David Swartz grew up hard in the Durban township of Wentworth, where opportunities were scarce. His dreams of becoming an architect, thwarted by the modest financial position of his parents, saw him kick-off his working career as a semi-skilled artisan in local industry. Not one to accept mediocrity, David studied diligently to achieve diplomas in project management, auditing and contracts management. His hard work eventually earned him a contracts management role at packaging and paper giant, Mondi. In 2009, with a vision of owning his own engineering services company, David left Mondi to pursue his dream.
Convincing his wife Melanie to join him, the duo setup a Level 1 B-BBEE accredited project management consultancy, with David’s technical focus complimenting Melanie’s ability to manage and streamline office processes. Operating out of their modest rented home, they soon landed a project management contract with Trotech Engineering to help manage a tank maintenance contract at the Engen refinery.
When Trotech’s contract expired in 2014, David faced losing his own contract and essential income. However, a chance discussion with an Engen representative at the refinery ended up changing David Swartz’ future in a flash. It was suggested to David that he tender for the complete Engen refinery tank project solution contract. Undaunted, David Swartz Engineering Services (DSES) was born, adding its name to a tender list of 24 other companies.
When Engen informed David and Melanie that DSES was on a shortlist of two companies, David sensed that Engen had been impressed with what they saw in him. Yet, when Engen actually awarded the contract to DSES, he found himself hopelessly unprepared for the challenges of owning and operating an engineering services company.
“We started out with no money and a critical need to employ people and invest in equipment,” remembers David. “The banks were not prepared to back us and our payment terms with Engen were 45-days.”
DSES ended year one (2015) turning over R2.4 million but barely surviving financially.
“Opportunity helps,” David explains, “but it is hard work that wins the day.”
Despite DSES precarious financial position, Engen began to expand their scope of work. At the same time, Melanie negotiated their payment terms down to 30 days, and eventually to 15 days. This allowed DSES to pay their suppliers promptly and earn credibility with their growing value chain.
Then in 2017 Engen’s procurement department engaged DSES with a development proposal. With financial support from Engen’s Enterprise & Supplier Development Department, DSES focused on acquiring assets to reduce the financial burden of hiring equipment and transport.
The initiative also included post-funding development whereby leading enterprise and supplier development firm, Edge Growth mentored DSES.
The results of this initiative proved successful with DSES taking on an increasing number of tank maintenance, tank repair and other complimentary service projects at the Engen refinery. This also expanded to include Engen’s storage facilities in East London and within the Island View precinct in Durban. DSES’s staff compliment grew from 24 in 2016 to 120 within six months.
“Tankage is a rare skill and you need a development plan for your staff,” says David. “We have our people on American Petroleum Institute Tank Inspection Courses (API650/653 Certification), Safety Management Courses, and Professional Project Management Courses to develop skills to support our growth.”
David pays tribute to Engen for their commitment to DSES and providing opportunities to expand the business in areas of pressure piping, geo-dome roofing and tank design.
“We are thrilled to confirm that Engen’s enterprise development fund is backing us with significant support and funding to gear us towards the future.”
Engen’s head of transformation and stakeholder engagement, Unathi Njokweni-Magida is heartened at the rapid growth of DSES.
“Engen has a solid track record and has proven its mettle in the enterprise development industry,” says Njokweni-Magida. “DSES management team is highly experienced, willing to learn and has shown clear abilities to execute on projects and to rapidly develop delivery teams.”
Njokweni-Magida says DSES loan funding of R4.6 million has helped them acquire their own equipment and vehicles in order to improve their margins in years to come.
“DSES’ stable future growth is built on secured revenues with Engen in 2018. Moreover, thanks to its rising reputation, DSES has a pipeline of projects that will bring exponential growth outside of Engen.
“Engen understands that what is good for the contractor is good for the business, and puts its money and its efforts into developing enterprises like DSES. After all, the wheels of industry will turn more smoothly if Engen can develop all the cogs that drive it,” she adds.
Swartz, for one, cannot thank Engen enough for helping him grow DSES and the support they have given him. “Thanks to Engen trusting us when we first started out and, with their growing backing, we will in all likelihood be employing 250 people before 2020.”
Engen’s Convoy Fund
Convoy is Engen’s Enterprise & Supplier Development Fund to promote broad-based black economic empowerment (B-BBEE) with the objective of maximising socio-economic development through supporting sustainable supply chain transformation. The fund supports
SMMEs (companies with turnover less than R50m) within and outside of Engen’s database. The also fund provides access to finance for both capital and business development needs for entities that are at least 51% black owned and/or black-female owned.
How it works
Convoy provides relaxed requirements for securing business loans to qualifying ESD SMMEs and business development support for the selected beneficiaries. This is to ensure the long-term sustainability of these SMMEs. The fund is managed by Edge Growth, a registered credit provider, and is governed by Engen’s Internal Transformation Committee, overseeing the disbursement and approval of funds.
