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.

Why entrepreneurial skills are important for a business

This month we chat to Justin Hawes of Scan Display, who was one of the finalists in the EOY 2012 competition about how he manages to instil entrepreneurial skills within his business.

justin-webHow do you develop entrepreneurial skills within your business?

With freedom comes responsibility. Therefore my management style is very much one of making each employee accountable for their actions. I do not meddle in how they get a job done, or what hours they work, but give them the freedom to achieve the results we need in the way they want to. This in turn encourages an entrepreneurial spirit in the company.

This is especially true for our Account Executives. They effectively run their own business within Scan Display: they manage the entire process of quoting, closing sales, project managing each job to completion and following up on payments. To facilitate this, I empower them to make their own decisions, such as which of our solutions to offer clients and choice of supplier. This impacts their earnings, so they are very responsible in how they handle it.

Of course, I need to identify the right kind of personality for this role. I need to have Account Executives who are comfortable with this responsibility. In addition, we also have systems in place that ensure we are delivering a uniformly high quality product to our clients.

Why is the development of entrepreneurial skills so important?

By ensuring Scan’s staff are responsible and empowered, and able to be creative with their solutions, our business is able to run more efficiently. I also believe our staff members enjoy this working environment as they feel stimulated and challenged. But they also always know they can come to me with questions and concerns – my advice and support is always available.

Do you think that because of your focus on these types of skills you have an advantage over competitors?

Yes, without a doubt. Our Account Executives drive our business forward, and they would not be able to drive it so quickly if they were not empowered in this way.

Why should fellow entrepreneurs look to do the same within their business?

If you empower your staff members to act as entrepreneurs, they are more committed to their work. They take ownership of their role and are hungry for success. We reward our Account Executives financially, and they make commission from the first R1 they sell out of every job they do. This keeps them fully invested in the business and its success.

Why is entrepreneurship so important for South Africa?

All the greatest countries in the world have a culture of entrepreneurship, and it stimulates economic growth and development. The United States is a prime example of this, as anyone can start a business venture, and it is easy to move in and out of different businesses. India is also an example of a country in the developing world where people are coming up with creative businesses that bring value to the market and give them an income.

When I was recently there, I had the sense that everyone had a job, from laundry people (“debwashers”) to the people who collect lunch boxes from homes to deliver to their owners at work (“tiffin-carriers”). Everyone is busy doing something, and earning something.

By encouraging entrepreneurship in South Africa we will be able to stimulate job creation. Rather than relying on the government to create jobs, people will be in a position where they can create their own jobs – and ultimately more jobs for other people too.

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

World entrepreneurship day a rallying call to aspiring SA entrepreneurs

Aspiring South African entrepreneurs need to take note of the successes being celebrated by their global counterparts on World Entrepreneurship Day (WED), 15 April 2012, as well as use the day as motivation to get better at spotting and taking advantage of ‘entrepreneurial gaps’ in specific industries, in order to create sustainable businesses.

This was the message from Nimo Naidoo, project manager of the Sanlam / Business Partners Entrepreneur of the Year ® competition, in the run-up to WED, who says that South Africa’s economic prosperity relies heavily on the actions and successes of the country’s existing and future entrepreneurs.

“The Global Entrepreneurship and Development Index (GEDI) recently revealed that South Africa’s global entrepreneurial ranking has fallen from 39 in 2011 to 45 in 2012, losing pace with smaller GDP countries such as Colombia and Peru. Entrepreneurship serves as a catalyst for economic growth and national competitiveness, and for an emerging economy such as ours this ranking is simply too low,” says Naidoo.

She says that in order to foster a culture of entrepreneurship locally, prospective entrepreneurs need to overcome barriers such as fear of failure and funding. “Tackling the first barrier is not always so simple, as South Africa’s society has a culture that neglects entrepreneurial activities, especially individuals who have failed in the past.”

Naidoo suggests that more needs to be done to identify and profile entrepreneurial role models, in order to give aspiring entrepreneurs an idea of the rewards and benefits of enterprise creation and reduce the stigma of failure.

“Initiatives such as entrepreneurial competitions, formation of bodies, government-sponsored awards and recognition from the private sector would all contribute to raising the profile of South Africa’s most innovative and successful entrepreneurs. In addition, these actions would also assist with creating a society that values and respects entrepreneurial spirit.

“Initiatives already in place to promote and grow entrepreneurship, such as Global Entrepreneurship Week in November and The Jobs Fund, under the custodianship of the Development Bank of Southern Africa, which co-finances projects by public, private and non-governmental organisations, have already had a positive effect with regards to job creation and entrepreneurial spirit in South Africa.”

