Latest Insights on Driving Business Growth

Grit & Growth

Welcome to Grit & Growth’s masterclass on the effectiveness of small business interventions in emerging markets — with hard data to back it up. Thanks to researcher Stephen J. Anderson’s studies with African entrepreneurs, you’ll hear why having a coach, getting classroom training, and learning how to delegate can drive growth and impact your bottom line.

Stephen J. Anderson has spent his entire career trying to bring rigorous research to international development efforts, whether at the World Bank, Stanford Graduate School of Business, or his current post at McCombs School of Business at the University of Texas at Austin.

Anderson makes his case for research on the effectiveness of growth interventions. He explains, “In the development sector someone says, “I have this great program,” and then they show you the best cases. But did this program or intervention really lead to that increase in firm sales and profits? I can't just cherry-pick or look at it anecdotally.”

Top Six Masterclass Research-Based Takeaways

1. Remote coaching works. The study of 930 Ugandan businesses proved that those companies that received coaching over six months increased sales, profits, and employment — by up to 50 percent!
2. Coaching on your value proposition had the biggest effect. Anderson advises entrepreneurs to ask themselves, “What am I offering? Who am I offering it to? And why should they buy from me?” Think about your business model, think about the strategic shifts that you might have to make in the value proposition. Coaching or access to coaching can help you do that.
3. In-person classroom training increases profits. The study of small firms in South Africa showed that those who received training — whether finance & accounting or marketing — increased profits by about 25 to 30 percent.
4. Networking with other entrepreneurs enhances learning. “We’re social beings,” explains Anderson, “and we still want to network. I learn a concept, I take it out to my business. I come back a week later and share what worked and what didn't work. I'm also going to hear from 10 or 15 other entrepreneurs. And so I'm going to learn the theory from whatever the instructor's telling me, but I'm also going to learn practically from others.”
5. Entrepreneurs need to delegate to scale. Anderson’s study of hundreds of businesses in Nigeria proved that to scale up, you need to let go. Anderson says, “Providing entrepreneurs with access to the expertise they need, that they can insource or outsource, grows the team, the managing team, and eventually grows the sales and profits of those firms.”
6. Try not to hire family or friends. Anderson urges entrepreneurs to think hard before they hire and to look for ways to professionalize their workforce with the specific skills they really need to grow the business.

Hear more about how Anderson’s research can be the basis for more effective entrepreneurship programs across the world and apply his findings to your own entrepreneurial journey.

Research Links:

• Pathways to Profits: the Impact of Marketing vs Finance Skills on Business Performance, by Stephen J. Anderson, Rajesh Chandy, Bilal Zia.
• Do Marketers Matter for Entrepreneurs? Evidence from a Field Experiment in Uganda, by Stephen J Anderson, Pradeep Chintagunta, Frank Germann, and Naufel Vilcassim. 2021. Journal of Marketing 85(3), 78-96.
• Improving Business Practices and the Boundary of the Entrepreneur: A Randomized Experiment Comparing Training, Consulting, Insourcing and Outsourcing, by Stephen J. Anderson and David McKenzie. Journal of Political Economy.

Additional research support was provided by Stephen Kagera, Janine Titley, and Christy Lazicky.

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