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Boosting SME Activity In SA By Tackling Barriers

Tackling entry barriers will grow SA economy and boost SME activity.

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Small businesses are often treated or viewed as a sideshow – or, worse, as a charity – in South Africa. A closer look at how things work exposes flaws in this viewpoint.

In reality, innovation and job creation are driven by SMEs. The government is now trying to push for the creation of 800,000 jobs per year between now and 2030 – 11 million in total – to stimulate and develop the economy. Awake to the impact of SMEs when they are given a chance and supply chain barriers are removed, the National Development Plan (NDP) envisages this sector as accounting for 90% of these new jobs.

It is time for a mindset shift in South Africa, especially in corporations that might be reluctant to procure goods and services from start-ups and other small entities.

Related: Stimulating The SME Sector: What Can Government Do Differently?

Many large organisations procure from old peers without opening the door for small businesses unless we speak of nonstrategic services such as cleaning and catering. Amid pockets of excellence in the entrepreneurial world, not all SMEs are faultless. Some fail to collaborate, as consortia, even when critical mass means either landing or losing new contracts. Also, not all of them are professional.

This category can do with coaching. Excluding SMEs from supply chains due to misperceptions rather than skilling them or reducing entry barriers limits economic growth. How will SMEs be able to prove themselves and present track records unless given the chance to gain experience?

Blue chips like ArcelorMittal, Growthpoint Properties and Woolworths have been commended for building their own timbre by going the extra mile to shore up SMEs. Awake to the dearth of skills and resources in the nascent green economy, J.P. Morgan has stepped in to fund the Small Business Boost Programme at the Gordon Institute of Business Science (GIBS) Enterprise Development Academy.

This new project will offer extensive training, support and mentorship to two cohorts of 50 entrepreneurs. The list of companies that deserve praise for uplifting start-ups or procuring from small businesses is not short – but huge room for improvement remains.

Developed nations view the SME sector as a launch pad, which explains the healthy ties between corporations and small businesses, with governments playing supportive roles while universities churn out the relevant skills. A company like Microsoft comes to mind: it was built by students and grew because of the entrepreneurial and innovative minds behind it.

A huge 58% of gross value added in the 27 European Union countries came from SMEs in 2011. In OECD countries SMEs accounted for an estimated 99% of enterprises and two-thirds of employment in 2010.

These numbers highlight the fact that corporations don’t create jobs to the extent that might be believed. “Innovative SMEs fuel employment and economic growth,” added the OECD report. “Nearly all net job creation in the US between 1997 and 2005 came from firms less than five years’ old.”

Related: Making Government Business More Attractive To SMEs

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Back home small businesses support the success of their larger peers. “The diversification of supply chains assists big businesses to have a wider choice of suppliers from SMMEs and promotes innovation within the value chain. The growth and sustainability of big business therefore depends on a strong small business sector, both as consumers and suppliers,” Small Business Development Minister Lindiwe Zulu once observed.

The benefits of cracking open supply chain management to include the SME sector are apparent. For South Africa to grow, research and development (R&D) should be made a top priority, because it catapults economies.

The South African government (which funds projects), academia and the private sector invest a smidgeon below 1% of its GDP on R&D, while the Netherlands – whose economy is much bigger than ours – spends twice as much in percentage terms. The average in OECD states is 2.5%.

If we are serious about being innovative and unlocking opportunities while also improving our competitiveness, we should bolster our R&D budget. We have just averted a credit downgrade – yet our economy, against the backdrop of runaway unemployment, has all the right ingredients for pronounced growth.

Coupled with that, new industries have to be nurtured to complement the entrenched ones such as mining and manufacturing. The question is: Where will the magic come from? To quote the NDP, the green economy is poised as one of the areas that will support growth.

Related: How SMEs Can Defeat The Red-Tape Bugbear

Aggressive investment in transport will bring magic in three ways: it will create jobs, lower input costs and cut travel times – both social and economic benefits. The tourism and telecomms industries can grow further. The medical industry, with traditional herbs remaining untapped in commercial terms, also stands out for its potential to help stimulate the economy.

Captains of industry and lenders are well-placed to invest in R&D, to improve our competitiveness, and to help entrepreneurs chase these dreams. It is through a strong SME sector that South Africa can achieve some or all of the NDP imperatives and reach its true potential.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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Business Linkages And Investment Readiness

The Africa Women Innovation & Entrepreneurship Forum (AWIEF) is hosting its flagship Growth Accelerator Programme for 2018, sponsored by Nedbank.

