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Rise Up, Entrepreneurs!

A fresh focus needed to drive entrepreneurship and job creation.

Allon Raiz

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Rise-Up

The South African government has implemented many policies and programmes to promote job creation and entrepreneurship, particularly amongst the alarmingly high numbers of unemployed youth. The focus of these policies and programmes has been on the creation of start-up businesses.

Despite the vast resources committed to these programmes, their success at reducing unemployment is almost negligible.

Given that South Africa is resource strapped, does this focus on start-up creation represent the most effective policy stance towards small business? And if not, what policy measures should the government be focusing on instead?

Job creation power

The importance of small businesses overall in terms of employment is unquestionable. The Adcorp Employment Index for March 2012 shows that, in South Africa, 68% of employees are employed by small businesses employing less than 50 people, with two-thirds working at businesses that have less than five employees.

South Africa’s start-up business rate of 5.2%, as per the GEM 2011 Report, is notably higher than its new business rate of 4.0%, indicating that start-up firms dominate the country’s total early-stage entrepreneurial activity.

The GEM 2005 Report found that less than 4% of start-up businesses (defined as functioning for less than three and a half years) take on any staff. Mike Herrington, executive director of the Centre for Innovation and Entrepreneurship at the UCT Graduate School of Business, points out that this means that for every 100 new small businesses, only about 10 additional jobs will be created.

On the other hand, further evidence from GEM shows that established small businesses, those that have survived for three and a half years or longer, are the ones that create jobs. The GEM 2011 Report states that these businesses create 3.2 jobs on average, and further states that established small businesses create 32 times the employment opportunities that start-up businesses do.

The GEM 2011 Report indicates that South Africa has an established business ownership rate of 2.3%, which is substantially lower than the average of 7.2% for all participating efficiency-driven countries. In terms of established business activity, South Africa ranked 52nd out of 54 countries.

This suggests that to create more jobs government policy should focus on supporting established small businesses rather than start-ups.

Related: (Video) What Makes SA  a Good Place To Do Business

Interventions for sustainable job creation

While the government’s New Growth Path (NGP) targets for job creation appear ever more unlikely to materialise, it is essential to identify the interventions that are most likely to lead to sustainable job creation.

Focus on established businesses with potential for considerable growth

Most often it is the operation that employs around 10 people that is ready to cope with expansion. These are the businesses that should be receiving the bulk of our support services in the form of incentives, grants, export assistance, access to new markets, mentorship for the processes of business expansion, and even subsidies for selected essential services such as financial and HR consulting.

Agencies such as the National Empowerment Fund (NEF) and the Industrial Development Corporation (IDC) should actively court these small businesses and provide them with proposals for expansion. Private sector agencies and banks should aggressively target this sector. In addition, giving procurement preference to this sector would assist suppliers with capacity building.

Relax labour policies

A working paper published by the African Development Bank in October 2012 states that:

Firm level surveys indicate that the single greatest impediment to the more rapid growth of outward-oriented manufacturing in South Africa is the high level of real wages relative to productivity levels. […] Labour market regulation – in particular the “extension provision” which requires collective bargaining agreements to be extended to all firms in an industry, regardless of size – is inhibiting investment and growth.

Small businesses cannot currently hire staff in confidence, because it is so difficult to fire people who are not performing. The Global Competitiveness Report 2011-2012 ranked South Africa 139th out of 142 countries in terms of rigid hiring and firing practices.

While laws to protect employees against exploitation and abuse are needed, there has to be a balance that makes it easier for companies to choose and retain the best person for the job. Relaxing the current dismissal regulations for the discretionary probation period would go a long way towards addressing this matter.

The existing regulations are counter-productive. Thousands of small businesses in South Africa, in fear of the arduous and costly dismissal process, are resorting to using temporary staff or hiring people only on short-term contracts.

The Adcorp May 2012 Employment Index notes that since 2000, permanent employment has fallen from 11.0 million to 9.1 million workers, a decline of 1.9 million workers or 18.7% of the workforce. In the same period, the number of temporary workers has increased by 2.6 million workers or 187.5%.

For the people in these jobs there is no job security; neither is there an incentive to strive to become a valued member of the workforce.

