EFFECTIVE BUSINESS COUNSELINGFOR MICRO ENTERPRISES

(EBC)August 14 – 18, 2006

Marco Hotel, Cagayan de Oro

Ms. Crispina B. AlmonteResource Speaker

DTI - CARP

SCOPE

Introduction to EBC Competences needed Definitions Framework of the course Self-Assessment Exercise Counseling a change process Principles of counseling

MODULE 1

INTRODUCTION DEFINITIONS IMPORTANCE/SIGNIFICANCE OF

OUR WORK SELF ASSESSMENT GENERAL COMPETENCIES

NEEDED

Competences Needed for EBC and Why We Need to Master

ChangingSTEEP

Globalcompetition

ChangingEBC TOOLS

National Eco.Goals

Survival Issue

Module 1

Competencies and Skills

Self Mastery

Enterprise Mastery

Situation Mastery

Exercise PersonalCompetence

Communication Competence

Understanding Role- Scope SBC

Conduct Business Analysis /Planning

Assess Client’s Competencies

Facilitate Clients Devl’mt -Capabilities

Capacity

What is EBC What is EBC ? ?

Help in planning or implementing a task or a series of task,

consultant is not actually responsible for the task itself assisting those who are.

Change process. dynamic, interactive, and progressive 3Es and 3Rs, 3As

Work begins with: condition that is unsatisfactory and condition in which a change for the better has taken

place.

What is What is EBC EBC

Partnership process entrepreneur (with a problem) and the

counselor (with access to solutions) agree to come together.

Limitations (time, competence, cost, scope of work)

1. Knowledge of principles and conditions for counseling. no knowledge 1 2 3 4 5 6 7 thorough knowledge

  2. Skill in assessing Client’s needs.no skill 1 2 3 4 5 6 7 competent

  3. Skill in setting objectives of the engagement.no skill 1 2 3 4 5 6 7 competent

  4. Skill in planning and designing an assistance plan.no skill 1 2 3 4 5 6 7 competent

5. Skill in selecting appropriate methods and techniques.no skill 1 2 3 4 5 6 7 competent

How Prepared Are You?How Prepared Are You?

   6. Skill in oral communication.no skill 1 2 3 4 5 6 7

competent

  7. Skill in written communication.no skill 1 2 3 4 5 6 7

competent

  8. Skill in planning and designing a strategic or improvement plan.

no skill 1 2 3 4 5 6 7 competent

  9. Skill in preparing and using prescriptive techniques in business operations.

no skill 1 2 3 4 5 6 7 competent

  10. Skill in preparing a report.no skill 1 2 3 4 5 6 7 competent 

Continuation

Assessment Score

7 statements with

ratings 7

You have the mastery needed for EBC. Pack your things and go back to work

7 statement with rating below 7 but not 4

This is a reinforcement training for you

7 statements below 7 not 4

This is a review and confirmation training for you

All statement above 4 This a course is for you

7 statements below 4 This is the training for you and you must apply learnings right away

5 statements or more with 4 rating

You do not know yourself

WHY ARE COUNSELORS ENGAGED?

Impartial third party viewpoint

Provision of specific knowledge and expertise/skills

Source of intensive professional attention on a short term or temporary basis

Provision of arguments to justify course of action

Render professional advice through the use of new technology and/or approaches

WHY ARE COUNSELORS ENGAGED?

SITUATIONS

Counselor is put in a

SITUATION NATURE OF ACTION

Assess a company’s condition perceptive

Rectify a deteriorating condition corrective

Improve an existing condition progressive

Improve / introduce new concepts innovative

Create a totally new situation creative

CONSULTING AS CHANGE PROCESSPlanned Changes Agreed Upon by You and Client

Personal/ Behavioral

• Enhanced values & attitudes

• Improved human relations skills between entrepreneurs & employees

• Organizational Change

Technical Competencies

Operations Acquisition of new

technologies Expansion and/or

diversification Productivity tools Quality tools

Fundamental Questions to Ask in EBC Fundamental Questions to Ask in EBC The 6-WH Principle / 3Es and 3RsThe 6-WH Principle / 3Es and 3Rs

WHY is it important or necessary/ implication?

