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					The Model for evaluating efficiency of Training Programmes for SME
Introduction into the model for estimating the efficiency and impact of Training Programmes for Small and Medium Enterprises When facing the decision regarding improving of the performance of national industries one faces complex question of efficiency of investment. It always looks as the investments required are too high. The isses is relevant when a Programme is reviewed at the each level of consideration such as single enterprise, industrial sector or national industry. A simple model facilitating the evaluation of investment results of the Programme is presented below to assist decision makers in assesment of the problem. It is based on simplified assumptions as well as actual results of already implemented Programmes. Its main objective is to provide decision makers, donors and investors with indication of rather pessimistic estimation of the results which can be expected after the implementation of the Continuous Improvement Programme based on UNIDO methodology and Pharos, Produce Plus and FIT performance management software tools. The real outcomes are much more complex, rich and multidimentional, exceeding this limited model scope. The model is made in easy to use spreadsheet format supporting decision makers in varying parameters and observing the various consequences of the decision adjusted to particular countries and economies. The parameters which can be varied are marked by RED color on yellow background. The prototype enterprise data was taken from the companies participated in the UNIDO Programme for Colombia 2002-2003 called by participants as "PHAROS Programme". The selection was made based on criteria of annual sales and number of personnel to fit into the low end of the definition of "Small and Medium Enterprise". Additional information regarding the selection is presented in this workbook on separate sheet "Sample Company Selection". The increase of net profit post-programme results by many factors including improved business performance, better use of available resources and planning, increased managerial capacity and business intelligence as well as business results, including quality, productivity, controllability, competitiveness and sustainability of businesses in general. There are some other important factors like social stability, enterprise and industry competitiveness, growth of economy, GNP, etc. which shall be analyzed additionally. Only net profit factor is used in the model presented below for the sake of simplicity and transparency. The service package delivered within the Training Programme to each enterprise contains as follows: 1. Training course of two senior managers, 5 days, 8 hours per day, total 40 hours 2. On-site guidance, consulting and application support for 9-12 months after the training course, at least two full working days per month provided by certified regional consultant, 126 192 hours in total 3. Benchmarking of the initial enterprise status when the Programme starts 4. Benchmarking/measurement of the after-programme performance of each enterprise and evaluation of the achieved improvements 5. Issuing the "Certificate of Enterprise Business Performance Improvement" by the Programme organizers upon assessment of the actual measured improvement results after the end of Programme 6. Issuing the certificates of “Business Performance Management Excellence” for 2 senior managers, which were trained and passed tests 7. Obtaining Pharos - Business Navigator, Financial Improvement Toolkit and Produce Plus software by UNIDO, 2 licenses of each with sample enterprise databases 8. Comprehensive Reference Materials on business management principles, continuous improvement methodology, strategic and production performance monitoring based on Pharos, Produce Plus and FIT, simulation of business targets, decisions and developments based on Pharos and Produce Plus enterprise models. The materials are prepared as files in .PDF format on CD-ROM which content and presentation is tuned to support self-training of entrepreneurs with minimum educational background. 9. Accessing dedicated Web site resources for Programme participants providing know-how development, reference information, user experience exchange and updates. Contact: info@win2biz.com; Additional information:www.win2biz.com

Enterprise Performance Improvement Centre, GOLEM IMS GMBH, Austria, www.win2biz.com

Page 1 of 4 pages

The Model for evaluating efficiency of Training Programmes for SME
Level of analysis

Parameter
Sales annual pre-programme per one enterprise, USD Net profit typical in % of sales Increase of net profit, post programme % Net profit annual, pre-programme, USD Net profit annual increase after the programme end, USD Sales annual post-programme, USD Increase of annual sales post-programme compared to initial, % Cost of the Programme service package per enterprise, USD Return on investment per enterprise, annual

Value
$632,000 5% 24% $31,600 $7,584 $639,584 101.20% $4,600

165%

Sector Number of enterprises taking part in the Programme Annual net profit estimation per sector, pre-programme Annual net profit estimation per sector, post-programme Net profit increase estimation per sector, post-programme 2,500 $79,000,000 $97,960,000

