Impact of Training on Small and Growing Businesses

Abstract

It is widely believed that small and growing businesses (SGBs) have the potential to be global engines of shared prosperity: to drive growth, promote sustainability, and support equality around the world. This study looks at the effect of providing training to SGBs on their growth, profitability and employment creation. Data was collected from 78 participants of the Advanced Entrepreneurship Program at the Institute for Small Business Initiatives in Kenya. The data was then compared as at the intake date, 1 year and 2 years after. The findings of the study show that the program has a significant positive effect on the businesses that went through it with average revenue increasing by 63%, average EBITDA increasing by 106% and 2.2 net new jobs created by each enterprise within a year of enrolment. The study finds that the program year is characterized by strong revenue and profit margin growth, as well as relatively low employment growth due to the optimisation effect. In the year after the program-year, the positive trend continues (at a notably lower rate); but once the streamlining process is completed, the employment growth booms (doubling the growth rate from the first year). The study also reveals that remarkable improvement in understanding of finance is not matched by an equivalent improvement in cost optimization and record keeping. The introduction of a user-friendly IT tool for financial analysis and cost optimisation is likely to greatly increase the effectiveness of such entrepreneurship programs and create longer lasting impact.