The development of a cost-effective extension service for small business

Abstract

The objective of the work is to examine the hypothesis that individual extension services are necessary for promoting the development of small business in general, and small scale retailers in particular, and that such services can economically and effectively be provided by staff traditionally four years of secondary education, no business experience and a minimum of formal training. Small scale retailers have traditionally been disregarded or even despised. It is suggested that they can nevertheless playa vital role, in Kenya and elsewhere, by satisfying the needs of their customers, making available a wide variety of inputs which are necessary for development, mobilizing otherwise idle capital and other resources, and by providing employment opportunities and a source of entrepreneurial talent. The actual performance of Kenya's small scale retailers is examined from the point of view of their customers, the manufacturers of the goods they distribute and their owners. Their failings are identified and related to their historical development and their 'present attitudes to business activities. The presently available sources of assistance for small business are described and evaluated. It is evident that the shortage of capital is believed by most small businessmen, in all parts of the world, and by many of those who attempt to help them, to be their major constraint. This belief is examined . in some detail. Loan programmes and associated assistance in Kenya and other countries are assessed, and the actual employment of capital by small retailers in Kenya is analyzed on the basis of sets of assets for a large sample of shops, It is suggested that the critical constraint is not as critical as it has been believed to be. What is lacking is the effective employment of the existing resources. Courses and other forms of training for retailers and other small businessmen in various countries are outlined. Many authorities conclude that the most effective form of training is in extension service, providing individual advice on the businessman's own premises. Such services have however rarely been implemented, because of the difficulty and cost of recruiting staff of the qualifications and experience believed to be necessary. The theory and practice of extension and the effective diffusion of innovations in agriculture and other fields is then examined; it becomes clear that apart from the particular difficulties of staff recruitment, there are other advantages to be gained from the use of relatively low-level staff. There follows a description of an experiment to test whether a staff training and field consultancy procedure could be devised which would enable staff with four years of secondary education, and no business experience, to provide an effective extension service for small scale retailers. The methodology is explained, and an account is given of how the procedure was developed, pretested by University students,and finally tested by replicable application in the field using consultants with only four years of secondary education. A smaller scale experiment using the part time services of private sector sales representatives was also carried out, to test their ability to apply the same procedure in the course of their promotional activities. The results of the experiments are described, and an attempt is made to analyze the costs and benefits of a Kenya wide replication of-the procedures and techniques which have been devised. The problem of determining an appropriate institutional location for the service is also discussed.