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The Drive to Make a Difference

Social entrepreneurship is not just about doing good; it’s about addressing social problems in an innovative way.

Monique Verduyn

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As a developing country, South Africa has many social problems like poverty, poor health services, poor educational services and joblessness. These need to be addressed in an innovative manner, and that‘s where social entrepreneurship comes in.

People like Shona MacDonald, Brian Richardson, Lesley-Ann van Selm and Nora Tager are all pioneering social entrepreneurs who address issues such as disability, banking for the poor, crime prevention and community development. They are making a difference and their solutions are sustainable.

“Because money is scarce in developing countries, you need to couple entrepreneurial flair with a passion to make a difference,” says Dr Susan Steinman, director: Centre for Social Entrepreneurship and Social Economy (CSESE), Faculty of Management, University of Johannesburg. “These people have managed to do so very successfully.”

Defining social entrepreneurship

The business model used by social entrepreneurs is often referred to as a social enterprise, says Steinman. “A social enterprise’s primary objective is to ameliorate social problems through a financially sustainable business model, where any surpluses are reinvested in purpose. The social purpose permeates the business model and becomes the essence or core of the social entrepreneur’s passion.”

Professor Gregory Dees of Duke University in the US describes social entrepreneurship best: Social entrepreneurs play the role of change agents in the social sector by:

  • Adopting a mission to create and sustain social value (not just private value)
  • Recognising and relentlessly pursuing new opportunities to serve that mission
  • Engaging in a process of continuous innovation, adaptation and learning
  • Acting boldly without being limited by resources currently in hand
  • Exhibiting heightened accountability to the constituencies served for the outcomes created.

The challenges in SA

In developing countries, the gap between rich and poor is often extreme. While investment capital is streaming into the private sector and GDP may be growing, often very little of that money trickles down to the poorest of the poor, or the rural areas. “Social enterprise can start to bridge that gap by interesting investors who want a return but also realise they need to address the social issues in the areas they work. It allows for a financial return (often lower than what would be expected for standard businesses, but still there) and more importantly social return on investment,” says Amy Tekié, course convenor, Social Entrepreneurship Certificate Programme (SECP) at the Gordon Institute of Business Science.

Funding in emerging economies is usually still limited to traditional corporate social investment (CSI) grant funding. Even in South Africa the social investment model (whereby investors get financial as well as social returns, either through debt or equity) is only just beginning to gain traction.

Working together for good

There are some excellent examples of social entrepreneurs and corporates working together. “Brian Richardson started Wizzit Bank and is working with a banking group to make banking possible for the poor through cell phones,” says Steinman. “There are many examples where a social problem is of great concern for corporate organisations. They use the services of social entrepreneurs to address problems such as HIV/Aids and crime reduction. CSI money increasingly goes towards social entrepreneurs because they deliver in a sustainable and innovative manner.”

Tekié says there are several ways that social entrepreneurs and corporates can work together. “Start-up social entrepreneurs have trouble finding the funds they need to get their ideas off the ground. CSI departments can look at setting aside funds to support people who have great ideas with huge potential for impact and scale. Companies can also look at using social entrepreneurs as supply line providers as many of them teach disadvantaged communities to produce goods that can be sold. Also, many social entrepreneurs would really benefit from the business learning that skilled corporate employees can offer. Pairing up employee volunteers with these entrepreneurs to provide input on strategic frameworks, business plans and marketing options could have great impact.”

Tekié adds that while there is a huge emphasis on entrepreneurship in South Africa, not enough attention is paid to social entrepreneurship. “Entrepreneurship incubators and capital providers should consider providing a specific type of support for social enterprises — either as incubators or financiers. There is, however, increasing interest from organisations like the Business Place or Shanduka Black Umbrellas in collaborating with social entrepreneurs.”

Another example highlighted by Tekié is that of Veronica Khosa who found that people living with AIDS in townships were sometimes left alone all day, with no one to take care of them. “She got former prostitutes who were looking for a new career to start providing home-based care. After a few years of running this model on very little income, she finally got recognition from the Department of Health that there was a great need for a home-based model of health care provision in South Africa. This has since been rolled out at scale.”

Can social entrepreneurship be learnt?

“When you have the passion it takes to want to make a difference, skills can be learnt,” says Steinman.

Tekié agrees. “You can provide people with the skills and confidence to start up their own initiative,” she says. “There are many budding social entrepreneurs out there who are either intimidated by the risk involved in going out on their own, or feel they don’t have a sufficient understanding of the context and grasp of the skills required. Many of the students on our programme come into the room and realise that they are not the only crazy ones. The support and networking that develops among the students is critical in getting people to take the leap.”

She notes that higher learning institutions also help to develop the theory and research that can provide useful models and legal frameworks and enable shared learning. They create awareness among students and faculty of the opportunities within social business and social entrepreneurship. “At top universities and business schools around the world there is a huge movement to create centres and programmes to support social entrepreneurship and innovation.”

It’s certainly happening here at home too. If you see yourself as a social innovator, you can arm yourself with the strategic, technical and business skills you need to create sustainable, scalable, high impact social enterprises through one of the programmes in social entrepreneurship being offered at many of the country’s universities.