Related: Africa’s Got the Talent

Import needed skills

The concern that foreign workers will take jobs away from local people is misdirected – a lack of skills inhibits job creation because without a skilled workforce the economy cannot grow. When intellectual capital flows freely, it supports growth; yet current policies deny South Africa the benefit of an influx of skills, further stifling our economy.

Brazil, which has the world’s sixth largest economy, has traditionally had a permissive immigration policy. Its booming economy is now attracting growing numbers of Portuguese speaking immigrants from job-starved Europe.

Entrepreneurship is flourishing in Brazil– its Global Entrepreneurship Week in 2010 attracted 50 000 entrepreneurs, compared with the 8 000 who attended South Africa’s.

Open up access to African markets

Intra-African trade is tiny relative to what it could be. Given a giant market on our doorstep (up to 30% of Africans are now middle-income earners)South Africa fails to compete with suppliers from abroad. Indian, Chinese and South American products are flooding into Africa– where are the South African goods?

Our potential exporters are hampered by old trade monopolies, cumbersome Forex regulations, corruption, cross-border nightmares and a lack of infrastructure.

Government is not working hard and fast enough with its African trading partners to ease the trading environment, improve capacity at border posts, and clear the obstacles to a smooth movement of goods. South Africais ranked as 115th out of 185 economies for ease of trading across borders in The World Bank’s Doing Business Guide 2013. This is a regional problem that is stifling cross-border trade: Sub-Saharan Africa on average ranks 137th.

Focus on entrepreneurial education rather than start-up financing

Contrary to popular opinion, lack of access to finance is not the primary obstacle to small business growth. More money won’t solve the problem. A bigger concern should be entrepreneurial skills development and education.

A Development Bank of Southern Africa working paper published in 2011 summarises the South African government’s youth entrepreneurship programmes as follows:

The NYDA is responsible for overseeing and monitoring these interventions for young people, including the provision of loans for young entrepreneurs, business development services, potential support for youth cooperatives and the introduction of youth entrepreneurial training in schools. However, the number of young people accessing these services in 2010 was almost negligible. Hence, there is a major gap in youth entrepreneurial training, which needs to be addressed if self-employment is to provide a pathway into employment for young people.

Emerging entrepreneurs urgently need to learn to understand the concept of a commercially viable business. A legacy of our failed education system and the previous deliberate marginalisation of black entrepreneurs is that the majority of emerging entrepreneurs have not had exposure to the complexities of building a viable and sustainable business.

They also often have no experience in identifying viable opportunities and developing these into sustainable ventures.

Banks would love to lend more money if it meant that they could get a competitive return on their investment. There is a great deal more money chasing good ideas than there are good ideas trying to get funding. Again, the solution is to give targeted support to those businesses that have the right potential, and the funding would follow.

Here, the private sector could make a strong contribution in the short-term by deploying skilled personnel (even for a few hours a month) to mentor smaller companies within their supply chains.

High potential

Whatever the problems in the small business sector, South Africans are enterprising. With the correct support directed at high potential established small businesses, a lighter corporate governance load and entrepreneurially friendly legislation, entrepreneurship can be the solution to reducing poverty and increasing job creation.

Allon Raiz is the CEO of Raizcorp, the only privately-owned small business ‘prosperator’ in Allon Raiz is the CEO of Raizcorp. In 2008, Raiz was selected as a Young Global Leader by the World Economic Forum, and in 2011 he was appointed for the first time as a member of the Global Agenda Council on Fostering Entrepreneurship. Following a series of entrepreneurship master classes delivered at Oxford University in April 2014, Raiz has been recognised as the Entrepreneur-in-Residence at the University of Oxford’s Saïd Business School. Follow Allon on Twitter.

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1 Comment

1 Comment

  1. Wendy Ferguson

    Feb 27, 2015 at 11:56

    The IDC has to be the worst funding agent to approach they disrespect women by the CEO referring to me as his darling and sweetheart and that I will be under his “personal” protection and not respecting me as a professional businesswoman and when I objected he cut my funding off. They also demanded my formulations and customer data base (have a look at their financials page they own a cosmetic and skincare company of their own) my products is a skincare range for cancer patients. They refused to sign a NDA stating that should my IP be exposed that the IDC would be responsible for ALL legal costs and now refuse to return any telephone calls, emails or personal calls at their offices and I have had to take them to the public protector. they literally have brought my company to insolvency as I cannot approach another funder because I had to sign over 100% of my company shares and the contract states that should I ever go to a resolution body or seek legal advice the contract is immediately cancelled and the funds already borrowed have to be paid back immediately! So THIS is the famous IDC stay away from them!