WHAT are critical assessment areas to do?

WHEREthe work will take place?

WHEN will counseling happen?

WHOM – to whom is engagement for?HOW - approaches/methods/tools/ techniques used

Knowledge of oneself will lead to self improvement

Goal of EBC Not JAH = But PAWOL

knowledge

Attitudes

Skills

GROWTH AND SUSTAINABLITY

kk = necessary for the solution of practical economic, social, political and personal problems

A = behavioural change AIVS, positive direction, sustainability

S = Intellectual and technical competence

Oral and written communication skills. Analytical mind to formulate good alternatives. Provide good judgment, objectivity of advice to clients

J U S T B E S M A R T

ROLES & RESPONSIBILITIES ROLES & RESPONSIBILITIES OF SME COUNSELORS ?OF SME COUNSELORS ?

TO BE AN EBC? TO BE AN EBC?

MODULE 2

Competence Framework

SELF MASTERY (In KASH)

SITUATION MASTERY (Client)

ENTERPRISE MASTERY (In MPOF)

The SBC as Change Agent KASH = KAIO

You KASH

K

A

I

O

Client DIFFICULTY

INVOLVED

T I M E I N V O L V E D

As a development worker

As a professional counselors,

As extension officer provides

THE ROLE AND SCOPE OF WORK OF A COUNSELOR

ROLES: Field/ Extension Officers Small Business Consultants Small Business Field Officer Small Enterprise Consultant Diagnosticians/ Fact Finder Industrial Counselors Teacher/ Educator/ Facilitator /Confidante Coach / Advocate Change Agent

TASKS: Promotion Continuing Education Mgn’rl /Tech Assistance Catalysts/ Initiates Linkage / Network Process analyst /specialist Information disseminator Negotiator / Go between Administrative work Monitoring and Evaluation

Business Counselors Take On Business Counselors Take On

Diverse Roles And TasksDiverse Roles And Tasks

Business counselor takes on Business counselor takes on diverse roles and tasksdiverse roles and tasks

 ROLES

Change Agent

Counsel /Coach

Educator

Facilitator

 TASKS

Behavioral

change Improve

administration Provide

knowledge Negotiate for

change

First visit will not end with a contract. Establish rapport with the client. Determine if potential client is motivated to change.

Trust

Capability

CLIENT

Right traits, good character, and Professional skills.

Motivated towards service

Wants to share knowledge and skills

Honest or truthful

Give positive criticism

Good physical and mental health

Projecting self-confidence and skills

Possessing Etiquette and courtesy

Independence of mind

Psychological maturity

TRAITSTRAITS

RequiredRequired

1.2nd

Personal and Professional Traits

SMALL BUSINESS COUNSELORS COMPETENCIES

General Areas and

Core Competencies and Skills

MODULE 3

SITUATION

MASTERY

Conduct Business

Analysis and Planning

(A)

SELF

MASTERY

EXERCISE PERSONAL

COMPETENCE

(B)

EXERCISE COMMUNICATION

COMPETENCE

(C)

ENTERPRISE

MASTERY

ASSESS CLIENT’S

COMPETENCIES

(D)

FACILITATECLIENT DEV. &COMPETENCIES

(E)

ENTERPRISE

SITUATION

ASSIST IN THE IDENTIFICATION OFCLIENT & PROJECTNEEDS /SOLUTIONS

(F)

(G)

ASSIST CLIENT IN FACILITATING &

INTERPRETING THE BUSINESS PLAN

MASTERY

At the beginning of the engagement:   active listening. Analytical Thinking interpersonal skills Communicate well / Manage time well

During the engagement professionalism in delivering your commitments. interpersonal relations with client and employees, as well as

with investors/funders. analytical & problem solving ability.     ability to synthesize, that is, the ability to look ahead, relaying

to your client, and developing your client’s skill to plan. confidentiality forms the core of professional traits.  Learn the skill of limiting engagements.