Changing industries

“The job of a social entrepreneur is to recognise when a part of society is stuck and to provide new ways to get it unstuck.

He or she finds what is not working and solves the problem by changing the system, spreading the solution and persuading entire societies to take new leaps. Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionised the fishing industry.”

Source: Ashoka Fellows

Monique Verduyn is a freelance writer. She has more than 12 years’ experience in writing for the corporate, SME, IT and entertainment sectors, and has interviewed many of South Africa’s most prominent business leaders and thinkers. Find her on Google+.

Business Landscape

Unlocking Optimism

South African entrepreneurs have one singular advantage that makes them stand out and succeed – optimism.

Howard Feldman

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Game drives. There is a remarkable similarity between the South African on a game drive and the South African entrepreneur. In both cases you’re driving through new territory on the lookout for that ultimate sighting or an opportunity. It’s the endless optimistic belief that around the next corner, after that last stretch of long, hot road, will be that crocodile eating that leopard that’s chasing a caracal. It’s an optimism that’s permeated the very fabric of our culture, our business personalities and the way we face adversity.

South Africans live with adversity every day. We face challenges and issues that our entrepreneurial counterparts in Europe or American don’t even realise exist. Adversity sits on every street corner, hangs out at every robot and reminds us of its presence whenever we stop and look around.

Yet the entrepreneur can take these complexities and harness them to be better at business and more positive in the face of failure. Here are five ways to re-examine what the world has on offer with the eye of the optimistic entrepreneur…

1. The tremendous challenges in our socio-economic and political landscape, from poor sanitation to the unemployment situation, can inspire us to do more and better the world we live in.

Today, many of the most impressive entrepreneurs on the African continent are those who stood up from within adversity and used it to create opportunity. From organisations that ensure children have sanitary pads so they can attend school to non-profit businesses that use the blind to detect breast cancer, optimistic belief in the future is the beating heart of entrepreneurial endeavour.

Related: 6 Of The Most Profitable Small Businesses In South Africa

2. Anyone can succeed

There are people standing at robots across South Africa who are using them as a shop corner, using the captive car audience to sell products and make enough money to get by. Some create works of art, some dance to an invisible beat, and some stand out in their ingenuity. There is a robot in South Africa today where a man stands selling life insurance. That’s the optimistic entrepreneur.

3. We are constantly surprising ourselves

South Africa’s transition from apartheid surprised the world. There wasn’t a bloody revolution, there was a peaceful shift. It was, and still is, imperfect, but it happened with far less brutality than many imagined. The same applied to the World Cup – the stories of doom were ready to be told, but the event was an incredible success. South Africans are capable of surprising themselves and this unexpected brilliance shines through in our ideas and our ventures.

4. Sometimes you just have to laugh

The corruption, the political manhandling, the rage, the insanity on the drive to work, the rising cost of living – the pressures of living in a volatile country take their toll, but South Africans manage to find the humour hidden in the hardness. The adverts that poke fun at the insanity, the ability to laugh at mistakes – this nation’s sense of humour is a very powerful quality that allows the South African entrepreneur to stand up and face each day with a fresh sense of purpose.

Related: 27 Of The Richest People In South Africa

5. We bounce back

The one quality that every entrepreneur needs is resilience. Businesses fail, ideas crash, customers leave and bad times arrive, but through it all self-belief and the ability to see something positive in what’s happened will ensure that lessons are learned and new paths taken. It is perhaps one of the hardest things that any entrepreneur has to learn and yet in South Africa, with its ongoing failure to provide that crocodile-leopard-caracal viewing, has imbued its entrepreneurs with the enviable qualities of patient resilience.

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Business Landscape

Depressed Economy Leading To Business Bust-ups

Palmer looks at the most common causes of business bust-ups and how to avoid them.

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News that our GDP had shrunk by 2.2% in the first quarter of the year, coupled with downward revisions of growth forecasts, are casting a pall on the investment climate. Deals are not only drying up, but there has been an increase in business partnerships bearing the brunt of the economic pressure.

After the initial flush of economic goodwill post the inauguration of President Ramaphosa, we’ve seen a flurry of business owners looking for finance to buy out their business partners.

We have had a number of attorneys and accountants refer dissatisfied partners to us who are looking to exit partnerships. When the economy slows – as we have seen over the last few months – many partnerships begin to show signs of stress. All too often partnerships are seen as tools of necessity and those who rush into these deals without properly exploring the common values between parties will not fare well when things get tough.

What many don’t understand is that undoing a partnership is not as simple as they may think and will come with legal and other costs over and above the finance to buy a partner out.

Related: Government Funding And Grants For Small Businesses

The most common causes of business bust-ups (and how to avoid them) are the following:

1. Misaligned expectations

This occurs when potentials partners don’t share a common vision of where they want to go, how they want to get there and what each wants from the deal.

Misaligned expectations of a business venture will result in disagreements sooner rather than later as they impact every strategic (and even some operational) decisions. It is worth considering a mediated session between partners before the deal is even drafted.

