TOR - Financial Analysis and Business Performance Improvement for Micro and Small Enterprises (MSEs)

TERMS OF REFERENCE (TOR)
Background

Hand in Hand Eastern Africa (HIH EA) is implementing the Unlocking Potential for Micro and Small Enterprises Project, which aims to strengthen the growth, resilience, and sustainability of micro and small enterprises (MSEs) Funded by Applied invest. The project supports entrepreneurs through tailored business development services to improve productivity, profitability, and access to finance with a clear higher objective of creating Jobs thereby improving the livelihoods of employees and the owner. 

As part of this support, HIH EA seeks to engage a qualified consulting firm to provide in-depth financial analysis to selected participating enterprises within the selected counties. The consultancy will help assess the financial health of enterprises, identify funding gaps, recommend cost optimization strategies, and guide strategic investments that enhance profitability and long-term growth.

Objective of the Consultancy

The overall objective of this consultancy is to strengthen the financial performance and investment readiness of supported MSEs through professional financial diagnostics and practical, enterprise-specific recommendations.

Specific objectives are to: 

• Assess the current financial health and performance of selected MSEs and provide a report to each MSE.  
  
• Identify funding gaps and optimal financing options - Recommend cost-cutting and efficiency improvement strategies
  
• Provide a list of priority investment area to increase profitability and sustainability
  

Scope of Work

The consulting firm will be expected to undertake, but not be limited to, the following tasks:

Financial Health Assessment

Review enterprise financial records (income statements, cash flow statements, balance sheets, where available)

Assess liquidity, profitability, solvency, and efficiency indicators

Analyze cash flow management and working capital cycles

Identify key financial risks and weaknesses

Funding Gap Analysis
Determine short-, medium-, and long-term financing needs of each enterprise
Assess current capital structure and financing sources
Identify funding gaps relative to growth plans and operational needs
Recommend appropriate financing options (internal financing, debt, equity, grants, blended finance, etc.) and institutions that offer the funding facilities

Cost Optimization and Efficiency Improvement
Analyze cost structures and major cost drivers
Identify inefficiencies and cost leakages
Propose practical cost-cutting strategies that do not compromise product or service quality
Recommend operational efficiency improvements

Profitability and Investment Advisory- In excel format
Analyze revenue streams and margins
Identify high-impact investment opportunities within the enterprise (e.g., equipment, technology, skills, market expansion)
Assess expected returns on proposed investments
Provide clear, prioritized recommendations to improve profitability

Reporting and Advisory Support
Prepare concise enterprise-level financial diagnostic reports
Present findings and recommendations to entrepreneurs and project staff
Provide actionable financial improvement plans for each enterprise
Where required, support enterprises to refine financial projections and basic investment cases

Deliverables

The consultant is expected to deliver the following: 

• Inception report detailing methodology, tools, and work plan
  
• Financial diagnostic reports for each assessed enterprise 
  
• Funding gap and financing recommendation summaries
  
• Cost optimization and efficiency improvement recommendations
  
• Profitability and investment advisory notes per enterprise 
  
• Consolidated summary report highlighting common trends, risks, and lessons across enterprises.
  
• Simple standard tools or templates for each component for future assessment. 
  
• Presentation of findings to HIH EA and relevant stakeholders to validate tools and reports.

Methodology

The consulting firm is expected to apply a practical, participatory, and enterprise-centered approach, which may include: 

• Review of existing financial records and business documents 
  
• One-on-one interviews with entrepreneurs 
  
• On-site or virtual enterprise assessments 
  
• Use of simple, practical financial analysis tools suitable for MSEs

Duration of the Assignment

The assignment is expected to be conducted over a period of 12 weeks covering 50 enterprises, which means at least 8 hours per enterprise. The final workplan will be agreed upon during contract signing. 

Reporting and Supervision

The consultant will report to Hand in Hand Eastern Africa (HIH EA) through the Project Manager, Unlocking Potential for Micro and Small Enterprise Project. All deliverables will be submitted to HIH EA for review and approval with periodic review meetings. 

Consultant Qualifications and Experience

The consulting firm should demonstrate: 

• At least 5 experiences in financial analysis, business diagnostics, and advisory services for MSEs 
  
• Completed at least 2 similar assignment in the previous years 
  
• Strong expertise in financial modeling, cash flow analysis, and investment appraisal
  
• Experience working with donor-funded or development programs is an added advantage with proven evidence.
  
• Understanding of the local business context and challenges facing MSEs 
  
• A multidisciplinary team with relevant qualifications in finance, accounting, economics, or business management, include profiles

Proposal Submission Requirements

Interested firms should submit:

• Technical proposal outlining understanding of the TOR, methodology, and work plan
  
• Company profile and demonstrated relevant experience 
  
• CVs of proposed key personnel 
  
• Financial proposal with a clear cost breakdown in KES.

Confidentiality

All enterprise data and information accessed during the assignment shall be treated as confidential and used solely for the purposes of this consultancy.

Anti-Corruption and Safeguarding

Hand in Hand Eastern Africa strives to fight corrupt practices within its operations and the same is expected of its vendors, contractors and service providers.  HIHE EA staff are therefore prohibited from accepting any gift/s, consideration or benefit/s of any kind which may constitute illegal or corrupt practices, either directly or indirectly, as an inducement or reward for the award of a contract.

HIHE EA and all its employees undertake to create a safe environment for our members and to prevent any form of exploitation or abuse. We are committed to acting in the best interest of our member’s and any willing vendor, contractor or service provider is required to commit and comply with our position on safeguarding.  

Submission of Proposal Requirement

Proposals will be made to procurement@handinhand-ea.org by 30th March 2026, citing the reference number as the subject of the email. All submitted proposals will be treated confidentially.