often need help not just on their business idea but on other issues including childcare, benefits advice, etc. For migrants there may be legal questions about employment rights and residency.

Disadvantaged groups and areas tend to rely on a combination of different public and semi-public agencies working at the boundaries between social security, employment and enterprise. Here, one often finds poor quality and overlapping sources of business support for small enterprises. They rarely form a genuine system capable of effectively accompanying disadvantaged groups along a pathway towards independent income generating activities. Further, business support staff are seldom trained in how to help disadvantaged groups, while agencies specialised in dealing with these groups may lack business skills and experience.

What kinds of solutions are being tested?

  • Specialised support for setting up and running a business: In Germany, for example, training designed specifically for women led to survival rates of around 80% compared to an average of 30% on normal courses.
  • Pre start up support: Many Equal partnerships have focused on the pre-start up phase which is often ignored by traditional business support agencies. This allows them to concentrate on issues specific to certain disadvantaged groups such as language, confidence and trust, caring responsibilities, work-life balance, and collective methods of working. In Wales a series of specialist pre-start agencies have contributed to an increase of 20% in yearly start-up rates. However, it is clear that there is also a common core of skills and competences that are necessary for anyone to set up any kind of business.
  • Outreach: EQUAL developed new techniques for working in communities including using ‘embedded’ advisers trained and accredited to quality standards based in ethnic minority and migrant associations.
  • Social enterprises often need specific support during all phases of business development. It includes cooperative management structures, registration of other forms of social enterprise, social franchising, dealing with voluntary workers, disabled workers and other disadvantaged personnel, managing public-private funding mixes, public procurement, social auditing and social return on investment.
  • Inclusive incubators aim to attract people that face particularly severe disadvantages in the labour market, such as single mothers, unskilled women or women from ethnic minorities, by providing longer and more flexible opening hours, space for part-time working, longer incubation periods, access to public transport, security, and childcare.
  • Mentoring has been tried and tested as a means of introducing both business realism and a degree of individual empathy. In EQUAL, work has been done on matching mentors according to age, sex and ethnic origin; also the mentor's interpersonal skills and the personal "chemistry" between mentor and business promoters are important. These conclusions lead to a clear set of methodological recommendations, such as the need for trial periods and the integration of mentors into well-defined packages of business support.
  • EQUAL one-stop shops (e.g. Verbund Enterprise in Berlin) go beyond trying to put all the services in one place and instead design a way of bringing together a genuine support system made up of clearly defined stages like profiling, planning, start-up, consolidation and growth.
  • Quality standards and training for inclusive business support: In the UK, this has been applied to produce officially recognised standards and monitoring procedures for business mentors. In Germany, EQUAL created a National Association for Business Start-ups and developed quality standards for the support system as a whole. Adding social inclusion to the quality criteria is an important step in addition to diversity awareness training for advisers (e.g. in Wales)
  • Integrated business support systems that link into mainstream provision: Each stage has a fixed duration (ranging from 4 weeks for profiling to 5 years for growth) and involves the provision of different services (such as counselling, training and qualification, mentoring and access to micro-credit). Both specialist and mainstream providers, such as banks, provide different parts of the support package in each stage. Survival rates after two years can be over 80% using these systems and the costs of support are estimated at around two thirds of the annual cost of unemployment.

Questions for discussion

  • How can integrated business support systems be developed to meet the needs of disadvantaged communities?
  • How can the specialists and community-based approaches influence and educate the mainstream providers about diversity and inclusion? How can the mainstream incorporate the learning and methods developed in the community based approaches?
  • Is a braided approach (functional linkages based on referral and financing between mainstream and specialist, business support and social agencies) the way forward in building more inclusive and integrated support structures? Can the funding follow the client in these more complex structures?
  • How can quality systems be adapted for disadvantaged groups?

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