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South African Women Want To Own A Business – But Crave Financial Stability And Lack Support Structures

New research from Sage Foundation, ‘The Hidden Factors: SA Women in Business’ offers insight into the motivations and aspirations of South African women in the business world.

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Jennifer Warawa
Jennifer Warawa

Left: Jennifer Warawa: executive vice president of partners, accountants and alliance at Sage, at the breakfast on 25 July
Middle: Guest speaker, Basetsana Kumalo – spoke about her journey to entrepreneurship
Right: MC for the morning, Redi Tlhabi

If you’re a South African woman who is thinking of going into business for yourself, yet fear the financial risks of doing so, you are not alone.

New research conducted by Livingfacts commissioned by Sage Foundation, reveals that more than 50% of women believe corporate jobs are ‘a safer option’. And, only 20% of those who don’t own a business felt they have the necessary network to support their family responsibilities.

The study pinpoints a need for financial stability and a low tolerance for risk-taking and failure are among the most significant factors holding back female entrepreneurship in South Africa.

Undertaken in partnership with the International Women’s Forum South Africa (IWFSA), the research highlights the obstacles that women face, including:

  • a lack of exposure to entrepreneurial role models in their families and communities;
  • poor access to funding; and
  • the challenge of juggling personal and work responsibilities.

Related: How Ramona Kasavan Built An Organisation That Helps Women Empower Themselves

Nonetheless, the research also shows that South African women admire entrepreneurs and increasingly see entrepreneurship as a viable pathway to personal growth and wealth creation.

Sage Foundation and IWFSA unveiled the study at a breakfast for IWFSA members, business partners, customers and entrepreneurs at The Park House of Events on 7th in Hyde Park, Johannesburg on 25 July.

Sage Foundation and IWFSA conducted the research to fill the gap for data about the motivations and aspirations of South African women in the formal business sector. Sage Foundation has made a global commitment to women as part of its effort to build sustainable social, economic and entrepreneurial opportunities in Sage’s local communities around the world – but helping starts with having the right information at hand.

The study provides fresh insight into what drives South African women to establish businesses of their own, why they succeed and why they fail.

The hidden Factors sage

The research highlights how critical it is for NGOs, government policymakers and other stakeholders to position entrepreneurship as a viable career path for young women and to provide them with mentoring and support as they build their businesses.

1Family role models needed to encourage girls from an early age

Only 20% of women in the survey and a mere 16% of respondents who do not have their own business agreed that having your own business was seen as a viable career choice when they were growing up.

Most women saw corporate jobs as a safer option, with more than half (51%) saying “it is definitely important to me to have financial security and a stable salary”. Nearly a quarter of women saw losing these benefits as a deterrent to starting their own businesses. 

The research indicates that few women get exposure to entrepreneurial role models in their formative years, with only 15% saying that they definitely had family and friends who often talked about business when they were young and only 29% who said that there definitely was a successful business owner in the family and extended family.

The lack of a role model carries through into women’s careers and later lives, too: Only 14% of women reported that they have a business mentor or role model.

“Young women need to be exposed to the possibilities and the benefits of having their own business at home, in their communities and schools, and in the media”, says Joanne van der Walt, Sage Foundation Programme Manager for Africa.

family-role-models

2The flexibility paradox

Some 59% of respondents who quit corporate jobs to set up a business said a key reason for doing so was that they wanted flexibility around how they managed family and work commitments. Yet 19% who gave up their entrepreneurial ventures to return to the corporate world cited a need for flexibility as the reason they went back to full-time employment.

Only 20% of those who currently don’t have a business felt they definitely had the necessary network of family and friends that can support their family responsibilities. What’s more, a higher percentage (70%) of women running their own businesses were married or living with someone who provides support, financially and in other ways.

Says Van der Walt: “Starting and running a business is far more time intensive than many women realise. Often, for women, a nine-to-five corporate job allows for more time with one’s family, and would-be entrepreneurs struggle to maintain balance between work and their personal lives – especially in the first few critical years of building a business. Changing gender stereotypes of who does what in a family and women overcoming their own reluctance to ask for help are key changes that could encourage female entrepreneurship.”

The flexibility paradox

Related: Why Donna Rachelson Believes The Secret To Your Business Success Lies With Women

3The risk-factor

Female entrepreneurs show more appetite for risk than women who have not gone into business. The research found that 26% of women who did not have a business said they were not afraid to take risks, compared to 43% who had their own business. Meanwhile, 37% of those that never had a business thought it was scary to be in business for yourself.

“Many families encourage young women to look for government or corporate employment, seeing this as a lower risk route for their future careers,” comments Van der Walt.

“Yet with youth joblessness at above 50%, many of our young women may never have a corporate job. We need to help young women see the risks and potential failures of entrepreneurship as learning experiences on the road to growth and prosperity.”

risk-factor

4Capital and funding remains a primary necessity

Female entrepreneurs are finding access to capital and funding to be as much of an obstacle to starting their own businesses as their male counterparts in South Africa – if not more. Most (84%) women started a business using their own savings to do so; very few obtained funding from traditional banks and even less knew about venture capital, angel or seed funding, grants, or crowdsourcing.

Some 61% of women who have never had a business cited not having access to money or capital to start their own business, as a barrier, while 33% of those who went back to corporate jobs after starting a business said it was a key stumbling block.

Capital and funding remains a primary necessity

5The rewards of being your own boss

The study confirmed that women are attracted to the benefits of being rewarded for their own efforts and the freedom to be their own boss when it comes to entrepreneurship.

They also saw entrepreneurship as a way to find personal growth and meaning, make a difference, achieve financial independence, give women a voice and control of their own futures, and create and innovate.

