Giving small businesses entry to corporate supply chains
Business Incubators the world over are known for the technical assistance they offer new firms, but an incubator’s true strength may lie in helping small businesses to enter corporate supply-chains in order to become market-ready, Mark Frankel, CEO of Shanduka Black Umbrellas, a non-profit enterprise development service, tells SmartProcurement.
Big organisations have a role to play in providing small businesses with meaningful access to procurement opportunities to assist in their development and enable more than the usual restricted access to catering, cleaning, security, travel and other “safe” procurement allocations, says Frankel.
However, large businesses often do not want to bring small black businesses into their supply chain and are not incentivised to do so, seeing it as more expensive, requiring more effort and having a higher risk profile.
Business incubators can help mitigate this risk.
Start-up businesses within incubator programmes such as Shanduka Black Umbrellas have gone through a rigorous selection process and are monitored to see that they are compliant with all regulations, says Frankel.
South Africa’s entrepreneurial dilemma
Unemployment in South Africa is currently sitting at a massive 25%, although some would say that in reality it is as high as 40%.
The country’s established business activity ranked second last out of 59 countries.
In reality it is only entrepreneurial activity that is going to create jobs in South Africa, says Frankel.
However, South Africa’s entrepreneurial rate, as measured by the The Global Entrepreneurship Monitor (GEM), is 8.9%, well below the average of 11.9%.
According to published GEM data a country at South Africa’s stage of development would be expected to exhibit an entrepreneurial activity figure of about 15% – 60% higher than our current rate.
So, in terms of perceived capabilities and entrepreneurial intentions, South Africa ranks in the bottom third of comparable economies.
To further compound the dilemma, most South African start-up businesses fail within the first three years of being established.
In South Africa, state procurement legislation may have helped create thousands of black small enterprises, but it has also propped up thousands of unsustainable firms with many wholly dependent on state tenders for their survival.
Meanwhile, Broad-Based Black Economic Empowerment (B-BBEE) has been more successful in creating suitcase-type investors who move from one deal to the next, rather than solid black entrepreneurs, who start and grow businesses from the ground up.
One of the ways to assist new entrepreneurs is through business incubation.
Entrepreneurs are offered support infrastructure, mentoring and access to third party finance, networks and other associated opportunities.
Incubators promote collaboration opportunities between 100% black-owned businesses, government, the private sector and civil society by providing a critical foundation for sustainable futures.
These foundations include the provision of serviced office space, computers, internet and telephones, vehicles with drivers, a compulsory reliable bookkeeping service and a structured mentorship programme with a business consultant/mentor.
Shanduka Black Umbrellas is an established business incubation programme with a proven track record. It is a non-profit enterprise development service provider that seeks to deliver real and meaningful transformation through empowered business growth.
Contact Shanduka Black Umbrellas for to find out more about their enterprise development services and for assistance in building your small business.