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Mentoring Crucial To SMEs Job-Creation Role

By 2030, the NDP aims to have SMEs creating 90% of new employment opportunities. To achieve that target, support and mentoring of established SMEs may be more effective than financing massive numbers of new start-ups.

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The 2015 annual SME Insight Survey commissioned by the South African Institute of Chartered Accountants (SAICA) yielded a number of findings that the institute believes can assist policymakers in government, NGOs and business as they seek to encourage growth in the SME sector.

Small and medium enterprises (SMEs) have been prioritised by the National Development Plan (NDP) as engines of job creation, with a rapidly growing small business environment seen as the only viable solution to mass unemployment.

By 2030, the NDP aims to ensure that 90% of new jobs will have been created by SMEs. Last year’s survey attracted more than 1 300 responses from business owners, and SAICA have launched their 2016 version – designed to help policy makers create an enabling environment for SMEs to thrive and to create employment. SMEs are encouraged to give up 20 mins of their time and to participate [2016 SME Survey].

Related: Results Of SA’s Largest Start-up Survey

One of the findings highlighted in the 2015 SME Insight Survey Report is the number of entrepreneurs who start multiple businesses. Of those surveyed, 61% have started at least two companies, with more than a third starting three or more, and 3% starting ten or more.

Number of businesses SMEs started survey

The research also shows that the SMEs with the highest turnover are generally those that have been in business for five years or more, and that the number of staff an SME employs increases sharply with turnover. Two conclusions can be drawn from this information: Firstly, that once the entrepreneurial bug has bitten, SME owners have a tendency to start more businesses and provide more jobs.

Secondly, and most importantly for the purposes of job creation, SMEs can only become major drivers of employment over time, providing they see sustained growth in turnover.

Funding start-ups that fail within two years – and as many as 63% do – cannot be the primary way to turn SMEs into an urgent and effective solution for unemployment.

Support and mentoring of SMEs crucial

Business Partners Limited, the biggest private funder of SMEs in South Africa and one of the most successful of its type in the world, has long believed that one of the most effective forms of risk-mitigation when lending to SMEs is to ensure mentorship and support in areas of business that many entrepreneurs are initially unaware of.

SMEs need advice about setting up and managing systems in their businesses; including people management, VAT returns, sales, bookkeeping and cash-flow forecasting, because many entrepreneurs are unaware of where to find help in building these systems, they simply focus on production and neglect the other aspects of running a successful business. General knowledge and business skills mean the difference between survival and business failure. This is why young entrepreneurs should continually tap into older entrepreneurs’ knowledge and experience.

In 2015 government allocated a new budget of R3.5-billion to support and mentoring of SMEs through the Department of Small Business. However, it is clear that the majority of this funding is to be spent in support of micro-enterprises, which are typically one-person operations. Whether it is a doctor opening a solo practice or a merchant starting a spaza shop, the primary focus of the micro-business owner is to support themselves and their families, not to create jobs for others.

While mentoring and support for micro-businesses is of course important; they face the same challenges as larger firms, and need the same guidance if they are to survive and grow, they are not and will never be significant drivers of employment. Government has in 2016 announced its intention of raising a R10bn fund to finance SMMEs. Detail is still short but one hopes, for the sake of the unemployed that this funding will be aimed at growing and grooming the SMEs that have weathered the first two year storm, and are capable of growth and significant employment.

Related: EOH 702 Youth Job Creation Challenge

Established SMEs are better job-creation engines

The findings of the 2015 SME Insight Survey suggest that it would be more cost-effective for government, NGOs and private funders to focus more on mentoring and supporting existing SMEs, especially those that have cleared the “two-year failure rate” hurdle.

SAICA, for example, runs a project that offers mentoring and advice to SMEs on issues such as budgeting, bookkeeping and cash forecasting, provided by qualified Chartered Accountants (South Africa) [CAs(SA)] who have graduated and completed their training, but have not yet found full-time employment. This allows the CAs(SA) to gain more real-world business experience, while at the same time demonstrating to SME owners the value of consulting a CA(SA) for business advice or mentorship.