For SMMEs to be eligible to apply, you must:
- Be an existing SMME with potential business contracts
- Meet the definition of an enterprise or supplier development beneficiary in terms of the revised B-BBEE codes: i.e. be 51% black owned or black-female owned
- Have a turnover of less than R50m per annum
- Be a South African citizen as defined by B-BBEE Codes
- Be in possession of a valid tax clearance certificate and audited/reviewed historical financial statements
- To apply for the Convoy loan facility or to find more information, please email
Global Guide For Entrepreneurs, Innovators Launches In Johannesburg
Startup Guide partners with SAP Next-Gen, Tshimologong Precinct to bring global guidebook to Johannesburg innovation ecosystem; calls for nominations.
Calling all entrepreneurs, accelerators, innovators, co-working spaces and experts in the City of Gold: Startup Guide, the leading global guide for start-ups in high-growth innovation hubs in Europe, the US and Middle East, is open to nominations in Johannesburg.
Founded in 2014, Startup Guide is a creative content and publishing company that produces guidebooks and tools to help entrepreneurs to connect to communities and resources in the leading start-up cities around the world. Its global footprint covers some of the most innovative and thriving start-up ecosystems in the US, Europe and the Middle East, including those of London, New York, Berlin, Tel Aviv, and Stockholm. After launching in Cape Town earlier in the year, Startup Guide now moves to Johannesburg.
According to Sissel Hansen, Founder and CEO of Startup Guide, South Africa’s largest city is emerging as a key innovation hub for start-ups.
“Johannesburg has recently emerged as a growing ecosystem for start-ups and entrepreneurs in Africa, particularly in the tech industry. We’re thrilled to have the opportunity to create a comprehensive guide of resources for aspiring founders wanting to do business in South Africa’s largest city.”
Startup Guide Johannesburg was launched at Wits University’s Tshimologong Precinct, one of Johannesburg’s newest high-tech addresses in the vibrant inner-city district of Braamfontein. Tshimologong, which means “new beginnings” in Setswana, focuses on the incubation of digital entrepreneurs, commercialisation of research and the development of high-level digital skills for students, working professionals and unemployed youth. Lesley Williams, CEO of Tshimologong Precinct, says: “South Africa is fast-becoming a go-to source for innovation, especially in the tech sector. We believe the introduction of a dedicated resource for the startup ecosystem in Johannesburg will unlock significant opportunities for innovation hubs such as ours to more easily connect with entrepreneurs, experts and other roleplayers, ultimately providing a more supportive environment for growth.”
Startup Guide has partnered with SAP Next-Gen, a purpose driven innovation university and community for the SAP ecosystem enabling companies, partners and universities to connect and innovate with purpose linked to the UN Sustainable Goals for Development. Ann Rosenberg, Senior Vice President and Head of Global SAP Next-Gen says:
“We strive to connect digital innovators in an open innovation community to drive the future success and growth of industries through the use of technology. As we have witnessed in other high-innovation cities around the world, the introduction of knowledge resources – supported by opportunities for collaboration and partnership in an open ecosystem – enhances the overall success of entire start-up communities. Johannesburg’s world-famous energy and business acumen will greatly benefit from the launch of Startup Guide Johannesburg and the support of industry partners, including SAP Next-Gen and the Tshimologong Precinct.”
Cathy Smith, Managing Director of SAP Africa, adds that the partnership with Startup Guide aligns well with the company’s commitment to the UN Sustainable Development Goals. “As an organisation we are committed to achieving the high ambitions set out by the SDGs. However, it is virtually impossible to do so alone: the concept of partnership with likeminded purpose-driven organisations and initiatives is vital not only to realising the SDGs but to foster a greater and more inclusive innovation ecosystem in Johannesburg and across the African continent.”
Nominations for the Johannesburg edition of Startup Guide are now open. If you know a start-up, entrepreneur, programme, space, accelerator, or experts and would like to see them featured in the book, please visit https://startupguide.com/shop/startup-guide-johannesburg and submit your nomination.
Aspirations For SMMEs In South Africa
Research released earlier this year, revealed that there are only 250 000 formal SMMEs in South Africa.
Entrepreneurs who have started up a business over the past 10 years have done so in an environment that has been largely negative, with slow economic growth and an unstable political landscape. “So, all in all, a very difficult setting to launch, grow or even maintain a business,” says Bizmod MD, Anne-Marie Pretorius.
Pretorius says that many entrepreneurs who operate in South Africa can be forgiven for often wondering if the slog is worth it. Yet they continue – despite economic uncertainty, strikes, retrenchments and downscaling. “It is this tenacity that sets entrepreneurs apart, and I often wonder how much more successful they would be in an easier and more supportive environment.”