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Business Landscape

Load Shedding – How To Stay Productive

We’ve all already had massive interruptions from load shedding and it’s not going away anytime soon so, instead of being caught out each time and losing productivity, let’s stay steps ahead of the outages and make sure that our productivity stays where it should be…

Warrick Kernes

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They say that prevention is better than cure and with load shedding the best cure is to have a generator, backup power inverter or UPS (Uninterrupted Power Supply) set up to kick in when the lights go out. If you don’t have this in place then you will want to understand when you will be affected and how to minimise the impact of this on your work.

The first step is to know when your area is scheduled for load shedding. You can find out by downloading the free app called Loadshedding Notifier which tells you when Eskom has scheduled areas to be turned off. We’ve already seen that the lights don’t always go out when they are scheduled to do so but it’s better to be prepared than to be caught in the dark.

Many entrepreneurs rely on their normal routine to drive their productivity but once you know that your routine is going to be interrupted then it’s time to re-plan your day. You could plan to get up earlier to avoid traffic or to start work super early so that you get through your priority work before the power goes off.

Arrange your to-do list so that you can get through the highest priority and income producing activities first and then you can get around to the rest of your work. Prioritising your daily actions becomes even more crucial when you have limited time. You can also plan priority work for when the power is out; just imagine how many sales calls you can make when not being interrupted by emails.

If you work from home check if the neighbouring suburbs will have power so you can go work at one of the cafes. Most cafes have free wifi but it can be slow and these networks aren’t always secured so it’s preferable to have your own 3G dongle so that you don’t rely on others for internet.

A few more load shedding quick tips:

  • Work in the cloud so that all your work is backed up automatically and not lost if you suddenly lose power.
  • Unplug devices when the power is out to avoid damage from potential surges when power is restored.
  • Keep your electronics charged up such as; headphones, cell phone, laptop battery, powerbank, 3G dongle.

If your computer battery dies or you run out of things to do then create a list of work that you and your team can do which doesn’t require computers or internet. An impromptu team building lunch or a good old brain storming session could prove incredibly valuable or if your team isn’t up for that then the storeroom could probably use a clean.

If all else fails don’t panic as you can always just go for a walk, meditate, spend time with the kids or go to the gym to clear your mind.

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Business Landscape

4 Tips To Create A Great Conference / Workshop / Event In 2019

Being able to host a great workshop or event is an essential skill for anyone in creative and innovative businesses. Your event will have a major impact – that is guaranteed. However, whether it is a positive or negative impact depends on the how well the event was put together and executed.

Revel Africa

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corporate-event-planning

Your business is fantastic. You work with amazing people, and your industry is dynamic and evolving. There are so many exciting ways available to you to share your good stories: social media, podcasts, videos, live streaming, emails. But the trend we’re seeing of more workshops and conferences is the most exciting, and effective. Why? Because people still do business with people, and face-to-face still has more impact than anything digital.

Being able to host a great workshop or event is an essential skill for anyone in creative and innovative businesses. Your event will have a major impact – that is guaranteed. However, whether it is a positive or negative impact depends on the how well the event was put together and executed.

Here are 4 top tips to create and host amazing events this year

1. Purpose

Identify the purpose of the event. Is it to train clients or future clients on the latest trends in your industry in a bid to position yourself as the subject matter expert? Is it to bring a large multi-campus business together into one space to unite them and refocus and energise them? Is it to bring creative minds together to solve a problem? Answer these questions and you will know if you need a small, vibrant workshop, a large, slick event, or a creative team-building conference.

Plus, having a really clear understanding of why you’re doing this event is the best way to deal with the stress of putting it all together. Anchor yourself to the core reason behind the event, and it will not only propel you forward through the process, but will also make a lot of the decisions easier to make as you go.

2. Prepare

If you are going to host an event, then embrace the reality of late nights, money stress, volatile emotions and extended periods when your nearest and dearest, your social life and your free time take a back seat. There’s no nice way of saying it – an event is a huge responsibility and one that will take up a lot of your time.