The survey findings, in conclusion, suggest that those who counsel SME funding as an investment in creating more employment opportunities will see the best return on that investment by channelling it into established SMEs. Providing mentoring and advice to these businesses will allow them to grow and thus increase their staff complements; a vital prerequisite if SMEs are going to help make a significant dent in unemployment by 2030.

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The Innovator Trust And Citi Are Searching For Black-Owned Smes Who Are Ready For Growth

The Innovator Trust, an enterprise development organisation, and the Cape Innovation and Technology Initiative (CiTi), Africa’s oldest incubator, are calling on Cape Town-based growth-stage ICT entrepreneurs to join the intensive 2-year enterprise development programme.

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The ICT sector has gone from strength to strength and is one of the fastest-growing industries on the African continent. Yet African entrepreneurs are still finding it a difficult business landscape to navigate. That is why The Innovator Trust and CiTi, through exposure, training and mentorship, now aim to equip entrepreneurs and businesses in the sector with tools that will keep them on track, assist them to achieve their goals and create tech leaders of the future.

ICT entrepreneurs in need of mentorship, skills development and business support who have been operating for more than 2 years and are fiercely committed to growing their business, can now apply to the prestigious 2-year Innovator Trust programme, co-developed and run by CiTi at the Woodstock Bandwidth Barn and remotely in Cape Town. Applications close on 22 February and the selected candidates will be announced on 4 March.

The Innovator Trust programme aims to support the: increase annual turnover, equip businesses with the necessary accreditation to remove red tape, as well as increase profitability and number of employees. Get ready to move the dial on your business.

Celebrating its 20th year of supporting entrepreneurs, CiTi currently runs a number of incubation programmes from idea to growth stage. After a very successful first cohort of the programme, completed in 2018, CiTi confirmed a second collaboration with the Innovator Trust to support further Cape Town businesses over the next two years. Applicants need to be in “ICT”, but this has included a broad range of focusses in the past, from IT recruitment, network security to cabling service provider and software solutions.

Related: Watch List: 50 Top SA Black Entrepreneurs To Watch

The programme, designed by CiTi and Innovator Trust, is not to be taken lightly. Monthly training, mentorship sessions with industry experts, and a strong focus on technical improvements means a substantial time and focus commitment by the entrepreneur. But this intensive design enables significant business progression over the two years.

 “Once the entrepreneurs who take part in our Enterprise Development programmes become more established, they turn their focus to growth. This accelerator is especially for entrepreneurs who’ve created businesses with high-growth potential and provides them with the skills to scale at speed and responsibly,” says Tashline Jooste, CEO of the Innovator Trust.

Cape Town was recently confirmed as the Tech Hub of Africa, by an Endeavor Insight Report commissioned by CiTi and partners, presenting growing opportunities for those businesses serious about growth, and with the right support.

“I believe strongly that ICT entrepreneurs are going to be critical to South Africa’s economic growth, which is why we need to focus on equipping these businesses with the skills they need to grow, create jobs and stimulate our economy,” adds Jooste.

In order to be considered for the programme, prospective applicants must meet the following criteria:

  • A company defined in South Africa as an SMME, QSE or EME;
  • Must be operational and trading for two or more years;
  • The business should be at least 51% black-owned;
  • A minimum Level 1 – 4 BBBEE status according to the DTI or ICT Codes;
  • The business must be a registered company with key focus in ICT and be based in Cape Town and surrounding areas.

In addition, applicants will need to supply copies of their company registration, company profile, and annual financial statements along with their BEE certificate and IDs with their applications.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

“We had a fantastic experience on the Innovator Trust programme, perhaps most beneficial was the advice and mentorship on our financial management, up-skilling of our team, and establishing a 3-year budget and growth plan for the business. Our advice to entrepreneurs considering the course is “JUST DO IT!!!” The skills and knowledge you gain are invaluable and put us on a serious growth trajectory.” states Jennifer Classen, Founder of Ngaphaya Y2K10, and Participant in the 2015 – 2018 Innovator Trust programme.