Special Skills Needed At Different Stages Of The Engagement

Towards the end of the engagement

conveying the message to the client and employees in such manner that they see clearly the cause(s) of the problem(s) and the concomitant factors that will affect operations.

increased capacity to handle pressing issues of a similar nature.

 feedback without making the client feel inferior

 client’s behavior not his business.

Expectations from SBCounsellors/ Code of Ethics

Objectivity in their dealings Technical know-how Honesty and Sincerity Constructiveness in criticism Demand for quality and efficiency Respect commitment Avoidance/ Minimization of failure Maintenance of confidentiality Plan for contingency/safety nets Plan for length of engagement

PROFESSIONALISM

Public interest . Integrity Objectivity

APEC TRACE : Principles of Professional Conduct

Independence Confidentiality Competence and due care Ethical behavior Credibility Professionalism Quality of service Confidence

MODULE 4

Understanding the Client-Entrepreneur

The Client

The Environment

PRESENTATION

The more clients encountered, the better you will gain insights in assessing clients, his personality, and aspirations.

Major concern is that at the end of the contract, the client

is in a better position and can do better.

leave him exhibiting attributes of a successful entrepreneur

have exhibited good business sense

has the drive for growth  

Before you accept/enter into an engagement, have an accurate reading of your potential client

Review of his environment

IMPORTANCE OF DEVELOPING SMEs

SMEs are seedbeds of entrepreneurship and means of discovering latent talent

Play a vital role in regional development, decentralization and rural growth

Provide such resources as capital in entrepre-neurship and skills in managerial know-how

Small factories / plants play a vital role in regional dispersion of economic activities

Provide means of creating employment opportunities at relatively low capital cost

Facilitate the mobilization of capital resources for productive ventures

Resource-based industries particularly those utilizing indigenous materials can be expected to generate foreign exchange thru export activities

Help build an industrial climate and a private sector in the society

EXTERNAL ENVIRONMENT

INTERNAL ENVIRONMENT

Strengths Weaknesses

ThreatsOpportunities

the National Plan was crafted to promote SME

Increase of SME from 8.7% to 12 % of total

MSME

32,000 new S&M

GVA increase from32% to 40%

SME Development Plan : Three-year objective

Local

government

BanksAnchor

Firms

Investors

Civic

Sector

The Players in Local Economic Development

BASICSTRATEGIES

Integrate SME DevtPrograms

NGA directed Projects /Activities

Localize the plan

Strengthen /operationalizeSME Centers

FINANCING

MARKETDEVELOPMENT

ENTREPRE-NEURSHIP TRAINING

TECHNOLOGY INTERVENTIONS

ADVOCACY FOR ENABLING

ENVIRONEMNT

NEEDSNEEDS

BARRIERS TO SME BARRIERS TO SME GROWTH

ENTRY economies of scale, government industrial policies and implementation, infrastructure, access to opportunities

SURVIVAL general environment,competition; foreign exchange; macro policies

EXIT labor contracting, inability to compete under a globalized market

REQUISITES FORREQUISITES FOR SUCCESSFUL ENTREPRENEURSHIPSUCCESSFUL ENTREPRENEURSHIP

ENTREPRENEUR with his motivated team

Technically sound and marketable ideas

Thorough venture analysis and good business planning

Equity and reasonable financing

A good client is one who is highly motivated and possesses some knowledge and/or

skills needed in the business, be it in manufacturing, trade or service.

The entrepreneur is a doer and is action-oriented.

