Why I Have Taken a Bet with Building Markets and You Should Too
Why I Have Taken a Bet with Building Markets and You Should Too
September 29, 2022 | Radha Rajkotia
A month ago, I started in my new role as the CEO of Building Markets. It has been a month of introductory calls with staff and colleagues – some of them who know Building Markets well and others who are learning about the organization for the first time. Invariably during these conversations, I have shared why I am excited about the work Building Markets does and why I have, in stepping into this role, taken a bet on its future. This has been a “pitch from the heart” – a collection of my thoughts, which have been driven by experience, data, and intuition. With a bit of space to think, I decided to write up some of my thoughts to share with you in the hope that you will at the least, get to know the organization and its work better, but more than that, consider joining me on this venture – as a thought-partner, cheerleader, or collaborator.
So what exactly does Building Markets do?
At its core, Building Markets works with small businesses to drive inclusive growth and job creation, with an ultimate goal of creating social impact. According to the World Bank, small businesses make up 90% of businesses globally and are responsible for over 50% of employment worldwide. In developing countries, small businesses are key to economic growth, and they provide essential goods and services to communities and other businesses. Every sector, from childcare to food services, or healthcare to construction relies on small businesses to get to that last mile or to contribute specialized services. But small business leaders, particularly women and those from minority communities, also face significant barriers to expanding their businesses beyond the markets they already operate in. They are limited in their ability to access credit and investment, and often have unequal access to professional business development services. Even the most well-run businesses with the greatest growth potential are capped if they do not have the resources, networks, or specialized support services to expand.
This is where Building Markets comes in. Building Markets uses a simple model to FIND small businesses with growth potential, BUILD their ability to market themselves and compete for bids, and CONNECT them to a wide range of procurement and export opportunities. This model relies on the use of detailed data to track business activities over time and digital platforms to connect businesses with information, services, and market opportunities.
How do we know it works?
To date, Building Markets’ results have been strong. From detailed monitoring data, we can see that our interventions have helped small businesses create over 73,500 jobs, win more than $1.36 B in new contracts, and secure over $21 M in loans. In addition, an impact evaluation conducted by Hjort, Iyer, and de Rochembeau (2020) of Building Market’s work with businesses in Liberia showed that businesses encouraged to complete the Winning Contracts training bid on 50% more tenders than those who were not, and businesses that completed training increased bid wins by more than 200%, compared to businesses that did not do the training. They also tripled their chances of winning bids from international markets. Importantly, results were visible three years after businesses completed the training.
These results are exciting because they demonstrate how a relatively simple intervention can lead to improved outcomes for businesses. But, they also support the idea that market access, in addition to its more popular conceptual siblings – access to finance and human capital – can foster positive outcomes for businesses. While the majority of policy frameworks focused on small business growth and development include the three concepts of human capital, access to finance, and market access; evidence on the latter is surprisingly thin. What this means in practice is that ideas about “what firms need” get tilted towards what is most known through the availability bias of studies. This is a missed opportunity to support firms in new and potentially more effective and cost-effective ways. We’ll share more on the evidence around market access in the coming months and how we plan to help contribute to this gap in evidence.
Where do we go from here?
I am optimistic about the positive results for business leaders, particularly women and those from minority communities, but I am also encouraged by the macro trends that are creating increased opportunities for small businesses. Governments across the world are prioritizing more inclusive public procurement policies at the national, regional, and municipal levels at the same time that corporations are talking about (if not yet actively seeking out) supplier diversity. These two shifts offer strong tailwinds for sustainable growth for small businesses. And this growth doesn’t just result in positive outcomes for those firms, but multiplier effects for employees, their families, and the communities associated with them.
In the coming months, I’ll be working with the Building Markets team, our partners, and advisors to build out our strategy for the next few years. At the core of this strategy is a desire to scale our impact. This means refining the Building Markets model, looking at locally-led delivery models for implementation at scale, and developing clear learning metrics to help guide our way. We will tackle the tricky question of whether there is a revenue generation model that is both financially sustainable and mission-enriching. We will also look at how our digital platforms can be leveraged for use by our partners.
We cannot create impact at scale alone and as I am driven by curiosity and excitement to tackle this challenge, I hope that you will also join me in taking a bet on Building Markets.
Ready to work together or interested in learning more? Email us at partnerships@buildingmarkets.org.