In the portfolio of businesses supported by the Business Innovation Facility, we see the full range of success and failure. This report explores the reasons why some things did not go so well. What led to problems, and what can we learn from them? In the BIF portfolio, six businesses were approved for support but were cancelled before they got off the ground. Eight of those that received BIF support are stalled or on ice. The vast majority are progressing, but some progressing slowly. Even those which are progressing well have experienced their share of delays and changes of direction in the past. We don’t want to be overly negative by focusing on the obstacles that have strewn the paths of inclusive businesses, but a review across the portfolio has enabled us to cluster the hurdles into ten main types.
10 reasons things don’t go to plan:
1. Management changes.
2. Lack of access to capital.
3. Partnerships don’t deliver.
4. Operational errors and delays.
5. Regulations, policies, government action or inaction.
6. Macro-economic shocks.
7. Difficulties embedding the model into the mainstream company.
8. Competing priorities take over.
9. The task is bigger than anticipated.
10. The business model is not quite right yet or the external constraints are too strong.
Launching any business is a challenge, with a high share of failures expected. Inclusive businesses are no exception and in fact they face extra challenges because they usually focus on unproven business models, unexplored market segments, customers that are hard to reach, or suppliers who have little formal market linkage. So in most cases, the business models are new and relatively unproven. That is certainly true of the businesses in the BIF portfolio: 40 companies in Bangladesh, India, Malawi, Nigeria and Zambia that received intensive support (plus about 300 others involved in shorter input). We expect them to be risky. Looking at their experience over the last three to four years helps us to see which risks turned out to the most common.
Our aim is simple, identify ten reasons why inclusive business get delayed or stalled. A business that stalls does not necessarily ‘fail’. Most have had to change direction or prolong their journey, and they have dealt with the obstacle and moved forward. The positive results and details of their progress are covered in other reports.
In most cases, a delay or change in direction cannot be attributed to a single reason, so the examples given here must of course be taken as simplified stories. We also recognise that the ten reasons listed here are not mutually exclusive: they can exacerbate each other.........
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