Business Consultancy Fund - Principles and General Procedures


The success of a Business Consultancy Fund is dependent upon a number of key variables, including:

  • The availability of competent resource persons to provide professional business advisory services;
  • The development of business advisory services responsive to the needs and demands of the target groups;
  • An active business community capable of demanding advisory services and able to pay, at least in part, for them;
  • Motivated and engaged project personnel who optimise the fund throughout all stages of planning, implementation and monitoring;
  • The involvement of cooperating partners, who focus on regional economic development, in the funding, design and implementation process to avoid parallel structures and conflicting strategies;
  • The successful marketing of BCF services in the region, so that target groups know about these services;
  • Open communication with the business community about the availability of the Fund and its requirements;
  • The availability of financing instruments (private savings or existing micro financial organizations) enabling entrepreneurs to implement their business plans and to expand in the targeted region; and
  • A transparent and flexible decision making process which can to be implemented quickly upon approval of the consulting projects.


The primary steps to establish a Business Consultancy Fund are:

A.  Introduce the idea of the BCF to Business Development Centres and other stakeholders.  This can be accomplished at a kick-off meeting with local entrepreneurs, financing institutions, development organisations and other identified stakeholders.

B.  Establish Fund guidelines that define (i) the target group; (ii) who is eligible to apply for business consultancy services; (iii) the type and extent of consulting services financed by the fund; and (iv) the prices and limits of the consulting services provided.  As a general principle, applicants for consulting services should be required to make a financial contribution towards the cost of the consulting services.  This ensures that requested services are responding to a genuine perceived need.

C.  Develop an Operational Manual that sets forth the roles and relationships between the Fund, the BDC, and the MSE client.  The Operational Manual should clearly define the application procedures, criteria for the acceptance of proposals, and documentation and payment procedures.
The flowchart depicted in figures 1 and 2 presents schematic mechanics of a BCF operations, including the elements which should be covered in the proposed operational manual.

D.  Establish administrative and decision making structures.  To operate smoothly, the Business Consultancy Fund needs an administrative institution supported by a decision making body (DMB).  The responsibility for application selection should be allocated to the DMB.  Members of the DMB should include representatives of the funding organisation(s), service providers, and individuals who are respected economic experts such as managers and/or owners of SMEs, micro finance institutions, commercial banks, and personnel from governmental units with MSE oversight responsibilities.

E.  Inform the target community of the Business Consultancy Fund and its conditions.  Before the Fund can begin operations, information about it must be disseminated to the intended target group through mechanisms such as brochures or mass media outreach (newspaper, radio, television).  The information should include how entrepreneurs can request consulting services, the selection criteria, and conditions for financing and payment.

F.  Train BDC staff on the Fund’s application, documentation and payment procedures, and train the Fund’s decision making body on the procedures for the approval of proposals.

G.  Contract the business service provider to provide services and apply the procedures.  After application approval, a contract between BCF administration and the business service provider will be concluded which states the project approved, amount and use of local grant and its provision, rights and responsibilities of the parties according to project implementation rules.  After the contract is signed, the grant is provided according to the operational manual.

H.  Monitor the Fund implementation and revise the regulations and procedures if necessary.  The BCF-administration should control use of the Fund and check the quantity and quality of services performed.  It should assess the financing requests and raise additional funds as necessary.
DMB members should be authorised to make principle adjustment to the conditions governing the Fund when necessary to account for unforeseen changes.

I.  Evaluate the impact of the Business Consultancy Fund.  Periodic evaluations should take place every three to six months, as determined in advance by the DMB.  An external party should report on the services provided and determine the extent to which the Fund delivered the intended direct and indirect benefits to the target groups.
files/images_static/bulp.jpg The step-by-step process required for developing a BCF has been graphically depicted in figure 1. The approach to be followed is as follows:

(1)  Project definition:  The BDC defines the project together with the client.

(2)  Submission of proposal:  After the project has been defined, the Business  Development Centre service provider submits a project proposal and a     financial proposal to the client.

The project proposal identifies the problem confronted by the enterprise and defines the consultancy services that would address the problem.  Figure 2 is a sample project proposal form.

Figure 1: The Concept of a Business Consultancy Fund


Figure 2:   Suggested “Project proposal” form


Under the project proposal, the BDC develops the financial proposal for the  provision of services.  The financial proposal describes the project stages,  planned consulting work in each stage, and the costs of the services. Figure 3 is a sample Financial Project Proposal form.

(3) Application:  The client applies for the financial support from BCF by submitting the project proposal including financial proposal.

(4a) Approval:  The BCF administration reviews the project and the financial  proposal.  If both conform to the BCF’s regulations and conditions, the BCF administration will inform the applicant (client) that the project is approved.


Establishing specific criteria for the acceptance of applications is an important  step in ensuring that the Fund will meet the objectives of its donors.   Depending on the objectives established for the Fund, two criteria are of  particular importance:

  • First, the project should help to increase the employment capacity of the applying enterprise.
  • Second, the proposed project should create some additional income for the applying businessmen/-women.

Figure 3:  Suggested “Financial Project Proposal” form


Other application selection criteria could include:

  • A good match between the application and the activities of business centre and its specialization;
  • Range of services presented in one package and ratio between cost of consulting services and expected output (cost-benefit-ratio);
  • Availability of, or access to, financial resources to follow the recommendations and business plans;
  • Realization by the applicant/client of necessity to have the consultancy service and readiness to make his/her financial input.

(4b)  Contracting:  At the same time the proposal is approved, the BCF administration informs the BDC about the consulting assignment and contracts with the BDC to provide the consulting services according to the approved project proposal.

(5)  Delivery of Services:  The BDC delivers the services as defined in the project proposal.

(6a)  Documentation and Billing:  The BDC summarizes all activities and results in a written report and submits the final report and bill to the client.

(6b)  Copies of the final report, work report and the bill are submitted to the BCF administration.

(7)  Payment:  After the client’s acceptance of the written report, the client pays the agreed contribution, between twenty and fifty percent, towards the financing of the consulting services.

Figure 4:   Suggested “Evaluation Sheet” form


(8)  Evaluation and Proof of Payment:  The client submits to the BCF-administration an evaluation of the consulting services and proof of payment.  Figure 4 is a sample Evaluation Sheet.

After checking the documents, the BCF administration pays the remaining amount for the provision of the consulting services. The BCF administration is entitled to suspend payments for consultancy and counselling services which do not meet the quality requirements, the regulations of the fund, or fail to fulfil the assignments.

It is important for the business centres to be cognizant of, and sensitive when dealing with, confidential and proprietary information.  Business consultancies may have access to the following confidential and proprietary information about their clients:

  • Actual financial data from the current and past two to three years of the company to be compared for evaluation and analysis purposes.
  • Structure of assets and liabilities.
  • New ideas and future plans of the company, in terms of new product development, new design, new markets, new approaches to the market.