$18,960,000

Government: Taxation improvement estimation Taxation of enterprise annual profit by balance sheet, % Taxation total pre-programme for the sector, USD Taxation post-programme, USD Increase in taxation income for Government, annual USD Increase in taxation income for Government, annual in % Efficiency of the Programme Support by Government Partial coverage of Programme service package costs, in % Partial coverage of Programme service package costs in USD Total annual investment into Programme by sharing its cost Return of investment (considering only taxation issue)

35% $27,650,000 $34,286,000

$6,636,000 24%

50% $2,300 $5,750,000

115%

Note:

The model includes assumption of stable business with or without training programme. In reality the complex of problems related to SME life after its successful start-up results in relatively high SME mortality index or premature bankruptcies. It is very well known fact that millions of small and medium size enterprises are closing after a mean time of five years in developing countries. Based on actual example by San Paulo Department of Statistics, Brazil there are 5 billion dollars and 530 thousands jobs in the medium and low range of manpower lost within one year in San Paulo State only. About 1,000,000 businesses had been closed between 1990-2002 just in the State of San Paulo worth of 62 billion dollars in invoicing and consequent losses in taxes. (The source: newspaper “O Estado de San Paulo”, Economy and Business Section, 4 Dec. 2003).

Enterprise Performance Improvement Centre, GOLEM IMS GMBH, Austria, www.win2biz.com

Page 2 of 4 pages

The Model for evaluating efficiency of Training Programmes for SME

Return of Investment at Enterprise and Governmental Levels

180% 160%

140%
120%

ROI

100%
80% 60% 40% 20% ROI Enterprise

ROI Enterprise

ROI Governmental Support

ROI Governmental Support

0%

Annual Net Profit Increase $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0
1

Enterprise Investment Efficiency

Cost of service package

Annual Net Profit Increase

Cost of service package

Annual profit vis costs

Net profit increase by Industrial Sector

Net Profit increase by Industrial Sector and Government

$20,000,000
$18,000,000

$16,000,000
$14,000,000

$12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0

Taxation increase

Gains by Industrial Sector and Government

Net profit by Industrial sector Taxation increase

Enterprise Performance Improvement Centre, GOLEM IMS GMBH, Austria, www.win2biz.com

Page 3 of 4 pages

Selection of the sample company parameters for the Model of Training Programme efficiency. The table presented below contains the basic information regarding the enterprises form leather/shoe sector located in Bogota, Colombia which took part in the UNIDO Programme for Colombia in 2002-2003 The parameters company #5 were selected as typical representative case for using in the model. The values of annual sales revenue were introduced into the calculations presented in the previous sheet. The variations of particular industrial sectors may be analyzed in detail additionally based on statistics for each country and target industrial sectors.

#

Company name

Production typical Fabricación de Cinturones Fabricación de Calzado Fabricación de Calzado

Number of workers 9 35 17 16 14 45 50 39 31 65

Total personnel 12 40 22 20 19 50 62 42 44 80

Annual sales average 2002, USD $120,000 $287,655 $400,000 $475,000 $632,000 $1,430,600 $1,500,000 $1,676,500 $1,800,000 $2,000,000

1 Esmeralda Leather Ltda

2 Shoomarker Ltda 3 Henry Mouse Ltda Industria de Calzado Soani 4 Fabricación de Calzado Ltda. Manufacturas en Cuero V & 5 Fabricación de Calzado C Ltda Fabricacion y 6 Boston Shoes Ltda Comercializacion de Calzado para Hombre 7 Imacal Ltda. Fabricación de Calzado 8 Districarnazas Luna Curtición de Piel 9 Curtiembres el Reno Ltda Curtición de Pieles 10 Calzado Atlas Ltda. Fabricación de Calzado

Enterprise Performance Improvement Centre, GOLEM IMS GMBH, Austria, www.win2biz.com

Page 4 of the Sheet #2


				
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