SA businesses encouraged to create incubators to develop tomorrow’s entrepreneurs

“If all business owners in South Africa commit to mentoring one young entrepreneur, we have the potential to double entrepreneurship in two to three years.”

This suggestion was made by a local entrepreneur at the inaugural 2015 Sanlam / Business Partners Entrepreneur of the Year® Alumni Association, an entrepreneurial platform established in an effort to stimulate conversation and action amongst established local entrepreneurs.

During the session the entrepreneurial community – consisting of over 50 past competition title holders and seasoned South African business owners from across various sectors – recognised the urgent need for business incubation in South Africa, and raised valid points about how seasoned business owners can play a vital role facilitating and building entrepreneurship in the country.

Now in its 27th year, the Sanlam / Business Partners Entrepreneur of the Year® competition holds a database of top entrepreneurs and through the alumni, we seek to harness entrepreneurs’ expertise to remove the barriers they see as hindering entrepreneurship within the country.

Entrepreneurs in attendance agreed that small and medium enterprise (SMEs) owners underestimate the value and the difference they can make by guiding and supporting potential entrepreneurs who need support in starting or growing their business.

Now more than ever the market needs more employers

The recently released GEM Africa’s Young Entrepreneurs report states that by 2040 Africa’s young workforce will be the largest in the world, surpassing both China and India. In South Africa, this potential workforce is largely unemployed with the figure already reading 53% when compared to the adult population figure of 21%.

In South Africa, the formal sector is increasingly feeling the pressure and is unable to serve the current employment demands. This pressure is only set to grow if additional measures to drive youth entrepreneurship are not implemented in the country.

To curb this, youth need to be encouraged to pursue entrepreneurship as a viable career option. More importantly, young entrepreneurs embarking on the journey need to be supported in order to succeed so that they too can develop into successful entrepreneurs who will go on to create additional job opportunities.

South Africa’s youth are being taught to be job seekers, rather than job creators.

Past GEM research shows that only 11% of South Africa’s youth indicate that they intend to start a business in the next 3 years.

As a country, we need to encourage entrepreneurship from a young age. Education institutes can only inspire youth to a certain degree. Families need to groom their kids to become entrepreneurs and young, budding entrepreneurs need to have access to business owners they admire and spend time with them in a working environment where they can experience an entrepreneur’s passion for business first hand.

Leading by example

A Western Cape based alumni member operating in the construction space recently implemented an internal mentorship programme and incubator space within his business as he believes that ‘giving someone an opportunity can lead to great things’. The programme provides a platform for start-ups to make use of his office’s infrastructure, whether it is a desk, access to the printer or use of the boardroom. The entrepreneur also mentors young entrepreneurs by providing advice when needed, as well as introducing them to the business world by allowing them access to business engagements or seminars.

While there are barriers to entry for young entrepreneurs, if the small business community can inspire more youth to consider entrepreneurship, one battle will be won.

In South Africa, there aren’t enough grassroots organisations that equip young entrepreneurs with technical knowledge. A retired entrepreneur in attendance said that having recently mentored her son who owns a business, made her realise how desperately the youth seek guidance. She explained that while they have the passion and ideas, they struggle to implement these ideas and that more should be done to make it easier for them to grow their business.

The youth therefore need to have the opportunity to shadow a seasoned entrepreneur and be shown what it takes to run a business and what can be achieved with commitment and dedication.

Give back and get back

Not only are these mentorship and incubator initiatives relatively easy to implement, but entrepreneurs can also reap rewards from these engagements. Entrepreneurship can be a lonely job and an incubator environment can create an immediate sounding board for your business. It creates an opportunity for you to also learn and possibly think of new ways to do business.

Gugu Mjadu, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® competition and co-facilitator of the alumni events which were hosted across the country in 2015.

Local entrepreneurs to grab ecommerce opportunities

Technological advancements have changed the way in which the South African business landscape operates, and this is increasingly leading to many opportunities for local entrepreneurs and businesses.

One such advancement stemming from the evolution of the internet is the rise of eCommerce – a platform used to market, promote, sell and buy goods and services online. Christo Botes of the Sanlam / Business Partners Entrepreneur of the Year® competition says that with this sector experiencing rapid growth both locally and globally, South African entrepreneurs have a chance to capitalise on the opportunities which will arise, as the industry is still in its infancy on the African continent.

Botes says that the eCommerce sector in South Africa accounts for a very small percentage of the retail industry, and overall GDP contribution, when compared to developed markets. He points to a report1 by McKinsey & Company which states that Africa’s iGDP, the measure of the Internet’s contribution to overall GDP, remains low at 1.1%. South Africa reported 1.4%, which is significantly below that of global players such as the United Kingdom (5.4%), the United States (3.8%) and China (2.6%).