The best advice we can give you is to find an event planner straight off to help you put your best foot forward at your event and deliver on your vision for the event. That way, once they’ve done all the heavy lifting, all you have to do is arrive on the day of the event looking fresh, fabulous, and stress-free and allow yourself to revel in its success. Your event planner would have handled everything for you, from haggling with suppliers, to sourcing the best locations at great prices, and should even handle the headache of RSVPs. In the Western Cape and Gauteng we highly recommend Revel Africa for bespoke events and innovative ideas that fit your budget.

Whether you use an event planner or not, you will need to think these through.

  • Decide on a theme – A theme helps to unify your ideas, source expert speakers, and market to the right people. Pick something simple, catchy and on topic. You can even go so far as creating a mission statement for the event to keep your efforts focused, such as, “We care a whole lot about this topic / industry / situation and we couldn’t find a conference that matched what we want and need. Our goal is to bring something that is welcoming and inspiring, where the talks are fresh, and the snacks are even fresher. We’d love you to join us and celebrate the people (including you!) who make this industry great.”
  • Prepare a budget and make bookings – Knowing what your budget is will help you set the price for delegates if it is not an in-house event. Here are the most common items you need to budget for, and book:
    • Venue – Once you’ve found a venue within the price and date range that you had in mind, you can fix the date for the event.
    • Transportation – For out-of-town delegates.
    • Catering – Events can rise and fall on the quality of the food provided. Shop around for this one and request taste-tests.
    • Speaker – Start thinking about speakers very early on, as all the good ones get snapped up fairly far in advance, so if you want your top choices, secure them as soon as possible. For interactive staff sales training we recommend Mark Berger, and for your MC / Inspiration needs, we recommend Warrior Ric.
    • Activities – Think of icebreakers and activities to get people out of observation mode and into participation mode.
    • Marketing – If this event is for external delegates, invest in a good marketing agency for social media, printed marketing collateral, banners, brochures, website updates, and paid media.
    • Team members – Select, and brief the team that will help you with this event.
    • Invitations – Once you have a date, venue, and keynote speakers, you can send out your invitation. Managing RSVPs and payment effectively is critical. Quicket can be a useful payment portal for events.
  • Daily emails: Once the conference has started, send out a daily email outlining the itinerary for that day. Keynote speakers and times, social events, meal plans, highlighted sessions, even the daily weather report can all help the attendee feel more prepared and connected when they reach the event. You can use Mailchimp or any other of the great bulk mailer platforms available.
  • FAQ: An FAQ is great for questions that come up again and again. The answers can be published on an event FAQ page on your website and the link sent in the daily mails. Questions like:
    • Are sessions be recorded? When will they be available?
    • Is parking available?
    • What’s the Wi-Fi password?

3. Productivity

Be mindful of who is attending the session and whether or not the session’s content is suitable to them. A talk that is too basic, too advanced, too demographically narrow, or too far off-topic for the conference – no matter how famous the speaker is – will bring the session’s productivity to a grinding halt.

Another great thing to consider is self-directed co-ordination as a great way to meet new people or to connect with people you’ve known for a long time. Using a Twitter hashtag, a Slack team, a Telegram group, are a great communication channel for the event to ensure attendees easily find information about how to network with each other. If your event is more technical, you could also create a wiki during the event to enable sub-communities to self-organise on the day and share content.

When it comes to how productive the sessions are, as the event planner it might be tempting to participate in the day’s events. However, as a facilitator your role is to remain objective and observe. You can’t facilitate and participate at the same time. Keep scanning the room to sense the mood and energy; keep discussions on track by asking great questions; constantly keep the end goal in mind. Typically, a good facilitator or event planner is often invisible on the day of the event.

4. Participation

There are many creative ways to structure the day’s proceedings to facilitate maximum participation.

