Encouraging New Enterprises

Provision of finance for new businesses

Micro-enterprise financial support is key to enabling businesses to start up as they usually cannot access traditional lending and investment institutions.  Micro-enterprise financing is a specialist area and is well documented.  There are many examples of largely private successful micro-enterprise support institutions, all of which need some money to start with, but that can become self-sustaining, through revolving funds.  Local authorities normally become involved in these schemes by meeting with micro-enterprise institutions to assess the forms of support needed and ways of collaboration.  It is not normal for local authorities to be involved in micro-finance schemes as they generally do not have the skills and resources to do this.  Their role is to identify needs and encourage institutions and private sector players to intervene.

Provision of micro and managed workspace

The provision of micro and managed workspaces to support new enterprises is one of the most effective ways to assist new businesses, especially when tied to technical and administrative support and mentoring programs.  These facilities may be provided by the public and private sector.

Providing technical advice on business management

Someone establishing a business for the first time needs to know how to produce his or her product. They must also understand finance, business planning, marketing, some aspects of the law including employment, taxation, safety at work, environmental legislation and so on.  The provision of access to un-formable training and support in these areas meets a basic need and can be provided through ‘one stop shops’ or independent advisers.  As in most areas of technical assistance, it is usually better for the local authority to enable the provision of these services rather than provide them itself, again an issue of skills and resources.  Charging for these services can be difficult, and some agencies give a limited number of consultations and then make modest charges thereafter.  Establishing ‘one stop shops’ with access to market information is often extremely useful.

Supporting the establishment and implementation of formal and informal business networks

People learn from each other.  Networks facilitate that learning.  Active involvement in business networking is also important for developing a customer base, acquiring intelligence for expanding businesses and developing collaborative relationships with businesses in the same sector.

Conducting business mentoring programs

Good practice suggests that by linking new and small business owners with established businesses, significant benefits can result for both businesses.  These need not be formal networks. In addition, informal networks of mentors and new businesses can create further benefits by developing supplier linkages, establishing critical mass for specialist training and so on.

Case Studies
(While we hope you might find the links below of interest, please note the World Bank is not responsible for the content of non-World Bank websites)

• PRODERE Project: Nicaragua, El Salvador and Guatemala -- (This is an example of encouraging local business growth and new enterprises).

• Mozambique -- (This is an example of encouraging local business growth and new enterprises).

• Peru, Villa El Salvador -- (This is an example of encouraging local business growth, new enterprises, promoting inward investment, and  investment in hard and soft infrastructure).

• Slovenia, Sezena -- (This is an example of encouraging local business growth and new enterprises).

• South Africa, Mhala -- (This is an example of encouraging local business growth and new enterprises).