Below, Pretorius shares her ideal pro-entrepreneur outlook for the future:
- Greater policy certainty on all key government policies from land reform to regulations surrounding labour broking.
- Being able to do away with bad policy faster. An example of where this did not happen was in the changes of visa requirements; leading to an unnecessary dent in our tourism industry, an industry that should be targeted for growth.
- Lower compliance requirements for companies with a turnover under R50 million. The cost of compliance for smaller enterprises is significantly higher in comparison to their income and the cash they have available. Smaller companies need simpler frameworks where compliance is required. A portal similar to SARS e-filing, which makes compliance across various pieces of legislation clear and simple, would be ideal.
- The Labour Relations Act is a key piece of legislation that has done a lot to protect the rights of the employee. It has attempted to balance the power relationship between employee and employer. Some innovation is however required in labour practices, allowing for mutually beneficial flexible working relationships that keep pace with the changing work environment.
- Buy small, buy South African! A framework whereby large corporations and government would have to allocate a certain minimum percentage to buying from smaller local companies. There are encouraging signs that this is happening more, however this is still not an ingrained practice. In addition, consumers should be more informed on what items are South African produced, in order for them to be encouraged to purchase locally.
- Easier access to funds enabling entrepreneurs to grow their businesses. There are currently a few options available, but all of the options require significant governance and red tape. Whilst this is understandable from the lenders perspective, it does hamper the agility and growth of companies.
- Make good financial governance aspirational, attractive and easily accessible.
- The process for tenders to be corruption free and fair, enabling more companies to add value.
- Pay SMME’s on 30 days or less. Enormous pressure exists on smaller companies when not paid on time. They simply do not have the cash flow to carry a debtor’s book of 90 days and this inevitably hampers their growth.
- Tax SMME’s at a lower tax rate. Profit tax should be lowered in order to drive entrepreneurship.
- Creating a platform that makes it simpler to employ young individuals with potential and create support programmes for SMMEs to upskill them. There is a significant financial and time investment required to train a young person, which can make SMME’s sometimes wary to do so.
“If we are able to make only some of these ideals a reality, there is no doubt that we would see economic growth, entrepreneurial growth, and more employment opportunities,” concludes Pretorius.
Related: A – Z Easy Small Business Ideas
South African Students Win R50 000 In The Universities Business Challenge
Students from Mangosuthu University of Technology beat 500 students from 13 different universities across South Africa.
The Overlings from Mangosuthu University of Technology are the 2018 winners of Cognity Advisory’s Universities Business Challenge (UBC), sponsored by General Electric (GE). The winning team of four students are walking away with R50,000 to turn their business idea into reality.
Launched in July this year, the UBC has seen 500 students from 13 different universities across South Africa participate in a business simulation competition designed to develop entrepreneurship skills.
When the competition launched, all teams were challenged to form virtual companies and to virtually manufacture and sell bicycles.
The final 10 teams were from the University of Limpopo, Mangosuthu University of Technology, Vaal University of Technology, University of KwaZulu-Natal and North-West University.
During the two-day final, the teams played six rounds of simulations. Each simulation gave the teams a chance to re-evaluate their progress and better certain areas that needed improving. The winning team realised during one of their simulations that in order to maximise profits they would need to introduce two new products and market it differently from their initial product. They paid special attention to their customer’s needs.
The aim of the UBC was designed to tackle South Africa’s high level of youth unemployment. Statistics South Africa (Stats SA) that South Africa’s official unemployment rate increased by 0.3 of a percentage point to 27.5% in the third quarter of 2018.
Nkosinathi Sokhulu from the winning team said, “Even though we didn’t have a great presentation we made the most profit. This experience taught us a lot about ourselves and business. Most of the decisions that we made came from serious debates. We learnt that market research is crucial when starting a business. We learnt that marketing starts and ends with the customer.”
“Based on this market research information we realised that it was important for us to introduce two new products and this, in addition to the main product we were selling, helped us to maximise profits. We saw an opportunity to add more products and it paid off” said Mbali Tshozi.
Tope Toogun, development advisor and CEO of Cognity Advisory said, “All the teams showed tremendous promise and I was very impressed by their levels of engagement with one another and their tenacity.”
“We really want to ensure that students are equipped with the necessary skills to not only start a business but to run it effectively. While we have selected one winner, our hope is that each team has benefitted by having learned the skills needed in the workplace.”
“The competition is designed to develop the ‘soft skills’ that are important for those wanting to set up their own business or simply be successful at work. With rising unemployment and ongoing talent shortages, having these skills is crucial for those wanting to get a job.”
The UBC, now in its second year in South Africa, will continue into its third year in 2019 and will run as the Africa Enterprise Challenge (AEC).
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