The role of business advisory and counselling services in the performance of small scale enterprises

Abstract

This study sought to examme the contribution of business advisory and counseling services (BACs) to the performance of the Small-Scale Enterprises (SSEs). It attempted to determine the factors that affect the start and growth of the SSEs and how these factors interrelate with one another. The specific objectives were to find out how accessibility to BACs relate to the performance of SSEs; how the cost of the service affects its utilization and find out the level of utilization of the business advisory services in Kenya by the SSEs relative to the other sectors. This study sought to identify the interdependence between business growth and performance to business advisory and counseling services. To capture the required information and get an understanding of reality this study was guided and informed by three theories: The Social Systems, Exchange and Achievement motivation. The relevant information was obtained from secondary data extracted from the works of past authors in the area of micro-finance and business advisory services. The study carried out a survey in the city of Nairobi capturing the operations of the small-scale enterprises and a sample of 100 SSEs was randomly selected from five micro-finance institutions (MFls). Nairobi city was purposively selected as the research site due to its proximity to the operations of the business advisory and counseling firms and the MFls. Moreover, 22 key informants, 12 from business advisory and counseling service firms and 10 from the micro-finance institutions further informed the study. The questionnaire was used for all the SSEs respondents while an interview schedule was utilized as a guide for the key informants. The data obtained were analyzed through SPSS program, classified and grouped in tables showing descriptives, frequencies and percentages. Bi-variate relationships were tested through cross-tabulations and the chi-square while the multivariate relationships were measured by correlation. The study found that of the SSEs studied only 15% of them consulted the advisory and counseling , firms for their services. The SSE entrepreneurs also claimed that the charges of the BACs were high and exploitative and that the service is both not accessible and known to the majority of the SSE entrepreneurs. Moreover, it was reported that the high cost of BACs has contributed to a low utilization of the service and consequently to a poor performance of the small-scale sector. As a result therefore, the SSEs l:m the lowest level of BACs utilization compared to the large and the medium scale enterprises. Similarl,y, it was further noted that even though the MFls had better terms and were more accessible to the SSEs as opposed to their counterpart the banks, their interest rates were still regarded as high. In conclusion, the BACs services were very expensive to the SSEs and therefore they were not adequately utilized by the small scale sector. Furthermore, the BACs were not known by the SSEs as the majority of the SSEs investigated reported of not being aware of the existence of BAC services in the country thus the BACs were not actually accessible to the SSEs. Moreover, due to the poor accessibility of the BACs to the SSEs and the high cost of the services, the SSE sector has not been able to utilize the BACs fully as compared to the medium and large scale sectors. Furthermore, drawing from the study findings and considering the complimentarity of all the stakeholders in the small-scale business, there is need for the SSEs to link up with all relevant departments and institutions for better outcome to be realized in the pursuit of economic growth. It is hereby therefore recommended that the BACs should be extended more rigorously and made affordable to the SSEs to help them gain a competitive edge against other sectors. Furthermore, the MFls also should lower their interest rates on loans and develop a mechanism of assessing and helping improve the performance of the small-scale entrepreneur. Lastly the government should increase its support to the SSEs in terms of provision for finances, research and information and the creation of an enabling environment as well as protecting the sector from undue competition by other sectors. The government must work together with all stakeholders to build a culture of entrepreneurship that nurtures business growth and rewards those actively involved in it by creating an environment that prepares the population as a whole take advantage of the abundant business opportunities in the society. The government should also provide supportive measures for entrepreneurs at all levels of development to utilize their potentials