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
Digital Transformation Should Be A Priority For Small Businesses In South Africa
With numbers like that, digital transformation is critical for any small business that wishes to find more customers and grow.
When a water pipe bursts in your home one morning, your initial reaction will probably be to grab your smartphone and search Google for a plumber nearby. Perhaps there is one just around the corner, but you wouldn’t know about them if they don’t show up in your search results. This scenario sums up why a good digital presence has become a must for small businesses in South Africa. The internet – and almost any business opportunity – is where the customers are.
According to the 2019 Global Digital Report prepared by We Are Social and Hootsuite, 54% of the South African population are internet users. This means there are 31 million people in South Africa who are searching for products and services online; 29 million of them are active mobile internet users. With numbers like that, digital transformation is critical for any small business that wishes to find more customers and grow.
First step on the road
We believe the journey of digital transformation starts with creating your own online identity. This is creating a place of your own online, starting with a website, and letting people know who you are, what you do, and what you offer. Think of it as your mobile storefront or your online business card. Start small and grow over time: no need to over-engineer or over spend.
Website builders like GoDaddy Website Builder can help you get a professional-looking website up and running in a short amount of time, even if you don’t have a big budget or any technical skills. And it will look amazing on a smartphone, not just yours! Once you’ve created your website, you can start looking at using tools like social media, search engine optimisation, and e-mail marketing to help reach new customers and stay in touch with existing ones.
Thanks to the internet and the digital tools available today, it’s not as hard or as expensive to create and promote your brand as it once was. First, a solid strategy is important, and it should include ways of showing your target audience what makes your brand and products unique.
Here are some other tips about how you can get value from your digital presence:
- Mobile continues to rise: As we’ve mentioned before, more than 90% of internet users in South Africa are mobile. You should focus on improving site speed, navigation structures and readability on mobile devices, and look to optimise your website from the start for the mobile experience.
- Simple design: This is an extension of creating mobile-first experiences, and it’s important that your website looks and works great on all screen sizes. This year, web design will focus on relevant and catchy content as well as design to help ensure you catch your users’ attention.
- Feature “platforms”. What do I mean by platforms? This includes maps, payment solutions, food delivery services, and shared rides fall into this definition. Our friend the plumber might not need these for his website, but a restaurant could truly benefit from adding maps, partnering with a booking or reservation service and even a customer rating solution.
With an increased number of data breaches occurring, protecting your new website and your customers’ data has become even more important for companies of all sizes. Whether or not a website has an SSL Certificate, it can affect your search rankings, so you should ensure your site has the added SSL Certificate protections.
Voice search and chat – are they in your business’s future?
Looking to the future, we can expect to see the digital world evolve at breakneck speed. Two trends to be on the look-out for in the not-too-distant future are voice search and chatbots. Currently, one out of every five internet searches come from voice queries, which means people are speaking their searches into their smart devices.
Therefore, while optimising your website and content for search engines, it will be important to do it for voice searches, keeping in mind the growing use of virtual assistants like Alexa, Siri, Google Assistant and Cortana. We can also expect to see more businesses using chatbots powered by AI on their websites, as well as social media profiles and applications, to provide instant assistance for their customers.
Perhaps your small business is planning to start implementing these tools during the year. Or it could be several years before these features are on your radar. Either way, they highlight some potential ways your evolving digital presence can allow you to find and interact with customers in new powerful ways.
Call For Application From Entrepreneurs In The Media Industry
Closing date for applications is 22 March 2019.
Investec CSI’s Global Exposure Trips provide South African entrepreneurs from various sectors with global exposure. Applications are now open for entrepreneurs in the South African media industry.
Are you an entrepreneur between the ages of 21 and 40 who has been in the industry for more than two years? Do you want to get global exposure and best practice for your business?
You could be chosen to go on the next media industry themed trip to Bangalore, India from the 17-24th May 2019.
Closing date for applications is 22 March 2019.