  1. Campfire sessions – These start like a traditional presentation, with a speaker at the front of the room presenting an idea to a group of people. However, after 15 or 20 minutes, the presenter becomes the facilitator and shifts the focus of discussion to the audience, inviting comments, insights and questions from those around the room. Campfire sessions allow attendees to drive their own learning and share experiences with others, which also assists with networking.
  2. Birds of a Feather (BOF) – BOF groups are small, informal gatherings of people with a common interest or area of expertise who join up to work together, typically over lunch or during the morning coffee break. You can suggest BOF groups for attendees to join or they can create their own. Sessions don’t have a pre-planned agenda and are aimed at encouraging discussion and networking.
  3. Lightning Talks – As the name suggests, lightning talks give speakers no more than 10 minutes to make their presentation. Because speakers don’t have time to waffle, the presentations are to the point, which keeps audiences focused and energised. A window of between 30 to 60 minutes is usually given to lightning talks, which can allow for up to 12 speakers to be heard.
  4. Silent Disco Talks – This is where many speakers present at once within the same room, while delegates – wearing wireless headphones with channels that they can switch between – choose who they want to listen to. Delegates enjoy bite-sized pieces of information and are always tuned in to something that interests them.
  5. World Café – This simple, effective, and flexible format is ideal for hosting large group discussions. Start the first round of discussion with groups of four to six people sitting around a table, and present each group with a question. After 15 minutes, each member of the group moves to a different table. Once all rounds have been completed, key points from each table are presented to the whole group for a final collective discussion.
  6. Storytelling – This is where speakers tell real-life stories that help illustrate or enhance themes in the conference. The story should contain a beginning, a middle and an end, with characters and plots, like adversity and triumph. Stories should be 15 minutes long, with 10 minutes provided for Q&A afterwards.

Here’s to hosting many great workshops and events this year.

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Business Landscape

What Is Business Insurance And Why Does Your Business Need It?

Your business asset insurance cost will go up if you add on more items, but this is common with all insurances. Not sure why you need it? Find out more information below.

Amy Galbraith

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You need to protect your business against all eventualities. This means that you need to have the ability to pay for any physical or legal damages that might occur, such as a client claiming that they were injured while on your property or an asset being stolen from your property. And business insurance in South Africa is a necessity if you want to apply for business finance, as the bank will need to see that your assets are insured.

You might be wondering now, as a business owner, “What is business asset insurance?” It’s insurance which insures your assets, such as vehicles, electronic equipment, and your business premises. You can also opt to have business car insurance if you have a company car that is used by your employees. Your business asset insurance cost will go up if you add on more items, but this is common with all insurances. Not sure why you need it? Find out more information below.

It protects your assets

Whether you are a small business just setting up or an established company, you likely have assets that are important to keep your business functioning. This could be a business vehicle that you use to transport goods to clients or computers that are vital to your employees.

If you do not insure these assets, you will need to pay for repairing and replacing that might need to happen out of your own funds. And this can become extremely expensive, depending on what has been damaged, lost or stolen. Another reason why you need business asset insurance is that there might be a natural disaster or “act of God” that occurs, such as a fire or flood, which could damage your equipment, meaning that it needs to be replaced.

It protects you from legal issues

Some of the problems that businesses face include legal issues, which can become costly and tiresome. These issues can be handled easily and efficiently if your business insurance to help pay for legal fees and settlement fees with the client or employee who is issuing the complaint.

In the case of being sued or taken to court, it is useful to have a business insurance offering available to help you. If you do not have this type of insurance, you will soon see that legal costs can become exorbitant. Legal issues can also reflect negatively on your company in the eyes of other clients or employees, but having business insurance can help to clear up any problems effectively and without any drama.

Your business will not shut down due to incidents

If your business vehicle is stolen or if the equipment is damaged, this could lead to your business closing for a period while you try to recoup your loss of money. This could lead to you losing even more money which could be highly detrimental to the success of your business.

Your insurance company will be able to compensate you the lost funds, granted that the issue is covered by the insurance cover you have in place. This will allow you to stay open despite the fact that you are experiencing difficulties due to equipment not working or other problems. You could even opt for emergency assistance if there is a natural disaster which will keep you, your employees and even your property safe from damage.

Your employees will be protected

Your employees are the backbone of your company. And, as such, you should have protection in place for them. You should have workers’ compensation coverage in place so that should your company lose money or be unable to pay your staff, their needs will still be covered.

And business insurance will protect them from any possible lawsuits that could be lodged against them by clients or customers. It can become highly expensive to pay for these out of your own pocket. Protecting your employees protects your business, so be sure to invest in insurance which offers workers’ compensation as well as disability cover to protect your employees.

Think smart for your future

Having business asset insurance and business insurance is important to both small businesses and large corporations. This is because your assets will be protected from theft and damage, which can be costly to replace and repair. You will also be able to weather any legal storm that might come your way, as well as being able to protect your employees and their welfare.

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