DTI - CARP

EFFECTIVE BUSINESS COUNSELING

FOR MICRO ENTERPRISES
(EBC)
August 14 – 18, 2006
Marco Hotel, Cagayan de Oro

Ms. Crispina B. Almonte

Resource Speaker
 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
 Module 1
Competences Needed for EBC
and Why We Need to Master
Changing Changing
EBC TOOLS STEEP

National
Global
Eco.
competition
Goals

Survival Issue
Competencies and Skills
Exercise Personal
Competence

Self Mastery Communication

Competence

Understanding Role
Situation - Scope SBC

Mastery Conduct Business

Analysis /Planning

Assess Client’s
Enterprise Competencies

Mastery Facilitate Clients

Devl’mt -Capabilities
Capacity
 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
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)
 How Prepared Are You?

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
 Continuation

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
 Assessment Score
7 statements with You have the mastery needed
for EBC. Pack your things and go
ratings 7 back to work
7 statement with rating This is a reinforcement training
below 7 but not 4 for you

7 statements below 7 not This is a review and confirmation

4 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 You do not know yourself
with 4 rating
 WHY ARE COUNSELORS
WHY ARE COUNSELORS
ENGAGED?
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
 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
 CONSULTING AS CHANGE PROCESS
Planned Changes Agreed Upon by You and
Client

Personal/ Behavioral Technical

Competencies
• Enhanced values &
attitudes  Operations
• Improved human  Acquisition of new
relations skills technologies
between  Expansion and/or
entrepreneurs & diversification
employees  Productivity tools
• Organizational  Quality tools
Change
Fundamental Questions to Ask in EBC
The 6-WH Principle / 3Es and 3Rs

WHY
is it important or necessary/ implication?
WHAT
are critical assessment areas to do?
WHERE
the work will take place?
WHEN
will counseling happen?
WHOM – to whom is engagement for?
HOW - approaches/methods/tools/ techniques used
Knowledge of oneself Goal of EBC
will lead to self Not JAH = But PAWOL
improvement

 knowledg  Attitude
e s

 Skills

GROWTH AND SUSTAINABLITY

k = 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

JUST BE SMART
 MODULE 2

ROLES & RESPONSIBILITIES

OF SME COUNSELORS ?

TO BE AN EBC?
 Competence
Framework

SITUATION MASTERY
(Client)
SELF
MASTERY
(In KASH)

ENTERPRISE
MASTERY
(In MPOF)
 The SBC as Change Agent
KASH = KAIO
Client
D
I
F
F
You K
I
C K
A
U
L
T A
Y

I S
N
V H
I
O
L
V
E
D
O
TIME INVOLVED
THE ROLE AND SCOPE OF WORK
OF A COUNSELOR

As a development worker

As a professional counselors,
As extension officer provides
 Business Counselors Take On
Diverse Roles And Tasks
ROLES:
 Field/ Extension Officers
 Small Business
Consultants
 Small Business Field
Officer
 Small Enterprise
Consultant
 Diagnosticians/ Fact
Finder
 Industrial Counselors
 Teacher/ Educator/
Facilitator /Confidante
TASKS:
 Promotion
 Continuing Education
 Mgn’rl /Tech Assistance
 Catalysts/ Initiates
 Linkage / Network
 Process analyst
/specialist
 Information
disseminator
 Negotiator / Go
between
 Administrative work
 Business counselor takes
on diverse roles and tasks

TASKS
ROLES
Behavioral
Change Agent change
Improve
Counsel /Coach administration
Provide
Educator knowledge
Negotiate for
Facilitator change
 Trust

CLIENT

Capability

 First visit will not end with a contract.

 Establish rapport with the client.
 Determine if potential client is motivated to change.

