Connect with us

Business Landscape

South Africa: Advancing or Inhibiting Entrepreneurs

Is South Africa an ideal environment for entrepreneurs? What conditions do our risk-takers operate in when measured against the rest of the world? A global report on the factors that enhance and inhibit the creation of new businesses – which are, of course, the very things that can make or break an economy – seeks to answer these profound questions.

Kevin Bloom

Published

on

Advance or Inhibit entrepreneurs

You don’t have to be a business genius – or an avid reader of this magazine – to understand that there’s a very tight correlation between the level of entrepreneurship in a country and its rate of economic growth. And you don’t have to be an economics major to understand that “real” progress is measured by productivity rates and income per capita, which (if they’re both on the up) tend to pull countries out of an extractive growth phase, through an intensive manufacturing phase, and finally to a phase where the service sector predominates. Still, just in case you’ve been too busy watching your bottom-line to focus on the macro-economic implications of your start-up enterprise, here’s a bird’s-eye-view recap of the situation:

Entrepreneurs drive innovation. In developing or advanced markets, they are the people who get rid of inefficiencies by attacking the big in cumbents and forcing them into shape. In fact, high-impact entrepreneurs – those that have the ambition and drive to build pioneering, fast-changing businesses – are the ones that generate the majority of GDP growth, job creation and wealth in an economy. In other words, without entrepreneurs (literally, those who “undertake” risk) the world might still be back in the dark ages.

This is why in 1997 a multinational project called the Global Entrepreneurship Monitor (GEM) was launched to study the phenomenon. As the first and largest worldwide initiative of its kind, the aim of GEM is to fully comprehend the various factors that enhance or inhibit entrepreneurship, so that countries –or, more specifically, bureaucrats – will be in little doubt as to what policies are the most enabling.

Importantly,the primary purpose of GEM is not to quantitatively compare the number of new businesses across different countries, although it does this quite comprehensively too. It is rather, as the 2008 report states, “about measuring entrepreneurial spirit and entrepreneurial activity through different phases of the entrepreneurial process.”

South Africa has been part of this “attitude-based” initiative since 2001, under the auspices of the UCT Centre for Innovation and Entrepreneurship at the UCT Graduate School ofBusiness. It’s an expensive exercise, costing in the region of R1,3 million annually, but is believed by many to be worth the outlay. In the 2008 GEMreport, South Africais one of 43 countries measured.

How do we fare? The short answer: not great.

Overall, South Africa ranks 23rd in early-stage entrepreneurial activity, which admittedly doesn’t seem too bad when considered in the context of the following measurement: 7,8%of South African respondents – the population sample falls between the ages of 18 and 64, and covers both rural and urban areas – are in the process of starting a business. Unfortunately, although the 7,8% figure does denote a substantial increase for the country over the last few years, it is bad when held up against the average for all lower- and middle-income economies measured: 13,2%.

So what gives? Before this question can be adequately answered, it’s necessary to delve deeper into the framework that the GEM compilers use to ensure that they compare apples with apples.

Countries that participate in the GEM survey are placed into one of three categories: factor-driven economies, efficiency-driven economies and innovation-driven economies. For the sake of simplicity, it can be said that the first category is concerned mainly with countries where there is a large agricultural sector and an extractive industry based around natural resources; the second category is concerned with countries where large-scale industrialisation has led to niching and economies of scale; and the final category is concerned with countries where an expanding service sector caters for an affluent population and innovative entrepreneurial firms are the chief drivers of growth.

It’s no surprise, of course, that in the latter category you’ll find the likes of the United States, Japan, France and the United Kingdom. Some what surprising, however, is that India is measured as a factor-driven economy, against Angola, Bolivia and Iran, while South Africa is considered an efficiency-driven economy, alongside Brazil, Turkey and Russia.

Mike Herrington, lead GEM researcher and director of the UCT Centre for Innovationand Entrepreneurship, is himself struck by the anomaly. “It is, I think, because a large percentage of the Indian population is factor-driven,” he says.“It’s an amazing one, I know. Many reporters have asked me about it. But then I’d also say that South Africa is somewhere between factor and efficiency.”

