It’s official: coaching does improve entrepreneurs’ success
Most people in the microfinance community believe that if microfinance is to reach those who need it most in society, then money on its own is not enough. It must be accompanied by business support services. A workshop at the annual conference of the European Microfinance Network (EMN) in Amsterdam in June 2011 examined evidence that coaching really does improve the chances of business success. The short answer is that it does.
A pilot carried out in the southern Netherlands from 2004-2007 involving 250 people showed that their chances of success in business rose from 50% to 85%, while a control group achieved 70% success.
The study, conducted by Erik Lubberding. It focused on the Start Smart scheme, which offers entrepreneurs coaching at a cost of only €150 to themselves (the total cost is €3,000-€3,500 per head). The scheme ran in the Nijmegen-Arnhem region of Gelderland province, and was later extended to Deventer and Zutphen and scaled up to reach 1,100 people.
The entrepreneur’s pathway through Start Smart is as follows:
- Sign up and pay the €150 fee
- Entrepreneurship scan (‘E-scan’), and online competency profiling tool developed at Groningen University
- SWOT analysis
- Entrepreneur selects a coach, using the profiles on the website
- Networking opportunities: two meetings for ex-clients are held each year, which attract around 20 people. There are also evening meetings called ‘Starters’ Cafés’
- Link with microfinance from local banks (not ther national Qredits scheme) if needed
The pilot was financed by Gelderland province and the local authorities. The Arnhem-Nijmegen scheme worked with 40 coaches, who were paid up to €1,600, which is equivalent to between 10 and 20 hour’s consultancy. Additional hours can be paid. Applications were processed by the Chamber of Commerce and university. The study sample contained an above-average share of well-educated entrepreneurs and women – it seems these types of clients are more open-minded about receiving advice.
One remarkable fact is that only 2% of the entrepreneurs needed to use microfinance (a further 2% apply but were refused). This is because self-employed people (ZZPers) don’t need much capital, or can raise it themselves.
The start Smart Scheme has now been expanded to Overijssel and Flevoland provinces as well.
Start Smart website: http://www.ikstartsmart.nl/
Report on evaluation of Start Smart in Gelderland: http://www.ikstartsmart.nl/flevoland/nieuws/evaluatie-eim-ikstartsmart-is-een-succesvolle-start-op-maat (in Dutch)
Complete evaluation report (Feb 2011): http://www.ikstartsmart.nl/uploads/gelderland/downloads/IkStartSmart_is_een_succesvolle_start_op_maat.pdf