How Can We Achieve Greater Scale and Impact Supporting Small Businesses?

Enterprise
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Photo: SABMiller. 4e participant and her mentor, Peru.

Andres Penate: Vice President, Corporate Affairs, SABMiller Latin America
Catalina Garcia: Sustainable Development Director, SABMiller Latin America
Miguel Aldaz: Lead Specialist, Office of Partnerships, Inter-American Development Bank
Estrella Peinado: Senior Specialist, Multilateral Investment Fund
Elfid Torres: Director General, FUNDES International
Jim Thompson: Director for Innovation, Office of Partnerships, US Department of State
Justin Bakule: Executive Director, Shared Value Initiative
Jane Nelson: Director, CSR Initiative, Harvard Kennedy School

To mark Global Partnership Week (www.p3.co), join us for a live, online discussion of ways to achieve greater scale and impact in our efforts to strengthen small businesses.

The CSR Initiative at the Harvard Kennedy School and Business Fights Poverty recently completed a report on SABMiller’s new 4e Path to Progress program in Latin America—a partnership with FUNDES and the Multilateral Investment Fund of the Inter-American Development Bank that aims to empower nearly 200,000 small retailers at the base of the pyramid by 2020.

The report identifies emerging lessons and key strategic questions facing 4e on the journey to scale. Many of these are common to enterprise development programs across regions and industry sectors, and we know that other organizations, in addition to ourselves, have some of the same questions—and their own valuable experience and insight to share.

Please join us on Tuesday, March 10, 10:30-11:30am Eastern Time / 2:30-3:30pm GMT to explore the following questions, exchange your insights, and help spark some new ideas:

  1. What is the business case for companies to help strengthen the small businesses in their value chains?
  2. How can technology be employed to increase scale and impact at a reduced cost per participant?
  3. Where do policy drivers most need to change to enable small businesses to succeed, and how can companies and their development partners influence these drivers?
  4. What is the scope for broader alliances of companies, donors, governments, and civil society organizations to work together to strengthen small businesses?

This event is part of a one-week special with SABMiller on helping small businesses thrive. Click here to read the blogs in the series.

CLICK HERE TO VIEW THE EVENT SUMMARY.

Editor's Note:

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Hello! I am looking forward to the conversation today.

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Jim Thompson said:

Hello! I am looking forward to the conversation today.
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Hello everyone! Let's give another two minutes for Andres and Catalina to connect.

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Great - am ready to contribute to this interesting conversation.

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Hello everyone and welcome to today's discussion: how to achieve scale and impact supporting small businesses!

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Thanks so much to our panelists, Andres, Catalina, Elfid, Jim, Justin, and Estrella.

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Let's get started with our first question. What is the business case for companies to help strengthen the small businesses in their value chains?

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Many large businesses rely upon small businesses in their value chains. From aid donor prospective we see the development potential of increasing the small businesses capacity and quality of product to support larger businesses. Value chain partnerships are some of the best “shared value” partnerships.

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Hello, I'm Lina, from Opportunities for the Majority at the Inter-American Development Bank

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Take for instance USAID’s work with Walmart. Many years ago the company wanted to start to sell Fair Trade coffee in their stores, but they couldn’t get the quantity that they needed to supply their consumers. In partnership with USAID and Trans Fare, Walmart invested in the value chain to have more farmers certified as growing Fair Trade Coffee. This worked well with USAIDs interest in getting farmers higher incomes and by linking to the market the farms became more profitable and sustainable businesses.

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The “virtuous cycle” at play here is about how social and business value creation are linked. By improving the performance of small businesses, SAB Miller should understand the connection to and improvement in its own business – it could be in improved sales, improved margin, brand image, etc. Importantly, this business-social value connection link should be understood and measured as this is what helps establish goals and an understanding of success. This then compels the business to increase, diminish or shift its investment.

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My view is that the small businesses in large companies’ value chains need to perform well for those companies to perform well. But this doesn’t necessarily mean the benefits will outweigh the costs of any given small business development program. Often companies have to look at the long term strategic benefits of helping to build increasingly stable, prosperous communities that can afford to buy their products and services into the future. They also have to factor in the reputational and relationship benefits, for example with governments, and the value of engaging their employees and giving them a sense of purpose – enhance turnover, greater productivity, and so on. The other possibility is to share the cost with donors who care about the job creation and development multiplier effects, and with other companies that depend on the same small businesses to succeed and grow.

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Hi everybody! Happy to participate in this so interesting panel and for the chance of sharing.

What we have seen is that small businesses are key components of the value chain of many large companies. It’s not just that they are one of the most important distribution channels in term of sales and volume; but also that they have major impact in brand loyalty, access to new markets, and market intelligence.

Small retailers give large companies great geographical coverage and, most importantly, local presence. This local presence gets transformed first brand recognition and, eventually, into brand loyalty. And brand loyalty means sales.

Small retailers are of such great interest to developmental institutions because they are mostly located in poor residential neighborhoods where the neediest tend to live. Improving these small stores means impacting in their surrounding communities and is one way to contribute to their development (which obviously requires a much more comprehensive support). In turn, this growth will involve an increase in acquisition power and, as such, a larger market to carter for large companies.

Last but not least, the proximity of small retailers to their clients favors quick feedback on new products, marketing campaigns, etc. allowing for adjustments and experimentation.

In other words: small business matter, and matter a lot!

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I am ready!

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We encourage questions and comments by our participants around the world as well.

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I also think within these comments its important to tease out two elements of this from the business perspective - is it a risk-oriented situation or an opportunity for new growth? Oftentimes on the supply input side, businesses are trying to address supply chain oriented risks and so the case is made around the seriousness of those risks and how it impacts their ability to do business. On the retailer side, I think it's often about a new growth opportunity - how can partnering with and influencing the excellence of retailers help drive additional growth opportunities. Both the upstream and downstream side may have brand benefits as well especially among the direct partners of the investing company.

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Jane Nelson said:

Let's get started with our first question. What is the business case for companies to help strengthen the small businesses in their value chains?

In relation to small shopkeepers and 4e, for many companies small shops are a distribution channel that in some cases represents 50% of total sales. Strengthening shopkeepers is strengthening an important distribution channel. The interesting aspect for an organization like the Multilateral Investment Fund (MIF or Fondo Multilateral de Inversiones FOMIN in Spanish) is the concept of using this potential to reach every corner of any low-income community to deliver goods and services that can help improving the standard of living of the population and the socio-economic development these communities.

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Savvy large businesses know that investing in their supply chains can build the productivity and reliability of their suppliers. Without these critical investments the large businesses become uncompetitive.

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  • Through ‘4e, Camino al Progreso’ SABMiller contributes to the progress of communities by investing in their social and human capital and driving the creation of new paths to action that increase their capacity to prosper.