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The Africa Women Innovation & Entrepreneurship Forum (AWIEF) is hosting its flagship Growth Accelerator Programme for 2018, sponsored by Nedbank. AWIEF is seeking 25 ambitious, innovative and committed early-growth-stage South African women entrepreneurs, from a variety of sectors, looking for support to scale their businesses.

Access to finance is the most cited challenge to the growth of women-owned businesses in Africa. Bankability and investment readiness are major impediments to attracting business finance.

This is an intensive six-week programme designed to support participants with the business modelling and growth strategy required to scale their enterprises, become investment ready and develop entrepreneurial leadership. The programme will cover:

  • purpose and values
  • target market, competitive landscape and value proposition
  • delivery model
  • financial modelling
  • conduct a creative force
  • growth strategy
  • financing for scale
  • pitch training.

Related: Watch List: 50 Black African Women Entrepreneurs To Watch

Nirmala Reddy, Senior Manager of Nedbank Enterprise Development, says: ‘We support initiatives such as this in line with our pledge to help clients see money differently, which is aimed at making a difference in South Africa, not just for women and children and business, but also for communities throughout the country. The bank strongly focuses on the development of female employees and black-women-owned suppliers, and this can be seen through our development and training programmes. We are also proud that women make up 62% of the workforce at Nedbank.’

The 2018 AWIEF Growth Accelerator, with its first 25 participants, is implemented as a build-up programme that will culminate at the 2018 AWIEF Conference, Exhibition and Awards event taking place on 8 and 9 November at the Cape Town International Convention Centre, where participating entrepreneurs will pitch their business to an audience of investors, business leaders and corporate decision-makers.

The three best ventures stand to win monetary prizes from AWIEF and financial management advice from Nedbank.

The programme details are as follows:

  • Dates: Starts on 17 September and culminates on 8 and 9 November 2018
  • Location: Cape Town and Johannesburg
  • Participation fee: Free 

Eligibility

Businesses must be:

  • in a post-revenue phase;
  • scalable and innovative ventures;
  • in operation for not less than two years (ideally three to five years);
  • owned or led by ambitious and committed women entrepreneurs; and
  • seeking investment or funding to grow.

If you are interested in participating, click here to apply. Applications close on 31 August 2018.

The event is hosted by AWIEF and sponsored by Nedbank.

Read next: Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

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Investing In Women Key To SA Socio-Economic Development

Investment in women’s empowerment delivers long-term socio-economic returns, says Novartis. Women’s networks and mentorship engagements can help unlock personal and career success.

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Empowering women has long-term positive socio-economic impacts, making women’s empowerment, career development and mentorship programmes a compelling narrative for companies.

This is according to Sibonile Dube, Head of Communications & Public Affairs at Novartis South Africa and a mentor at Phakama Women’s Academy. Marking the start of national Women’s Month, Dube cites Bain & Company research into how and why the career paths of South African women and men differ, which found that in 2017, 31% of South African companies had no female representation in senior leadership roles. The research noted that the Businesswomen’s Association of South Africa (BWASA) census on women in leadership indicated that 22% of board directors were women, but only 7% were executive directors. Only 10% of South African CEOs and only 2.2% of JSE-listed company CEOs were women.

“Considering that recent research by MCSI concluded gender diversity on the board has significant benefits for both productivity and profits, South African enterprises need to become more proactive about supporting women’s empowerment in the workplace,” says Dube. But Dube adds that while formalised empowerment and mentorship programmes are important, South African women hold some of the keys to helping both themselves and other women unlock success.

She outlines three key factors that hold women back from corporate and entrepreneurial success, and how these challenges can be overcome:

Lack of confidence

A key factor holding women back from achieving their true potential in the workplace – and as entrepreneurs – is fear and a lack of confidence, says Dube. “As women, we often undersell ourselves – we underestimate our potential, our power and the amount of influence that we have. In contrast, men are typically quite confident in themselves and their capabilities,” says Dube.

The Bain & Company survey of over 1000 women found an apparent loss of confidence amongst women in junior- and middle-management positions that they could rise to the top. At this level, some respondents noted political imbalances that were difficult to navigate; while their male colleagues had access to a sponsor or mentor (normally of the same sex and colour) to help navigate these issues.

Dube believes women need to become more proactive about empowering themselves, equipping themselves with a broad range of skills, and actively working on building their self-awareness and self- esteem. “Building skills goes beyond developing academic or technical expertise – we need to work on our relationship skills and communication skills, because human relations are crucial for success in a setting where you are looking for influence and significance.”

“Dealing with fear and lack of confidence is important, because this enables us to have relevance and contribute more meaningfully to in the workplace and in business,” says Dube.