Every year Investec, in partnership with En-novate, sends a group of young entrepreneurs from various sectors to specifically selected countries in order to gain global exposure. Each itinerary provides them with opportunities to network and engage with venture capitalists, funders and captains of their specific industry. The aim is for them to gain learning and exposure to innovation, technology and process advancements. The programme also offers networking with subject and sector experts.
Navigating The Tricky Path Towards BEE Compliance
All organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.
BEE On the National Agenda
Navigating complex BEE requirements to ensure compliancy can be a tricky process for many businesses. Since the implementation of BEE in 2003, there have been many high-profile cases of companies found to have faked their BEE credentials and many who have failed their verification audits for other reasons.
The unfortunate reality is that faked credentials is not a victimless crime. Any company awarded a government tender through the use of fake credentials is taking business away from another that has worked hard to achieve transformation through compliance.
The Government has been particularly verbal in highlighting the need for BEE compliance. At last year’s State of the Nation Address, President Cyril Ramaphosa stated that “We [South Africa] will improve our capacity to support black professionals, deal decisively with companies that resist transformation and use competition policy to open markets up to new black entrants.” Thus, all organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the BEE codes.
Finding the Right Supplier For Your Business Needs
According to LFP Group CEO, Louis Pulzone as the demand for BEE suppliers grows, the market becomes more saturated with suppliers offering all sorts of prices and all sorts of offers. “The industry is attractive – particularly in our current economy. We’ve heard of a lot of devastating cases where clients look to low priced suppliers who cannot deliver on their promises due to a lack of infrastructure and resources. This ultimately leads to failed BEE verification audits and projects that never get off the ground”.
Your training providers must commit to providing a compliant service by meeting various pieces of legislation. This ensures a defensible service offering and ultimately, the desired BEE scorecard result.
When implementing skills development initiatives specifically, Louis says that there are a few key things to keep in mind:
- Ask your supplier for provide you with factual proof of compliance – they are obligated to share this with you.
- Ensure that your training provider complies with the Basic Conditions of Employment Act and Unemployment Insurance Act when it comes to caring for your learners.
- Suppliers must act in accordance with the provisions of the Employment Equity Act when providing learnerships to disabled learners, all learners must be covered by COIDA and UIF provisions must be made.
The size of your business determines the required levels of BEE compliance. “The Codes provide for three levels of compliance based on the size of your business”:
- Exempted Micro Enterprises (EMEs), which are businesses with an annual turnover of less than R10 million.
- Qualifying Small Enterprises (QSEs), which are businesses with an annual turnover of between R10 to R50 million.
- Medium to large enterprises (M&Ls), which are businesses with an annual turnover of more than R50 million.
BEE Shortcuts Lead to a Dead-End
Whilst some companies create fraudulent compliance certificates in order to avoid having to comply with the BEE codes, others simply altered the dates on their out-of-date legitimate BEE certificates to avoid the costs involved in having to renew a certificate. In one case, a billion Rand corporation reported their annual turnover to be less than R5 million in order to secure BEE exemption. Fraudulent practices like these have caused experts to estimate that ‘up to 5%’ of all BEE certificates are invalid.
The penalties for a business being found not BEE compliant are hefty. These penalties, enshrined in the Employment Equity Act, can be anywhere between R1.5 million and up to 10% of an employer’s annual turnover, depending on the nature and frequency of the non-compliance. Ultimately, if a business fails their annual BEE Compliance Audit due to substandard BEE suppliers, the large financial investment made in order to ensure compliance is lost.
LFP Makes BEE Hassle-Free
Louis explains that the LFP Group was born out of exactly this. “Our brand is built on credibility and a clear understanding of the industry”.
As an easy way to determine your businesses required level of BEE compliance in accordance with these Codes, LFP recently launched SA’s first free BEE Management Tool. “This user-friendly service allows you to analyse your company’s scorecard, calculate your current points and plan your company’s BEE requirements going forward” says Louis.
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