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Better business = inclusive support
EQUAL develops high quality support systems for all
Business support services: too disjointed and inappropriate for disadvantaged groups?
Small businesses and governments in many European countries complain that sources of business support frequently do not respond to the real needs of actual and potential business people, particularly those who face disadvantages in the labour market.
Disadvantaged groups and areas tend to rely on a circuit made up of different public and semi-public agencies working at the boundaries between social security, employment and enterprise policy. 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 an itinerary towards independent income generating activities. Furthermore, 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.
These problems contribute to lower rates of self-employment and business creation among disadvantaged groups and areas, lower rates of employment and loss of output.
Businesses need high quality and targeted support
Providing business support is already a major policy priority of the European Union. Business advisory services and shared business services represent approximately one third of the €16 billion to be spent on supporting SMEs by the structural funds 2000-2006 (split fairly evenly between pure advice and support involving some kind of business premises). Another third of the total is spent on grant aid but this often forms a package with the business advisory services. The advisory services often play a key role in the access to and allocation of the grant aid.
Since the late nineties this has led to a whole series of initiatives to document good practice in business services, to increase the synergy between the large number of existing projects and to improve quality, relevance and take-up. The Directorate formally responsible for most of these initiatives has been DG Enterprise. Improving the coherence and quality of the business support system is mentioned as a priority in the European Charter for Small Enterprises and its successive national reports.
The recent Strategic Evaluation of Financial Assistance Schemes to SMEs also argues that the "overall rationale of business infrastructure and advice should not be questioned. The cluster responds to practical needs, particularly acute as far as SMEs are concerned, even more if one considers micro and small enterprises which cannot afford to pay for such services, deemed crucial for their survival rate after three to five years". The report endorses the statement that "the development of a one-stop SME shop, capable of providing information regarding all of the services available at national level is urgently needed". Consequently, the report supports "closely aligning SME measures with regional development strategies". In addition, it says targeting should be made "according to geography, size but also particular social groups".
This point was also taken up in DG Enterprise's Green Paper on Entrepreneurship and the Action Plan that followed from it. The latter states that "the Commission will keep promoting access to top class support and management training for entrepreneurs from all backgrounds including groups with specific needs such as women and entrepreneurs from ethnic minorities". From the point of view of employment policy, the report of the Employment Task Force chaired by Wim Kok and the Joint Employment Report also stress the importance of further developing advisory services for start-ups. Finally, business support services are specifically mentioned in the first two objectives of the new ERDF regulations and support for entrepreneurship is raised under two of the three priorities of the ESF regulations for the period 2007-13.
In this light, DG Enterprise is considering further initiatives regarding top class business support which include further developing systems for tailoring business services to the needs of entrepreneurs; establishing a European quality referential for business services; developing a recognised common core of training for business support workers; and developing common evaluation systems of business services.
Ensuring high quality business support for all
EQUAL strategies for ensuring a high quality business support system for all can be summarised in three lines of action, which are interlinked and reinforce each other:
Specialised support for setting up and running a business
In order to balance the advantages of specialist support (for example, greater understanding and affinity with the client group) with the additional costs and the risk of marginalising people even more, specialist organisations (often NGOs) within EQUAL have focused on the phases before the launch of the business. This allows them to concentrate on issues specific to certain disadvantaged groups such as language, confidence and trust, caring responsibilities and work-life balance, and collective methods of working.
Regarding social economy businesses, specific support is needed throughout all phases of business development, not just pre-start. It includes cooperative management structures, dealing with voluntary workers, disabled workers and other disadvantaged personnel, managing public-private funding mixes, public procurement, social auditing, social franchising and so on.
Three key support services have received particular attention: business incubators, mentors and "one-stop shops". Most business incubators focus on the higher technology end of the market and are often closely related to universities and research centres. EQUAL has developed incubators that support disadvantaged groups in different ways:
Mentoring has been tried and tested as a means of introducing both business realism and a degree of individual empathy into what sometimes risks becoming a rather academic business planning process. EQUAL has demonstrated the importance of matching mentors and business promoters in two key areas: firstly, their experience and background not only in terms of sector and type of business but also according to age, sex and ethnic origin; secondly, 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.
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) that help the entrepreneur acquire the personal competences, the skills as well as the resources necessary for success. Then, based on a predefined division of labour, both specialist and mainstream providers, such as banks, provide different parts of the support package in each stage. Systems have been developed to record the progress made by the entrepreneurs along this itinerary in a way that is recognised by banks and other agencies. Survival rates after two years can also be over 80% using these systems and the costs of support are estimated at around two thirds of the annual cost of unemployment.
Quality standards and training for inclusive business support
By adding 'social inclusion' to the quality criteria applied to business services, EQUAL has exposed the need for fundamental changes in certain cherished business support methodologies. For example, more accessible and flexible business planning tools may better reflect the more gradual, organic way in which many businesses are started by women and ethnic minorities. However, to ensure that these methods are not restricted to specialist support services, training packages on diversity have been developed for business advisors and used extensively at a national and at regional level for a broad range of disadvantaged groups.
The good practices tested under EQUAL address and reinforce the policy orientations and priorities at EU level by addressing the business needs of under-represented groups.
National and regional business support programmes (particularly if these are co-financed by the Structural Funds) would increase their effectiveness and efficiency by:
Business support staff would benefit from recognised training in all the above. Business support methodologies must also be adapted to deal with very different realities (social entrepreneurship and the submerged economy).
 Small Business and Government. The Way Forward. UK Small Business Service. 2002
 Commission Staff Working Paper. Creating an Entrepreneurial Europe. The Activities of the European Union for small- and medium-sized enterprises (SMEs). 2003
 The following are key references to EU policy recommendations in this area. Establishing a methodology for tailoring business services to the needs of entrepreneurs.
 Strategic Evaluation of Financial Assistance Schemes to SMEs. DG Budget. Final Report. 2003.
 Action Plan: the European Agenda for Entrepreneurship COM (2004) 70 final
Communication from the Commission to the Council. Draft Joint Employment Report 2003/2004
 Proposal for a Regulation of the European Parliament and of the Council on the European Regional Development Fund (Com 2004) 495 and on the European Social Fund (COM (2004) 493.
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