Related: 13 Female Entrepreneurs Rising To The Top In SA

Lack of support networks

More than women, men generally back one another be it in corporate or in business deals and this has supported their career success a lot, says Dube. “Having a network is important – it is through these networks that opportunities are shared and support is gained. Having a strong network of people that back your career becomes an effective reference point especially in times of challenges. And through these networks, people are also able to find mentors.”

Dube believes mentorship is a crucial component of career success, offering both mentor and mentee opportunities to learn and grow. “We need more mentorship. With mentorship, training and coaching, women can actually pull out some of the strengths they possess which they may not be aware of. One is challenged and pushed to aim higher,” says Dube.

Bain & Company research found that sponsorship of individuals, especially at the mid-management level, ensures that contributions and performance are recognised and attributable to the individual. Often women, particularly in middle management, feel marginalised, ignored or simply worn down by trying to get their efforts recognised.

Dube, who mentors a number of women, says mentorship can be formalised through a corporate career development programme, but can also extend to informal and virtual mentor-mentee relationships. “You can be guided by simply reading the books, reading articles and watching videos and talks of inspirational leaders anywhere in the world on social media,” says Dube. Dube points out that good mentorship can be a mutually beneficial in the exchange of ideas and meeting of minds. “In an effective mentor-mentee relationship, reverse mentorship takes place. In an era where we now have four generations in the workplace, the digital and tech savvy younger generation have a lot to offer to the rest,” says Dube.

Poor Health and Wellbeing

In order to cope and remain competitive in the workplace, women have to ensure they take care of their health and maintain some resilience especially when pressure mounts. Recently, there have been a lot of conversations about mental health in South Africa. According to the World Health Organization (WHO), gender is a critical determinant of mental health and mental illness. Gender determines the difference in power and control that men and women have over the socioeconomic factors of their mental health and their exposure to specific mental health risks.

“Women are under immense pressure to perform in various spheres of their lives. Juggling a career, motherhood and marriage or a relationship can be emotionally and physically taxing to the extent of affecting one’s health, especially mental health. It is therefore imperative that women take good care of their health and wellbeing amid the demands of a competitive and fast paced lifestyle presented by the demands of modern society,” says Dube.

Depression is not only the most prevalent women’s mental health problem but may be more persistent in women than it is in men. There is more research needed to determine the reasons for this and what can be done to address it.

Related: 30 Top Influential SA Business Leaders

Unlocking empowerment

This Women’s Month, Dube says women should feel encouraged to be proactive about their own career development, and about helping other women to grow – both personally and professionally.

“As women we should be firm believers in one another. We hold the keys to opening doors for other women. By creating a support structure for one another, we can create phenomenal opportunities to make a difference for fellow women, with the aim of creating leaders and catalysing empowerment that has a ripple effect, benefiting all of society and the economy as a whole. Studies have revealed that women reinvest up to 90% of their income into their families compared to men who reinvest 30-40%. This has far reaching socio-economic gains for any society,” concludes Dube.

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Leaderex Drives Digital Transformation Agenda For 2018 Summit

Leaderex, Africa’s largest gathering of business leaders, professionals and entrepreneurs, returns to Johannesburg on 4 September 2018.

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Building on a successful debut in 2015, the organisers, Leader.co.za, in association with the JSE and leading think tanks, will host 250 masterclasses on key priority areas to drive digital transformation, including agile leadership, innovation, fintech and blockchain, AI, IoT, ecommerce and the future of work.

“Our programme has been designed around peer-based learning, allowing participants to gain practical knowledge from the trenches, engage with the best in the business, and thrive in a disrupted world,” says Leader.co.za.

Over five hundred CEOs and industry leaders will share actionable insights and advice on the day, representing one of the largest collaborations of its kind in the country.

Delegates will have the opportunity to connect with incubators, accelerators and start-up platforms, explore MBA programmes and business schools, and participate in one-on-one sessions with respected coaches and consultants.

South Africa’s lack of a savings culture will be another talking point, and investment vehicles, from tax-free savings to ETFs, will be thoroughly unpacked.

“We are pleased to be working with Leaderex again this year because we have seen the impact that the event has had since inception,” adds Mpho Ledwaba, Head of Marketing at the Johannesburg Stock Exchange (JSE).

For executives and entrepreneurs looking to unlock value through new technologies and ways of thinking, Leaderex 2018 represents a highlight on the business calendar.

Tickets can be purchased online at www.leaderex.com.

Read next: 22 Qualities That Make A Great Leader

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