She adds that role models are also key to educating South Africa’s youth about entrepreneurship. “There is a great opportunity for our youth to choose entrepreneurship as a career and become job creators rather than job seekers. Our education system should also promote entrepreneurship as a career. Entrepreneurship will then also address unemployment issues at a youth level by providing an outlet for the talents of many highly educated young people, such as college and university graduates, especially in globally-growing industries such as information technology.”

On the barrier of funding, she says that more support and attention in fiscal and government policy is necessary to stimulate entrepreneurial activity, which can ultimately lead to the country’s economic recovery. “We also need to investigate the implementation of new finance models and methods in order to broaden the access of finance to more entrepreneurs.”

Naidoo adds that the inclusion of structural policies that determines and clarifies the overall economic framework in which the local business sector operates, such as policies affecting labour markets, tax, competition, financial markets and bankruptcy laws, will also be conducive to entrepreneurial growth.

“As a group, entrepreneurs represent the best hope of creating sustained economic growth in South Africa. As we celebrate WED, we can see the tangible economic benefits that pro-entrepreneurial policies in emerging economies such as Brazil and India have achieved.

“It is now our country’s turn to create an entrepreneurship climate to create employment and build sustainable, high growth companies,” concludes Naidoo.

World Entrepreneurship Day a rallying call to aspiring SA entrepreneurs

Aspiring South African entrepreneurs need to take note of the successes being celebrated by their global counterparts on World Entrepreneurship Day (WED), 15 April 2012, as well as use the day as motivation to get better at spotting and taking advantage of ‘entrepreneurial gaps’ in specific industries, in order to create sustainable businesses.

This was the message from Nimo Naidoo, project manager of the Sanlam / Business Partners Entrepreneur of the Year ® competition, in the run-up to WED, who says that South Africa’s economic prosperity relies heavily on the actions and successes of the country’s existing and future entrepreneurs.

“The Global Entrepreneurship and Development Index (GEDI) recently revealed that South Africa’s global entrepreneurial ranking has fallen from 39 in 2011 to 45 in 2012, losing pace with smaller GDP countries such as Colombia and Peru. Entrepreneurship serves as a catalyst for economic growth and national competitiveness, and for an emerging economy such as ours this ranking is simply too low,” says Naidoo.

She says that in order to foster a culture of entrepreneurship locally, prospective entrepreneurs need to overcome barriers such as fear of failure and funding. “Tackling the first barrier is not always so simple, as South Africa’s society has a culture that neglects entrepreneurial activities, especially individuals who have failed in the past.”

Naidoo suggests that more needs to be done to identify and profile entrepreneurial role models, in order to give aspiring entrepreneurs an idea of the rewards and benefits of enterprise creation and reduce the stigma of failure.

“Initiatives such as entrepreneurial competitions, formation of bodies, government-sponsored awards and recognition from the private sector would all contribute to raising the profile of South Africa’s most innovative and successful entrepreneurs. In addition, these actions would also assist with creating a society that values and respects entrepreneurial spirit.

“Initiatives already in place to promote and grow entrepreneurship, such as Global Entrepreneurship Week in November and The Jobs Fund, under the custodianship of the Development Bank of Southern Africa, which co-finances projects by public, private and non-governmental organisations, have already had a positive effect with regards to job creation and entrepreneurial spirit in South Africa.”

She adds that role models are also key to educating South Africa’s youth about entrepreneurship. “There is a great opportunity for our youth to choose entrepreneurship as a career and become job creators rather than job seekers. Our education system should also promote entrepreneurship as a career. Entrepreneurship will then also address unemployment issues at a youth level by providing an outlet for the talents of many highly educated young people, such as college and university graduates, especially in globally-growing industries such as information technology.”

On the barrier of funding, she says that more support and attention in fiscal and government policy is necessary to stimulate entrepreneurial activity, which can ultimately lead to the country’s economic recovery. “We also need to investigate the implementation of new finance models and methods in order to broaden the access of finance to more entrepreneurs.”

Naidoo adds that the inclusion of structural policies that determines and clarifies the overall economic framework in which the local business sector operates, such as policies affecting labour markets, tax, competition, financial markets and bankruptcy laws, will also be conducive to entrepreneurial growth.

“As a group, entrepreneurs represent the best hope of creating sustained economic growth in South Africa. As we celebrate WED, we can see the tangible economic benefits that pro-entrepreneurial policies in emerging economies such as Brazil and India have achieved.

“It is now our country’s turn to create an entrepreneurship climate to create employment and build sustainable, high growth companies,” concludes Naidoo.