What Is Business Development Services (BDS)?

Business Development Services (BDS) include services such as consulting, training, mentoring, and guidance aimed at enhancing the managerial skills and business practices of small and medium-sized enterprise (SME) managers. Evidence shows that BDS improves SME performance through increased productivity and access to new markets (Piza et al., 2016; Cravo and Piza, 2019).

BDS can cover various aspects of business start-up and operations, including consulting, training, mentoring, and advisory support. The BDS market refers to the systems through which these services are delivered to SMEs by different providers, including government agencies, private companies, or non-profit organizations. The BDS market varies in terms of development, quality, and accessibility across services and countries.

Vietnamese Entrepreneurs

As Vietnamese businesses increasingly participate in the global market, the demand for BDS to improve business performance is also rising. While many Vietnamese entrepreneurs tend to solve problems on their own (Edwards & Phan, 2013), certification for participation in global supply chains often requires external BDS support.

However, BDS is not always easy to find locally, and many SMEs are unaware of its existence or benefits. The concentration of BDS providers—especially private entities—in major cities may help urban SMEs grow, but it also increases the gap between regions.

Designing a Low-Cost Program to Reach More SMEs

Low-Cost Services and Targeted Policies

To reach more SMEs with low-cost services and target areas with weaker markets (i.e., underserved markets), two main steps are necessary:

1. Affordable, Scalable Services:
   A lower-cost service that can serve a larger number of SMEs is essential. An SME information portal with online tools, interactive training, and “virtual” mentoring is a common “low-cost, wide-reaching” approach used by OECD governments.

   

   In Vietnam, the National SME Support Information Portal could be enhanced to serve as a primary source of information, guidance, and resources for entrepreneurs and SMEs. BPO.MP can support this effort by:

   • Providing additional guidance for SMEs on business start-up and growth.

   • Leveraging content and tools from other Vietnamese organizations’ websites.

   • Offering more learning opportunities through interactive training modules.

   • Making the online database of approved mentors more useful by displaying their expertise and connecting with subsidized advisory services.

   • Creating a virtual Q&A window for entrepreneurs to submit questions and receive prompt responses.

   Supporting underserved BDS markets in remote areas of Vietnam remains a challenge. These areas are less attractive to BDS providers due to limited accessibility, smaller business numbers, and lower productivity compared to urban areas (Johansson & Klaesson, 2011). Fully subsidized or partially funded BDS programs are therefore crucial. Experiences from BDS organizations in major cities, such as the Hanoi SME Association, can assist SMEs in non-central areas, particularly in skill transfer and providing funding support. The National SME Support Information Portal is part of the solution for rural SMEs with internet access. Additional approaches include working with local SME associations, offering virtual consulting or training sessions, and deploying mobile BDS clinics to remote areas.

2. Cost-Recovery Mechanisms:
   Focusing on cost recovery through BDS programs can reduce net costs. Experimental studies indicate that beneficiaries pay more attention to advice if they incur some personal cost (Gino, 2008). Voucher programs are suitable for this approach, allowing businesses to use subsidies as a trial of BDS, recognize its value, and be willing to pay the full cost later. Hence, the BDS development framework should include voucher programs to cover part of the service cost.

The Vietnamese Context

Although Vietnam provides a favorable environment for BDS development, there are weaknesses in the national BDS ecosystem. Support provision is scattered across multiple organizations—central and local government agencies, business associations, and private consulting firms—each operating independently and offering different types of BDS, with limited opportunities for experience sharing or collaboration.

Currently, no coordinated mechanism exists among organizations to implement BDS activities. Such a mechanism would reduce fragmentation in BDS delivery nationwide, increase efficiency, and fill service gaps. AED should aim for higher inter-organizational coordination in SME support, particularly in BDS provision. MPI-AED should continue collaborating to build on pilot projects in Hanoi and Ho Chi Minh City, aiming to scale up a comprehensive BDS support system and a cooperative network of BDS providers in other provinces of Vietnam.