The rise in access to internet and mobile services, coupled with a growing middle class, will however see South Africa’s eCommerce figures rise in years to come. Earlier this year Google South Africa stated that the country’s eCommerce industry is expected to continue its growth in 2015, having seen a 37% increase in query volumes during 2014. The McKinsey & Company report also recently revealed that eCommerce could account for 10% of retail sales in Africa’s largest economies by 2025.

With the future of eCommerce looking bright in South Africa, local entrepreneurs should seek to establish themselves online, says Botes. “While business-to-consumer transactions are growing rapidly, with South Africans increasingly turning to online platforms to purchase goods and services, the growth of online business-to-business (B2B) transactions offers major opportunities for entrepreneurs as customers increasingly seek business services online.

“New online ventures offer a relatively low barrier to entry, and entrepreneurs can establish themselves on a playing field with larger competitors as in many cases the customer isn’t able to tell the difference between a small and large company,” says Botes.

Highlighting the rising opportunities for smaller players, PayGate CEO, Peter Harvey, revealed that five years ago the company would upload 10 start-ups onto its payment gateway for every established business, but that the ratio is currently 100:1.

Botes says that opportunities are abound for local businesses. “The rise of eCommerce includes various opportunities for small businesses ranging customer services, technical support or security and payment offerings for businesses e-platforms. It isn’t just limited to the selling of goods or e-tailing, and entrepreneurs should think out of the box when considering potential business ideas.”

While the eCommerce phenomenon offers entrepreneurs an opportunity to establish a business in this flourishing market, Botes says that entrepreneurs with an established business should also be looking at growing their online presence if they have not already done so.

“Entrepreneurs also need to adapt the way in which they communicate with their customers. Having an online presence has the ability to positively impact marketing and sales efforts, and entrepreneurs should be embracing these channels to discover how the Internet can transform and grow their businesses. A local bakery, for example, who may be predominately servicing its surrounding community, could expand its customer base across the city by introducing an online platform for their business in the form of social media platforms or a website.

“The development of a business website is no longer an expensive cost to the business, but instead can be designed affordably with easy to use, do-it-yourself website builders such as Woza and WordPress.”

He adds that it is important for entrepreneurs to gauge where their traffic is coming from, and what is the best platform to reach their target audience is. “Entrepreneurs need to ensure their communication channels are matched to their audience’s preferences, as there isn’t a one size fits all approach to online channels,” concludes Botes.

Let your garden grow


For Justin Sam, Sanlam/ Business Partners Entrepreneur of the Year® 2014 entrant, building a sustainable business means getting your hands dirty, writes Jane Steinacker-Keys.

Even though Justin Sam knew little about plants when he started his vertical and rooftop landscaping business, what he did have was his training and experience as an aeronautical engineer – training which instilled in him a sense of systems, processes and planning, which allowed him to innovate and create self-contained gardens to add greenery and life in the most unexpected places. In essence, Vertical and Rooftop Landscapes gives homes, office parks and developments an opportunity to share a connection to nature.

Sam’s gardens, be they on a wall or a roof, have two distinctly unique features. The first is that Sam designs them personally, from the irrigation and drainage systems to the aesthetic design. The second is that he has spent a considerable amount of time and effort in understanding not only the world of plants, but what the South African décor market is looking for.

“We offer a variety of systems to suit different budgets and client expectations. We endeavour to offer a high level of customisation and artistic direction, not only to construct products that our clients enjoy, but also to continue to learn and grow our knowledge and expertise,” he says.

“We use plants that suit the conditions, but are conscious of the responsibility of landscapers to use indigenous plants wherever possible. We also do exotic indoor ferns, as well as herb and vegetable gardens.

“I always wanted to be an business owner,” Justin adds. He believes his passion for entrepreneurship probably came from his father, who immigrated to South Africa from China as a teenager, and built himself up from nothing through business. “And when the right idea came along, it made sense to take the risk. It was never all about the money. I really enjoy being creative every day. I like to challenge myself.”

The notion of starting from scratch is not a deterrent for Justin, but rather his inspiration, and his business is growing at a sustainable pace. His company offers its original hydroponic (soil-less) system, as well as less fully planted soil-based systems.

The original system is self-contained and eco-friendly, and the parts and components are sourced locally. “We proudly support local manufacturing, with an eye on practising sustainability,” says Justin.

But he believes getting his hands dirty is integral to his success. “I believe that to build the type of business I am aiming for, I need to understand every aspect of what my business is about. It’s important to know what you’re doing before you train others to do it.” And he believes in tackling what he considers the most arduous or difficult tasks first.

“In aspects of business that I wasn’t experienced in, I learnt and planned what I could, and then just tried. But when I get stuck, I outsource expertise,” he says. Justin says he has often bumped his head and knocked his knees while trying, but for a man who chooses the preferred route to the easy one, this is no deterrent.

What Justin has also realised is that learning about other aspects of his business, from marketing to finance, has engendered a sense of personal empowerment. “It was really fulfilling when I realised that I could, in fact, design, market and sell my products. Being an entrepreneur is an amazing experience. It teaches you a lot about yourself and the world around you,” he says.