Ready to grow your business? Learn more about the programme and submit your application HERE.

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Rocket Challenge Targets Local Coding Skills

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

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Addressing the growing skills gap within software development, local information technology value added distributor, Axiz has sponsored the Rocket APT Challenge and encouraged 39 students to participate in the regional round of the Rocket.Build coding challenge. This comprises 40% of the total numbers of entries received globally. Hosted by Rocket Software and APT Solutions, this annual challenge provides a forum for participants to develop applications on Rocket’s MultiValue platform.

Colleen Becker, Axiz pre-sales engineer, says that the response to the challenge was exceptional and the company is excited to be part of this global initiative: “This is a fantastic innovation challenge that provides students with an opportunity to hone their coding skills on a leading software platform. South Africa is by far the bigger pool of entrants and we are excited to see who is selected for the global Rocket.Build 2019 Hackathon.”

Participants are required to design an app on Rocket’s MultiValue application platform in support of the challenge theme: ‘Improve your Community’. Consisting of three regions: EMEA, Asia-Pacific, and the Americas, three winners from each region will be selected and awarded a cash prize of:

  • $1,000 (USD) – third place
  • $2,500 (USD) – second place
  • $5,000 (USD) – first place

Related: Want To Take Your Coding To The Next Level? Check Out These 7 Productivity Hacks

The nine developers will also be given an all-expenses-paid trip to Massachusetts, USA in June 2019 to participate in Rocket.Build 2019, where they will compete in teams of three to decide the global winner of the Rocket APT Challenge. The winning team will share a grand prize of $24,000 (USD).

Becker says that this is the first year Axiz is participating and the company will definitely register for the 2020 challenge, recruiting of which starts in September 2019: “We are committed to grow the number of young coders on the Rocket platform. There is a global opportunity for students to graduate into a developing industry and support the growing shortage of MultiValue-certified coders. Participants also stand the chance of receiving an internship from participating partners across all industry sectors.”

The Rocket APT Challenge is open to undergraduate students 18 years of age or older who are currently studying engineering, science, or technology at an accredited college or university.

For more information, contact colleen.becker@axiz.com

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SMEs: Have You Completed Your Financial Planning For 2019?

While small to medium enterprise (SME) owners may not have a great deal of control over South Africa’s broader economic issues, they do have control over how they plan and manage their finances, says EasyBiz Technologies Managing Director, Gary Epstein.

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“The failure of many SMEs to make it past the critical 3.5-year mark is more as a result of their inability to get the fundamentals right, rather than being able to deal with issues such as political uncertainty, crime or credit-rating downgrades.

“Several SMEs do not gain an adequate understanding of their markets or the competition they are up against. In addition, failure to manage their finances properly or to access funding and adapt to changes in the marketplace can also be serious hindrances to success.”

Epstein believes without proper financial planning and management, businesses place themselves on the back foot. “Business owners can only make informed decisions when they have a clear view of what is happening with their finances.”

That’s why having the proper financial management tools in place is so important for start-ups and SMEs. “At EasyBiz Technologies, we offer accounting solutions that are aimed at helping businesses manage their finances properly and placing them on a sound financial footing,” adds Epstein.

Tangible outcomes of a good system include increased productivity, reduced monthly expenses, improved accuracy, simplified tax compliance and better financial security. An effective system can also provide critical business insights and allow business owners to make informed and proactive decisions.

Epstein says efficient accounting solutions can help speed up business processes, affording business owners more time to focus on their core processes and growing their operations. “After all, time and money are the most precious resources when it comes to running a small business.

Related: 6 Steps Of Financial Planning

“Our solutions include analysis tools, report making applications and payroll assistance. In addition, income and expense trackers provide valuable information for tax and audit preparations,” he adds.

Epstein urges SMEs to plan for 2019 if they haven’t done so already. “It’s not too late to prepare for the year ahead and, with the financial year end for many businesses looming, now is the time to get a good system in place.”

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