Small and medium enterprises (SME) in Papua New Guinea need to hone their business models and sales pitch to get more investors. Business Advantage PNG looks at some of the ideas that the Fusion Foundation, a non-profit entity that supports entrepreneurs, proposes to help SMEs succeed.

Fusion Foundation’s team working in PNG. Credit: Fusion Foundation

Many investors in Papua New Guinea are looking for small and medium businesses opportunities, according to Bessi Graham, Director and Co-Founder of Fusion Foundation, a non-profit entity that supports entrepreneurs through the entire investment process. The main obstacle, she says, is preparedness and knowledge.

‘Unlike many other countries in the Pacific that we have worked in, there is a lot of liquidity [available money] here,’ Graham,  a leading practitioner in impact investment and social enterprise, said in a conference held in Port Moresby.

‘There are investors looking to invest in PNG, but they are struggling to find enterprises that are at the standard they require.’

Graham said small and medium entrerprises (SMEs) need to develop sound business practices. ‘People need more than just access to capital. Money does not solve all of the problems.’

Business partners and mentors

Fusion Foundation’s Bessi Graham.

She pointed to the need for business partners to mentor new businesses, and said there are other bodies that can provide useful help, including the Women’s Business Resource Centre, Kumul Game Changers,Techlab and the PNG ICT cluster.

‘I would much prefer to see an SME that has a clear sense of its business model, who its customers are, and is focused on consistently delivering quality products or services.

‘SMEs should not only look to take on investment, they need to give investors confidence that they can deliver on it and pay back that capital.’

‘Finding an organisation that can commit to buying from them as part of their supply chain is far better than just finding an investment of a disconnected kind. Customers are a form of investment.’

Graham said SMEs should undertake market analysis, have a clear narrative and a well-defined sales pitch.

‘It is not just about saying: “We need money”; it is about saying: “How much money do we need, and what is that money for?” That helps you understand what kind of capital may be appropriate. Doing that investment-ready work can also help you get debt finance from a bank.’

‘There is no shortage of great ideas and entrepreneurs and solutions to the problems we are facing.’

She said there is also a ‘huge gap’ in governance reporting and standards.

‘SMEs should not only look to take on investment, they need to give investors confidence that they can deliver on it and pay back that capital.’

Unlocking capital

Graham said the Fusion Foundation is ‘aiming to unlock K175 million’ for SMEs in its first five years of operation in PNG.

The focus will be on improving linkages between donor-funded programs and market-based business.

‘We tend to have disconnected approaches where we take very complex things and pump out simplistic, short term and academic responses.

‘There is no shortage of great ideas and entrepreneurs and solutions to the problems we are facing.

‘But it is a big expectation to think that individual entrepreneurs are going to be able to navigate and find these disconnected programs and then know how to move from an idea through to not only taking on an investment but actually delivering.’

Key points

• Getting investment capital for SMEs first requires developing a sound business model, often working with partners.
• Getting investment from customers that are bigger businesses is often the best strategy.
• If investors can find ways of managing a PNG SME portfolio cost effectively there is a potentially big market.