2. Effort Resentment

Another problem creeps in when one partner feels like they are tasked with doing all the work. Resentment around how much effort is put into the success of a venture is not something to be taken lightly – irrespective of it being based on perception or fact. Most contracts will be clear on the value of the equity each partner has, but many ignore the value of sweat equity and how that will be measured and factored into the deal structure.

3. The Golden Rule

Many partnerships are based on one individual who puts in the lion’s share of the capital and another who is committed to doing the day-today work. Effort resentment extends beyond the deal negotiation. When a contract between partners is drafted it reflects a future which is not yet known. As the venture progresses, reality will set in and the division of labour agreed at the outset may not match day-to-day business in year three or four.

It is sometimes useful to draft partnership agreements as you would a lease. Give it a three- or five-year timeframe, with clear deliverables and then, at the end of the period, reassess the partnership and allow for renewals or re-negotiation. Having a sunset clause in your partnership agreement removes the soul-crushing feeling that you are trapped in an unhappy relationship with no chance of escape.

Related: How South African Small Business Owners Can Overcome Economic Uncertainty

4. Honour amongst thieves

Although seldom encountered, there are some partnerships which fall apart because someone is doing something blatantly untoward. Finding out your partner had their hand in the till can be devastating but in tough financial times, such as we are currently experiencing, some people will resort to desperate measures.

5. Absentee landlords

In many cases, a partner may have committed capital to a venture and even agreed to joint expectations. But other work commitments (or a lack of interest) means they disappear from operations for extended periods. No-one wants to work with people who are uninterested in the future of your company. However, the truth of the matter is any breakup has associated costs. Unwinding a partnership can cost more than setting it up and this should be considered before going down that road. Many investors are involved in multiple ventures with the same partners and exiting one deal may result in prejudicing the future of others.

While no-one can predict how long the economic slump may last, minimising the potential for partnerships falling apart requires a meeting of minds. This means agreeing to a common set of values and ethics which will govern how the business is run.

Partners need to agree on how they see the world if they hope to make a success of the business relationship. Thereafter, they should explicitly voice their expectations of how the venture will work, what they want out of it, and how they see their role in achieving that result. In some instances business partners have been together longer than they have been with their spouse. It makes sense to treat the relationship with the same care. More particularly, healthy partnerships will attract more investment and will be a key decision factor when it comes to raising future funding.

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Business Landscape

Giving Our Youths The Edge That The Need To Succeed

With youth month just past, LFP Training posed a challenge to corporates via its online platforms. Using a hashtag campaign, we looked to remind the private sector of its crucial role in educating and empowering the youth.

AJ Jordaan

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The latest IMD report depicts a grim picture of youth unemployment in SA; we currently have approximately 3.3 million youths without employment and South Africa is ranked a poor 62 out of 63 in our global competitiveness ranking. With this in mind, LFP’s #YouthMonthChallenge was created. Our team challenged corporates to do even more: whatever you are doing now, double it!

Whilst many countries prioritise their youth, our country chose to overlook them. Those who get to lead our legacy and are responsible for moving the country forward, will inherit our baggage and are left to fight some of the toughest battles yet.

What can aptly be described as a ‘system in crisis’ has left very little hope for South Africans. AJ Jordaan, Sales Manager for LFP Training says that a weak foundation from pre-primary onwards has left us with my unemployed and uneducated people, with very little hope of a successful future. “At LFP, we provide learnerships to the unemployed and disabled thanks to the assistance of corporates. A key requirement is that the learner should have a Grade 10 qualification. We see learners of all ages – some fall into the youth category whilst others are still fighting unemployment at an old age,”

“Many lack confidence and are truly victims of a flawed system. Basic education at a public level has certainly failed many South Africans and as a result, us as private sector participants are left to pick up the pieces” says AJ.

Related: 10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets

AJ explains that with all the odds stacked against the learners who come onto their courses, it might be surprising to hear that LFP Training’s pass rate well-surpasses the industry norm. “When you think about it, we receive unemployed, disabled and often very destitute learners”

“We believe that LFP’s pass rate signifies the benchmark for what our country could be. If we go the extra mile, employ quality educators and provide more opportunities in a growth conducive environment, our youths certainly will flourish. LFP Training’s formula once again proved itself in April when we hosted a graduation for more than 500 learners; a record-breaking ceremony” says AJ.

The formula takes all the wrongs of the system and rights them. “Beyond theory and winning methodology, we connect with our learners. Every single facilitator, moderator and employee at LFP Training is fair, compassionate, patient, stern when needed, knowledgeable and truly understands that more than just a learnership, this is actually an emotional journey for our learners too. We take the time to recognise and address weaknesses, ensure that our facilitators have a firm understanding of our course materials and can connect with the learners”

“We want to equip people for the workplace and ensure that they are hungry and able to take on opportunities. By giving people the tools to succeed, we have seen them do exactly this. Beyond circumstances, we know what it takes to create great leaders and we don’t let their pasts dictate their futures” AJ concludes.

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