 Right traits, good character, and Professional

skills.
 TRAITS Personal and Professional Traits
Required
 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
1.2n  Psychological maturity
d
MODULE 3

SMALL BUSINESS COUNSELORS

COMPETENCIES
General Areas and
Core Competencies and Skills
 (B) (D) (F)
E
EXERCISE N
S E ASSESS ASSIST IN THE
PERSONAL
I COMPETENCE N
CLIENT’S
COMPETENCIES
T IDENTIFICATION OF
CLIENT & PROJECT
T T E NEEDS /SOLUTIONS

U S E R
A E R P
T L P R
I F R I
S M
O I
E A
N M S S
A E
S T
M S
I E
A T M
T R
S E A
U Y
T R S
E Y T A
R E T
Y (A) (C) R (E) I (G)
Conduct Y O
EXERCISE FACILITATE ASSIST CLIENT IN
Business COMMUNICATION CLIENT DEV. &
N FACILITATING &
INTERPRETING THE
Analysis and COMPETENCE COMPETENCIES
BUSINESS PLAN
Planning
Special Skills Needed At Different Stages Of
The Engagement

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.
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
 APEC TRACE : Principles of
Professional Conduct

 Public interest .
 Integrity
 Objectivity
 Independence
 Confidentiality
 Competence and due care
 Ethical behavior
 Credibility
 Professionalism
 Quality of service
 Confidence
MODULE 4

Understanding the
Client-Entrepreneur
 nt
m e
on
v ir
E n
h e
T

PRESENTATION

T he C
lie n t
Before you accept/enter into an
engagement, have an accurate
reading of your potential client
 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
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
INTERNAL ENVIRONMENT

Strengths Weaknesse
s

Opportunit Threats
ies

EXTERNAL ENVIRONMENT

the National Plan was crafted to promote SME

SME Development Plan : Three-year objective

Increase of SME from

8.7% to 12 % of total
MSME

32,000 new S&M

GVA increase from

32% to 40%
The Players in Local Economic
Development

Ban
t ks
e n
l
a n m
c
Lo ver

A
go

nc
Fi

ho
rm

r
Civic

s
Sector
Investors
 Integrate
SME Devt
Programs

BASIC
NGA directed Localize
STRATEGIES
Projects / the plan
Activities

Strengthen /operationalize
SME Centers
 FINANCING

ENTREPRE-
MARKET
NEURSHIP
DEVELOPMENT
TRAINING
NEEDS

TECHNOLOGY ADVOCACY FOR

INTERVENTIONS ENABLING
ENVIRONEMNT
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 FOR
SUCCESSFUL 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 Growth Motivation
drive
Intuition
Adaptability
Opportunity-
Independence seeking
Decisiveness Perseverance
Energy Risk tolerance
Entrepreneurial Social Skills
 STRENGTHS

 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
 WEAKNESES

 No clear strategic direction

 Diminishing number of skilled workers
 Insufficiency of operating capital

 Below average marketing skills

 OPPORTUNITIES
Enter new markets or
segments
 Add product lines
 Diversify into related
products
Add complementary
products
 Vertical integration
 Faster market growth
 THREATS
 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
 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 everywhere
secondly, 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.
 Module 4

EFFECTIVE BUSINESS CONSULTING

and THE CONSULTING PROCESS
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
the first meeting is usually a
“getting to know you” session.

 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.
2nd
 Prepare counseling proposal

 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.
2nd
 Counselor familiarize with the operations
 Parts of a Proposal

 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.
 Formalizing the Relationship

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
2nd step for the client and government-employed
counselors but it should be done.
 Organizing the Work

 The owner/investors of the business must

spend time for meetings and interviews.
 Top/key persons participation
 Employees are informed

2nd  Culture and biases of the firm

 Data-Gathering

 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
2nd
o Any dominant personality respected? Abrasive?
Etc.
 Steps 2.6 Consider Other factors
 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?
2nd
WHO will do WHAT, WHEN, WHERE and HOW
 PHASE THREE:
DIAGNOSING

Analyze the Client & the Business

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?

2nd
 Develop the Goal

 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
2nd Within the control of the person who is
accountable for its achievement.
 Decision-making

 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
2nd encourage the use of software to facilitate
decision-making.
 PHASE FOUR: WORKING
THE PLAN

Implementing the Plan

2nd
 Break the Activities into Smaller Tasks
Use WH Principle

HOW will it be done

WHAT is to be done?

For Whom is
WHER activity
E will Intended
it be
done Why is this to be
done
WHEN will
it be done
2nd
 Observe client and
implementation of plan

 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
2nd feel like a winner.
 PARTS 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
2nd presentations are encouraged.
 WRITING STYLE

 “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.

2nd
MODULE 5
Counseling /Consulting PROCESS

ROLES /
STYLES
STEPS IN
THE PROCESS

KEY PROCESES
INVOLVED
PHASES IN
CONSULTING
PROCESS
 General Phases of the SBC Process

Consultan
Consulta
Consultant t
Getting explores &
nt – decreases
Ready / Client level of
develops a
agree to involveme
Mobiliza working
work nt and
relationshi
- with the ceases
p w/ client engage-
tion problem
ment
& its
solution

Pre-Work Entry Work Separation

 Five-Phase Model of the
Small Business Counseling Process
5
Termination

4 Implementation

3 Action planning

2 Diagnosis

1 Entry
 Five-Phase Model of the
SBC/ Consulting Process
5
Termination Evaluation and termination

4 Implemen-
Planning the work
tation
Working the plan
Action Goal setting & decision
3 planning making

2 Diagnose client situation

Diagnosis
Establish win-win situation

1 Entry Making 1st contact with client

 ACTIVITIES INVOLVED

Entry Point Diagnosis Action Planning Implementation Termination

• 1st contact with • In-dept Fact • Developing • Assisting • Evaluation

client Finding solutions with • Final report
• Preliminary • Fact • Evaluating implemen- • Setting
problem diagnosis analysis alternatives tation
• Assignment and • Proposals commitment
planning synthesis to clients • Adjusting s
• Assign. Proposal • Detailed • Planning for proposals • Plans for:
to client problem implemen- • Training follow-up
• Consulting exam. tation •Contingenci
contract • Detailed es
problem • Withdrawal
examination
 • Policies • Incentives
• Practices • Perks

Direct local Foreign

Investment Investment

ECONOMIC WELL-BEING =
ENTREPRENEURSHIP + GOVERNANCE
 ENTREPRENEURSHI as a process
P

Creativity/
Innovation THE
ENTERPRISE
Resources Planning
Organizing Products
Producing or
Passion Services
for or
business Trading
And the components are:

Entrepreneurship = Entrepreneur + Resources +

One who Conducive
Idea  Economi
 starts c
Environme
Equity nt
and enabling
manages Fixed policies
an assets
economic  Investme
activity Intang nt
for the ible climate
purposes assets
of profit.  Political
stability
 is
innovativ  Business
e and -friendly
employs local
strategic governm
practices
ent
SWOT Analysis of each identified project
Controllable

Uncontrollable
CONTROLLABLE

STRENGTHS
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

WEAKNESSES
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
 UNCONTROLLABLE

OPPORTUNITIES
Conditions in the environment that will
allow you to earn more income
• Growing demand
• New technological innovations
• Strong government support
• Expansion
 UNCONTROLLABLE

THREATS
Conditions in the environment that can
negatively affect a business
• Wage legislations
• “Unfavorable” government regulations
• Inflation
• Stiff competition
• Raw material shortages
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

Doer
Dreamer Risktaker

BUSINESS PROJECT
STEPS IN ENTERPRISE
DEVELOPMENT
Evaluation

Management

Profit
Implementation
or lose
Appraisal &
Business
financing
Business Functions
Start up &
Planning
Operation
Project Id Resources
Self -
acquisition
realization Critical
functional
Micro areas
screening
Personal
competencies
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

leave entrepreneurship
to those who are more
capable and more
fortunate

set up another
 Module 6 Integration

 Workshop on the Counseling Process

Framework

 Action Plan
 That’s all folks
 Have a good day