But while he is still learning new skills, he still supervises most of his projects to ensure that not only is the job completed to the client’s specifications, but the safety of his crews is ensured. “We stress safe and stringent standards of construction,” he says.

“Last year in Eastern Europe, a roof collapsed while they were building a roof garden on it, killing dozens of people. With vertical gardens, irrigation and drainage are the main challenges to the viability of the project. So, technically, the systems and methods of construction need to be sound, and knowing and managing risks is key,” he says.

The company has been well received by the market, with not only architects picking up on how the installations can contribute to their design philosophy, but also large developments focusing on greening their estates. Landscapers are also looking to outsource work to specialists in a relatively new market.

The media, too, have taken note, with features including Vertical Landscapes and Rooftop Landscapes in notable publications such as House & Leisure and Garden & Home.

Sam believes that his business philosophy of steady and sustainable growth is what makes his concept such a success. “In the long term, I want my business to outlive me and continue to push boundaries and be innovative, while producing beautiful work and providing efficient service,” he says.

Welcome to 2013

Feed on the positive SME entrepreneurs!

The Sanlam / Business Partners Entrepreneur of the Year® team welcomes you to 2013! May we feed on the positive this year and not allow the eternal pessimists to shape us into a negative frame of mind. May we celebrate entrepreneurs and their relentless drive to grow their businesses that are keeping our economy ticking and promote the successes of our heroes in the small and medium business world.

Although businesses are most likely to face challenges going forward, business owners / entrepreneurs shouldn’t blow these hindrances out of proportion and forget about the great strides they have made in continuing to grow, rendering goods and services to their target market, employing people, paying their taxes and contributing towards the wellbeing of their communities?

As we consider what the year might hold for South African businesses one realises that the only certain aspect is the economic uncertainty that prevails in the country and the world. If one however takes stock of what we have to be grateful for, there is much positivity to feed on.

The South African economy grew marginally by an estimated 2.5% (in 2012) and economists forecast growth of about 3.5% in 2013. Although this growth is not enough, it should result in demand for your services also growing marginally. This boils down to increased sales, which could be even more positive if businesses manage to outplay their competitors with better service and competitive pricing.

Entrepreneurs are more than likely to be experiencing the lowest interest rate environment they have encountered in the history of their businesses. Are you capitalising on this? In most businesses the cost of debt (interest) is amongst the three highest expense items on an income statement – now this cost has decreased down to prime lending rates of 8%. In a SME’s case the saving on the interest bill alone could be 50% or more when compared to four years ago.

In real terms the saving is even more and should be used to reduce the debt in the business, in other words, paying off more of the capital portion of loans or to fund the working capital needs of a business. SME owners could also consider paying creditors/suppliers sooner, but this should only be considered if they are able to provide early settlement discounts. This is another positive aspect to feed on!

The lower inflation environment experienced over the past few years should bring some stability in ensuring that prices do not run away. In order to embrace this, costs should be managed appropriately and negotiations with suppliers and other service providers to limit their price increases should be considered. South African businesses already have to contend with substantially higher than average inflationary electricity costs and cannot absorb more price increases. A lower inflationary environment is a further positive for SMEs.

Commodity prices are on the increase and with the weaker rand, the rand prices of commodities are increasing even more. With demand for commodities also picking up and mining strikes hopefully under control, mining activities should increase locally through higher output and a renewed drive to increase capacity through an increased capital expenditure programme. This is positive for direct job creation and will in turn increase the level of consumer spending as overall disposable income improves. Sub-contractors to the mining industry are mostly small and medium-sized businesses and their order books should hence benefit directly. This is a positive for SMEs operating in the mining service sector and/or servicing mining communities.

South Africa is playing a leading role in the Sub-Saharan economy. It is estimated that this region will grow nearly two and a half times faster than the advanced economies of the world as we head towards 2020. This fast growing region is economically viable and this is seen by other emerging giants such as China and India as an opportunity. These regions realise that they need South Africa as an entry point into the continent and that our country is the best place to settle in first, as we are the strongest economy on the continent, with the best infrastructure from which they can leverage. South African SMEs should view this as an opportunity as businesses can be grown by being these regions’ local agent and service provider. The opportunities clearly outnumber the threats.

SMEs and business owners should feed on the above positive pointers and develop strategies for the year ahead, which will also assist in a positive change of mind frame. Challenge yourself and be positive – also remember to not be all things to all people. As an SME, you should try to be an efficient niche player mapping out a future in a growing market that still has many opportunities just waiting for the real entrepreneurs to take up and run with them.

I wish you all great success in 2013 and know that as a real entrepreneur you will be able to capitalise on opportunities and create gaps for your business, even where there are not so many obvious ones. Good luck!

Christo Botes
January 2013