Among those that do not own a business:

  • 58% admire entrepreneurs
  • 42% want to work for themselves rather than someone else
  • 36% envisage having their own business (even higher among young black women)
  • 36% believe you can make a significant amount of money.

The rewards of being your own boss

“The emergence of a growing community of female entrepreneurs is one of the most significant economic and social developments in the world. It is not merely redefining women’s economic roles; it is reshaping the modern global economy,” says Van der Walt. “Our research shows that this trend is also unfolding in South Africa – but it also highlights how much more we need to do to unleash the full potential of our country’s female entrepreneurs.”

Says Mpho Letlape, deputy president at IWFSA: “It’s a privilege to partner with Sage Foundation for this initiative. Research is vital for understanding how women are moving forward in the South African business world.  With more insight into the challenges facing businesswomen and female entrepreneurs, we can focus on the areas where intervention is most needed.  Right now, women leaders have an opportunity to make a difference in society, and help heal our nation.”

Sage Foundation will use the findings of this research to engage with policymakers and social NGOs about ways to encourage and support female entrepreneurs – starting from their school years. Sage Foundation already works with NGOs that support financial literacy programmes at primary and high school level. It will look for more NGO partners that it can work with to help remove some of the barriers that women face when they go into business for themselves.

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Top Sectors For SMEs In 2019

“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”

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While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.

This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.

“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”

Tourism

The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.

“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations  have been relaxed and the sector is once again poised for growth,” he says.

Related: Government Funding And Grants For Small Businesses

Manufacturing

Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”

He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.

Agriculture

“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.

“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.

In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.

Data and information technology

Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.

“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.” 

Related: 9 Ways To Elevate Your Small Business To The Next Level

It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”

In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.

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Herman Mashaba To Talk On City Of Jo’burg Job Creation Initiative

Herman Mashaba to talk on City of Jo’burg job creation initiative at 2019 Business Day TV SME Summit.

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Mayor of the City of Johannesburg, and one of South Africa’s most successful entrepreneurs, Herman Mashaba, will be one of the presenters at the 2019 Business Day TV SME Summit which will be taking place at The Empire Venue in Parktown on 7 March 2019.
Now in its third year, the Business Day TV SME Summit provides an opportunity for small business owners, entrepreneurs, incubators, franchisors, investors, as well as suppliers to the SME sector to come together and engage with experts in the business, technology, marketing and investment fields.
Having founded the now iconic hair-care brand, Black Like Me, more than thirty years ago during the apartheid era and on the back of a R30,000 loan from a friend, Mashaba’s experience in establishing an entrepreneurial enterprise holds great value for small and medium-sized business owners in South Africa. Mashaba will also be highlighting the City of Johannesburg’s innovative drive to stimulate inner city opportunities and job creation.
a-panel-discussion-from-the-2018-business-day-tv-sme-summit
Managing finances and obtaining funding and expansion capital are challenges many entrepreneurial businesses face as they look to grow their footprint in the market. Darren Segal, Personal and Business Banking Innovation executive at Standard Bank – one of the partners of the SME Summit – will present advice on negotiating funding and finance, to ensure effective cash flow management.
Complex tax issues will also be covered by a representative from the office of the Tax Ombudsman.
Taryn Westoby, Head of Tiso Blackstar Events which manages the SME Summit and curates the speaker line-up says: “We work alongside Business Day TV to meet the requirements of those engaged in the SME sector, so that the content of the Summit aligns to some of their most pressing concerns and needs. The line-up of speakers includes experts in the fields of business scaling, marketing strategy, intellectual property (IP) rights, and risk mitigation.”
As such, Graham Mitchell from GROW has been engaged to share insights into the leadership required to scale a winning management team.  Vishen Pillay, partner at Adams & Adams and an authority on copyright, patents, and trademarks, will provide guidance on protecting IP. Therusha Bhagarette of Credit Guarantee Insurance Corporation of Africa Ltd will expound further on the do’s and don’ts of risk management. The full line-up of expert speakers and topics will be published on www.smesummit.co.za.

International perspective

An international perspective to entrepreneurship will also be provided through Business Day TV’s The Big Small Business Show and a pre-recorded session with Uri Levine: renowned serial entrepreneur and founder of Waze.  Levine was recently in South Africa as a guest of Tiso Blackstar to deliver the keynote presentation at the prestigious Sunday Times Top 100 Companies Awards to an audience of CEOs from the top-performing companies on the JSE.

Leading organisations at the SME Summit

Once again, leading organisations have committed their participation at the Business Day TV SME Summit, recognising it as one of the most effective platforms for SMEs to engage professional insights and facilitate knowledge-sharing in support of much needed entrepreneurial development in SA.
This year’s headline partners are Credit Guarantee Insurance Corporation of Africa Limited, SAICA, and Standard Bank. Other partners include BDO, Adams & Adams, Liberty, Payfast, GROW, The Tax Ombudsman, W&R Seta, Telkom, Santam and The Little Green Number.
For sponsorship and exhibition opportunities:  Stephen Horszowski – stephen@tisoblackstar.co.za
Delegates who wish to purchase tickets for the full day event (07h00 – 15h00) at R995:  Lucy Johnson – johnsonl@tisoblackstar.co.za or visit  www.smesummit.co.za

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SME Insurance Checklist For New Year

Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.

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SME Insurance

Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.

Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.

He advises SMEs to consider the following factors when reviewing their policies:

  • Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.

This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.

  • Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).

SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.

  • Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.

Related: I would like to start an insurance business. What are the basic guidelines?

More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.

  • Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
  • Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.

Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.

  • Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
  • New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.

“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.

Related: Insurance For Small Businesses: What Should Be Covered?

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