Given Herrington’s assessment here, one can’t help but think that maybe, for the sake of appearances, it would have been better for us in the lower category –because, as already indicated, we are significantly below the average of efficiency-driven economies in certain key measurements, and lower than many factor-driven nations in others.

In the “new firms” measurement, for example, where countries are compared on the basis of the percentage of businesses that are older than three months, we are 38 out of 43. And in the established business category (older than 3½ years) weare even lower: 41 out of 43.

“What this indicates,” says Herrington, “is that we require a large number of start-ups to get us through. We have a high failure rate, so we need some sortof policy intervention that supports and nurtures companies through the start-up phase.”

A simple drill-down into some of the attitude-based measurements of the 2008 GEM report adds yet more weight to Herrington’s call.

For starters, 60% of South African respondents answered “yes” when asked if they saw a “good opportunity for starting a business in the next six months” – as against 40% for Egypt and 58% for India. Brazil, a country that South Africans often look to as a benchmark, came in at 44%.

But in the same set of questions, only 31% of South Africans said they had the “required knowledge and skills to start a business” – against 44% for Angola, 53% for Egypt, 45% for India and 49% for Brazil. Also, a paltry 13% of South Africans said they “expected to start a business in the next three years”, significantly lower than Angola’s 27%, Egypt’s 35%, India’s33% and Brazil’s 26%.

“What’s more,” says Herrington, “the report shows that we have comparatively poor management skills. This is because of a lack of adequate training and education, which could be attributed to apartheid. But entrepreneurship is not taught in our schools today. They say it was introduced as part of the syllabus in 2005, but that’s not entirely true. It’s not taught at all in the poorer areas.”

Exacerbating the situation is the fact that two of the key organisations established to support entrepreneurial initiatives in South Africa have so far met with very little success.

The Umsobomvu Youth Fund has been fraught with problems from the get-go, while Herrington hopes that government’s other major project, the Small EnterpriseDevelopment Agency (SEDA), an arm of the DTI, will buck the trend. “SEDA are restructuring. With new management, I think they’ll do a good job. I’ve met thenew bunch. Of course they still need to prove themselves, but I think they’ll do better than the last group.”

And then there are the other things that Herrington thinks are worth being cautiously upbeat about. Early-stage entrepreneurship, for instance, has increased dramatically over the last two years. Although our above mentioned figure of 7,8% is well below the factor-driven and efficiency-driven average, it is still 50% up on our 2006 figure – which came in back then at 5,5%. “This rise,” Herrington suggests, “is fairly important when we take into account the fact that our start-up businesses have a very low survival rate.”

Added to this is the favourable mix in South Africa of necessity-driven versus opportunity-driven entrepreneurship, the former of which is a wholly subsistence-based impetus to starting a business (no good jobs are to be had, so the only way to feed and clothe one’s family is to “hustle”) and the latter of which actually creates jobs and wealth by finding and exploiting market gaps.

Since 2004, in fact, the level of opportunity-driven entrepreneurship in South Africa has been rising steadily. “We’re surprised that necessity-driven entrepreneurship in South Africa has been decreasing since 2004,” Herrington observes, “because in Angola and Uganda it has been increasing.”

Soare these signs that South Africa is actually acquiring the hallmarks of an innovation-driven economy, even if the progress is so slow as to be imperceptible? Perhaps. What’s still uncertain is whether we now have agovernment that will lead us with intent. President Jacob Zuma may have stated in his recent State of the Nation address that he will soon be slicing the red tape that faces every new business owner, but then– as Herrington snidely point out – that’s a promise Thabo Mbeki made more thana few times.

Ultimately, it’s not just South Africa’s entrepreneurs who’re waiting with bated breath.

Kevin Bloom, an award-winning South African journalist, is currently a writing fellow at the Wits Institute of Social and Economic Research (WISER). His first book, Ways of Staying, a narrative non-fiction journey through selected concerns of contemporary South African life, was released by Picador Africa in May 2009.

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

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

Published

on

load-shedding

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.

Continue Reading

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

Published

on

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.

Continue Reading

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

Published

on

business-insurance

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.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending