New Mindset, Increased Profits: Lessons from an Innovative Entrepreneurial Training in Togo

LOME, January 18, 2018‒ “I had noticed my business was not functioning the way I wanted it to. ... I was looking for ways to help my business take off,” says Akouélé Ekoué Hettah, who ran a small shop to rent out wedding dresses. She had attended a microfinance organization’s traditional business training session, and a marketing training session, but still her business was not growing.

Then, Akouélé participated in the Togo personal initiative training, a program designed to build up self-starting, future-oriented, persistent behavior. “This enabled me to define a goal and draft a plan to rebuild and broaden my business so that, in addition to renting out wedding dresses, I could sell dresses, jackets, shirts, gowns, evening outfits,” she said. … “I wanted to have more clients and increase my income, and that's what happened.”

Shopkeeper Akouélé Ekoué Hettah believes that without knowledge, everything is trial and error. Erick Kaglan/World Bank

Today, Akouélé is the picture of a successful entrepreneur. Her formal wear and accessory company, Ameyayra, has shops in both Togo and Benin, with another planned to open in Ghana.

Traditional business training covers core business practices like accounting, marketing, and human resource management. It is designed to increase an entrepreneur’s knowledge of management and business practices in order to increase a firm’s productivity.

But, because such programs have not been very effective at increasing many small-scale entrepreneurs’ profits, maybe traditional business training does not result in a large enough change in business practices? Or, perhaps, the wrong skills are being taught to this target group?

A different approach

The World Bank Group decided to try something different. It teamed up with psychologist, Dr. Michael Frese, to implement personal initiative training in the context of a randomized controlled trial with small businesses in Lomé, Togo. The study "Teaching Personal Initiative Beats Traditional Training in Boosting Small Business in West Africa" compared the impact of the psychology-based personal initiative training to the International Finance Corporation’s Business Edge training. A control group received no training.

Participants learn to look for ways to differentiate themselves from other businesses, as well as to anticipate problems, overcome setbacks, fostering better planning skills for opportunities, and do other, long-term preparation.

Personal initiative trainer, Abalo Alaye, says “personal initiative training allows the entrepreneur to break with routine, and understand how to be proactive and not reactive.”

Habibou Ouro Djobo taking measurements in Lomé, Togo. Erick Kaglan/World Bank

Habibou Ouro-Djobo found the personal initiative approach to entrepreneurship particularly helpful. The civil engineer and subcontractor observed that “other business training courses focused merely on the concepts and principles of entrepreneurship. It was more theory than practical knowledge. This was a more dynamic training course, helping us to become engaged by using personal development techniques."

Habibou was afraid to take risks with his business, and to overcome obstacles. Now he feels he has regained confidence as an entrepreneur. As a result, he is looking for two business partners and plans to bid directly for construction projects. He is also applying core business practices that he did not use before. For example, the business now performs services only after receiving an order form.

“Entrepreneurs are no longer resigned to their fate,” says personal initiative trainer, Kouassi Magnon Aziafor. “They no longer fear challenges. Self-reflection helps entrepreneurs weigh the problems encountered and find their own solutions.”

Researchers conducted four follow up surveys over two years following training. Business Edge participants, in contrast, had a statistically insignificant 11% increase in average profits against the control group.

Training helped women the most

Personal initiative training had even more of an impact for female entrepreneurs, who usually see little or no improvement after traditional business training.

“Women who received personal initiative training saw their profits increase by 40%,” says Markus Goldstein of the Africa Gender Innovation Lab. “Compared to a 5% increase for those who’d had traditional business training.” As a result of the increase in their profits, the women who had taken the personal initiative training, recouped the cost of it (about $750 per person) within a year.

Personal initiative training led to more than just a boost in profit. Entrepreneurs who took the personal initiative training introduced more  innovative products into their line of business than those who participated in the Business Edge training. They also borrowed more and employed more workers.

Akouélé, the manager of a clothing boutique, is now adding her own personal touches to the wedding dresses she bought from her suppliers. “We need innovative products, creative ideas. We need extra special items to appeal to our customers,” she says.

Although personal initiative training did not focus on core business skills the way the traditional training did, entrepreneurs from both types of training increased their use of core business practices at almost the same rate. The only difference was that traditional business training participants had slightly better record-keeping practices.

This supports the argument that, in taking the place of traditional business training, personal initiative training can have much the same impact that traditional business training has, and much more.

Leila Salifou believes personal initiative training was like teaching her to fish rather than being given a fish. Erick Kaglan/World Bank

Leila Salifou took over her mother’s roadside foufou shop in 2012. Because of personal initiative training, she decided to do a catering course and then register her business formally. Her company now caters for everyone from family parties to government ministries, and she runs a hospitality and tourism agency as well.

Leila plans to open a cooking training workshop for young people. “My goal is to grow my business into a large restaurant, make my name known throughout Africa, and even across the world,” she says. “The day training ended, I set myself a goal: I told myself I have to become a renowned restaurateur in Togo.”

The results of the impact of personal initiative training have encouraged programs to implement personal initiative training in Mozambique, Mauritania, Ethiopia, Jamaica, and Mexico, with this study making a strong case for the role of psychology in influencing how small business training programs can be better taught. Research underway on the impact of this training in the contexts of some of these countries will show us if the same promising impact holds for entrepreneurs in other parts of the world.