Let us see what takes a successful entrepreneur

Achievement drive

Adaptability

Independence

Decisiveness

Energy

Entrepreneurial

Growth Motivation

Intuition

Opportunity-seeking

Perseverance

Risk tolerance

Social Skills

STRENGTHSSTRENGTHS

Ability to have good relationship with their publics

Determination to maintain highest quality for products

Marketing through known & successful marketing organization

Use of subcontractor for specialized work & additional capacities

WEAKNESESWEAKNESES

No clear strategic direction Diminishing number of skilled workers Insufficiency of operating capital Below average marketing skills

Enter new markets or segments

Add product lines Diversify into related productsAdd complementary products Vertical integration Faster market growth

OPPORTUNITIESOPPORTUNITIES

Resistance of workers to new systems High cost of money Adverse government policies and

procedures Entry of new competitors Changing buyers’ needs and

preferences Advances in technology

THREATS

The client’s motivation for growth is usually accompanied with the drive to make things happen.

The client’s alertness of potential product/service innovations and markets and ability to seize opportunities, convert them to sales, and ensure repeat orders.

“Gut feel” could be traced to his knowledge of the industry.

The entrepreneur knows that his products/services have distinctive features/characteristics. He perseveres to improve his products and services by exploiting every opportunity to do so.      

The client makes hard decisions to the point of self-sacrifice

Delegates some authority to employees firstly because he is not everywheresecondly, decision-making should be at all levels thirdly, he is not forever in the pink of health.

Can tolerate minor mistakes (committed once) and be able to point these things to the decision-maker(s).

Must possess interpersonal skills to make things happen without sacrificing innovation and adaptation.

Must be able to correct and/or introduce change in spite of resistance.

EFFECTIVE BUSINESS CONSULTING and THE CONSULTING PROCESS

Module 4

Coverage

Client development scale

Business consulting styles

Personality types

Communication Styles

Behavioral role of a counselor

The consulting process

 PHASE ONE: MAKING THE FIRST CONTACT

When a prospective client approaches the counselor, the client recognizes that he has limitations

When a counselor makes the first move, it can be misconstrued differently. The move may be perceived as motivated by other considerations.

the first meeting is usually a “getting to know you” session.

2nd

Conduct a preliminary fact-finding activity especially when no prior relationship exists.

Both parties must agree on the scope of work.

Duration should not exceed three work days for small enterprises

Client to must make available some base documents and authorize the interview with key persons in the company.

Counselor familiarize with the operations

Prepare counseling proposal

2nd

Technical proposal details the intended work and general approach (Inception Report).

Counseling team is identifying the persons who will form the team and their respective areas of responsibility and the delineation of the role of each one

Resume of the team wherein the team’s counseling experiences in similar businesses are enumerated.

The financial proposal may be a separate document where details on the cost of doing the work and the timetable are presented.  

Parts of a Proposal

Engagement agreement preparation in the form of one of the following

Letter of agreement

“Conforme” or an “I accept” line in the letter

Formal contract

Memorandum of agreement (MOA)

Verbal agreement which is a result of a previous relationship  

Contract writing is sometimes considered an awkward step for the client and government-employed counselors but it should be done.

Formalizing the Relationship

2nd

The owner/investors of the business must spend time for meetings and interviews.

Top/key persons participation

Employees are informed

Culture and biases of the firm

Organizing the Work

2nd

In an interview the counselor should prepare his/her questions to ensure accurate responses and optimize time.

After the interview, the notes are read to the interviewee to confirm responses.

Observe meetings, operations and any interaction considering interpersonal and intra group relationships. In meetings, observe the following:

o   Presence of agenda

o   Mode of discussion

o   Any dominant personality respected? Abrasive? Etc.

Data-Gathering

2nd

Accountability

 Limitations and potential constraints

 Quality time of the client due to family affairs, participation in organizations, etc.

Potential constraint like holidays, access to confidential files/information

Client’s personal views

The WORK PLAN must answer the following: WHAT is to be done? HOW will it be done? WHERE will it be done? WHEN will it be done?

