South Africa’s economy urgently needs entrepreneurs to boost growth, foster innovation, and help in job creation, thus enterprise development is pivotal to South Africa’s BBBEE Codes of Good Practice.
Corporates have a critical role to play in this imperative, as their funding can make or break an entrepreneur or SME. However, a BEE box-ticking mentality is not the way to approach this challenge, according to Riversands Incubation Hub CEO Jenny Retief.
“The recent official unemployment statistics have brought the crisis into sharp focus – approximately one in four of South Africa’s youth is jobless. Corporate SA is pivotal in addressing this challenge. It’s well documented that small and growing businesses are the biggest job creators and it’s time for corporates to actively engage with the entrepreneurs and small businesses they support, help them scale their business, and share in their successes by using their products or services,” she says.
Ten things corporate SA can do to help entrepreneurs and SMEs:
1. Leverage your size to their benefit: Help SMEs by giving them favourable terms on raw materials; allowing an SME to pay bulk prices for small quantities will help them compete against larger businesses. This is not a handout, but can prove to be a huge enabler for SMEs.
2. Stick to specifics and pay on time: When ordering something from an SME, give a clear specification on what you expect from the deal. Include a reasonable deadline. This will allow them to up their game. And please pay on time! Nothing constrains cash flow more than late payment.
3. Mentor meaningfully: Any successful business person will testify to the importance of mentors on their road to success. The value of mentoring by someone who has been there, done that, is immeasurable. Riversands is actively looking for experienced business people to volunteer as industry mentors and industry specialists to the entrepreneurs on its programme. Don’t sugar-coat feedback: be brave, honest and specific. This will allow the SME to do better next time. And don’t forget to compliment and affirm what they’re doing well!
4. Fund SMEs wisely: Funding is not a silver bullet to an entrepreneur’s growth challenges, but a smart entrepreneur with a marketable business plan and the discipline and determination to put in the work can post growth figures well upwards of 300 percent in the year after they raised capital. These are the entrepreneurs you need to support.
5. Buy from small local businesses: South Africa’s small businesses have an important role to play in the development of the socio-economic landscape. By supporting these businesses, corporates and entrepreneurs become mutually dependent and share the value of their business relationship. From catering for an office function, to car branding, textiles and uniforms to specialist engineering services, Riversands makes a good hunting ground to procure services.
6. Visit the SME you are funding: Physically seeing where and how your funding is being used makes a tangible impact on the funder-recipient relationship, elevating it from a ‘box-ticking’ exercise to a philanthropic experience. At Riversands Incubation Hub, for instance, more than 150 majority black-owned SMEs are located on a smart, modern campus, and their collective enterprise is gratifying to behold.
7. Streamline your BEE rating: Seek a simple solution to improving your BEE scorecard points. An incubation hub is ideal for this. At Riversands Incubation Hub there is a wide range of level 1 and 2 black-owned suppliers across many industries. B-BBEE spend is streamlined and trouble-free because the Riversands team interacts with business owners to ensure that all documentation is provided in an audit pack as required.
8. Sponsor an SME: Corporate sponsorship partnerships can make or break an entrepreneur. At Riversands, the process is managed, from recruitment to implementation. Each ZAR invested is tracked, with continuous monitoring to ensure that funds are allocated correctly. Economies of scale ensure that expenses are reduced and impact is maximised.
9. Fund a reputable incubator hub: An incubator can and does make a significant impact on the lives of entrepreneurs, as the four pillars of support (infrastructure, marketing, systems & operations and leadership & strategy) provide them with the best shot at success. Black entrepreneurs being guided and supported in an incubation programme are also better equipped to sustain success beyond the programme.
10. Contribute to growing SA’s productive capacity: Incubation programmes have many of the ingredients that enable small businesses to grow. The thriving eco-system of like-minded entrepreneurs networking, sharing ideas and sourcing from each other is often cited as one of the key benefits of the programme.