WHO will do WHAT, WHEN, WHERE and HOW

Steps 2.6 Consider Other factors

2nd

At this stage the counselor is guided by the task question

Where is the firm now? What seem to be the problem (s)? What are the causing the problems Where does the firm want to go?  

Analyze the Client & the Business

PHASE THREE: DIAGNOSINGPHASE THREE: DIAGNOSING

2nd

Results-oriented

Specific as to accountability and time

Measurable in terms of quality and quantity

Realistic and achievable

Challenging and stretching      

Inclusive of constraints or conditions imposed by manpower, money, material, time & other forces

Within the control of the person who is accountable for its achievement.

Develop the Goal

2nd

Formulating an action plan to solve a problem

Developing at least three alternative ways of achieving a goal  

Present to your client decision-making techniques,

Reiterate the desired situation or goal, and then allow her/him to make choices.

For clients with good computer skills encourage the use of software to facilitate decision-making.

Decision-making

2nd

PHASE FOUR: WORKING THE PLAN

Implementing the Plan

2nd

 Break the Activities into Smaller Tasks

Use WH Principle

WHAT is to be done?

HOW will it be done

WHERE will it be done

WHEN will it be done2nd

Why is this to be done

For Whom is activity Intended

When a deviation occurs, let the client learn how to solve problems.

Observe how the client reacts and corrects the deviation

When milestones or targets are met, there is reason to celebrate.

As problems are solved make the client feel like a winner.

Observe client and implementation of plan

2nd

PARTS OF THE REPORTPARTS OF THE REPORT

Executive summary Body of the report must be planned both in

substance and style.   Contents of the main report should have a

logical sequence Amplify the contents of the executive

summary in the main body of the report. Tabulations, matrices and graphical

presentations are encouraged. 2nd

  

“Write to express not to impress.”

Writing style must be simple and in short sentences.  

Writing style can also mean the use of bullets and numbers.

 

WRITING STYLEWRITING STYLE

2nd

MODULE 5 Counseling /Consulting PROCESS

PHASES IN CONSULTING

PROCESS

KEY PROCESESINVOLVED

STEPS IN THE PROCESS

ROLES /STYLES

General Phases of the SBC Process

Pre-Work Entry SeparationWork

Getting Ready /Mobiliza

-tion

Consultant explores & develops a

working relationship w/ client

Consultant –

Client agree to

work with the problem

& its solution

Consultant

decreases level of

involvement and ceases

engage-ment

Five-Phase Model of the Small Business Counseling Process

1

2

3

4

5

Entry

Diagnosis

Action planning

Implementation

Termination

Five-Phase Model of the SBC/ Consulting Process

Entry

Diagnosis

Action planning

Implemen-tation

Termination

Planning the workWorking the plan

Goal setting & decision making

Diagnose client situationEstablish win-win situation

Making 1st contact with client

Evaluation and termination

1

2

3

4

5

ACTIVITIES INVOLVED

Entry Point Diagnosis Action Planning Implementation Termination

• 1st contact with client• Preliminary problem diagnosis• Assignment planning• Assign. Proposal to client• Consulting contract

• In-dept Fact Finding• Fact

analysis and

synthesis• Detailed problem exam.

• Detailed problem examination

• Developing solutions

• Evaluating alternatives

• Proposals to clients

•Planning for implemen-

tation

•Assisting with

implemen-tation

• Adjusting proposals

• Training

• Evaluation• Final report• Setting commitments• Plans for: follow-up•Contingencies• Withdrawal

ECONOMIC WELL-BEING = ENTREPRENEURSHIP + GOVERNANCE

Direct localInvestment

Foreign Investment

• Incentives• Perks

• Policies• Practices

ENTREPRENEURSHIENTREPRENEURSHIPP

Planning Organizing Producing

Creativity/ Innovation

Resources

Passion for business

Products or

Services or

Trading

THE ENTERPRISE

as a process

And the components are:

EntrepreneurshipEntrepreneurship = Entrepreneur + Resources + Conducive Environment One who

starts and manages an economic activity for the purposes of profit.

is innovative and employs strategic practices

is motivated to achieve

Idea

Equity

Fixed assets

Intangible assets

Economic enabling policies

Investment climate

Political stability

Business-friendly local government

Peace & Order

Infrastructure

SWOT Analysis of each identified project

Controllable

Uncontrollable

STRENGTHSSTRENGTHS

Positive factors that contribute to the success of a business

• Skills, expertise

• Availability of resources

• Easy access to resources

• Strong market demand

• Low capital requirement

CONTROLLABLE

WEAKNESSESWEAKNESSES

Negative factors that contribute to or cause the failure of a business

• Lack of skills, expertise

• Unstable supply of resources

• Lack of raw material sources

• Seasonal demand

• Lack of capital

CONTROLLABLE

OPPORTUNITIESOPPORTUNITIES

Conditions in the environment that will allow you to earn more income

• Growing demand

• New technological innovations

• Strong government support

• Expansion

UNCONTROLLABLE

THREATSTHREATS

Conditions in the environment that can negatively affect a business

• Wage legislations

• “Unfavorable” government regulations

• Inflation

• Stiff competition

• Raw material shortages

UNCONTROLLABLE

A enterprise project goes through several phases which will typically include:

Idea : generation of a notion or new concept

Research : patient, systematic search and inquiry and examination into a field of knowledge

Design: conversion of ideas into a plan for a product, service or process

Development: taking a specification and converting it into an actual product, service or process

Market study: involves the determining the need for the product or service and deliver results to customer

Production: conversion of resources to product or service that provides value to the customer

Enterprise Development requires a

DreamerDreamerDoerDoer

RisktakerRisktaker

BUSINESS PROJECTBUSINESS PROJECT

Self - realization

Personal competencies

Project Id

Micro screening

Business Planning

Critical functional areas

Appraisal & financing

Resources acquisition

Implementation

Start up & Operation

Evaluation

Profit or lose

STEPS IN ENTERPRISE STEPS IN ENTERPRISE DEVELOPMENTDEVELOPMENT

Management

Business Functions

Project identification Scan the internal and external environment Assess strengths and weaknesses Identify opportunities and threats Identify market needs that the business can serve Identify resources for the business. The output of this activity is a list of alternative

business ideas that an individual can consider for investment.

Project formulation/ development of a business plan

Decision to proceed with the project Development of a simple business plan Identify critical points of the project from the point of

view of commercial viability and technical feasibility.

Project appraisal and financing

Raise the required capital for starting the project Acquire resources for the project

Project implementation Implement the business plan Locate the business Acquire and install the production equipment needed Recruit and train workers Conduct production trial runs Sell them to customers

Project management Planning production and sales Organizing the resources Directing the workers and coordinating their

activities, monitoring results and outputs Controlling the business operation.

The entrepreneur-manager meets concerns such as:a. Marketing problems: stiff competition, fluctuation

in market demand, customer buying and paying habits, and rejection of products.

b. Production/ operation : desired volume, quality, and price; increasing costs of production inputs such as materials, labor and utilities; high degree of defects and product rejects; breakdown of equipment; productivity of workers and machine; running out of materials; and frequent power failures.

c. Personnel management workers are satisfied, motivated, and productive; tardiness and absenteeism; productivity; and morale.

d. Financial management : cash to finance daily operations, safeguarding of cash from losses, and high degree of inventories and receivables.

Project evaluation assess the performance of the business Examine results of the financial operations analyze profit and loss statements and balance

sheets determine if desired return on investment is

attained

The evaluation may indicate any of the following:a. making good money and there are prospects for

expanding or diversifying into other areas.b. losing money from the business.c. the business is just breaking even.

decide to continue

set up another

leave entrepreneurship to those who are more capable and more fortunate

Module 6 Integration

Workshop on the Counseling Process Framework

Action Plan

That’s all folks Have a good day