INCUBATORS

The need for incubation

Spokesperson for the Sanlam / Business Partners Entrepreneur of the Year competition, Gugu Mjadu
Gugu Mjadu at the launch of the Business Partners Ltd Education Fund for SMEs.jpg

While the importance of investing in aspiring entrepreneurs in South Africa remains of top priority, the fact that many of our start-ups face a number of challenges and often need leadership assistance along their journey to success goes without saying.

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%.

“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 entrepreneurs at the Sanlam / Business Partners Entrepreneur of the Year alumni gathering. The annual event also seeks to harness entrepreneurs’ expertise and to remove barriers impacting entrepreneurship in South Africa.

Spokesperson for the Sanlam / Business Partners Entrepreneur of the Year competition and co-facilitator of the alumni events, Gugu Mjadu, says during the session the entrepreneurial community recognised the urgent need for business incubation in South Africa, and raised valid points about how seasoned business leaders can play a vital role facilitating and building entrepreneurship in the country.

According to Mjadu, “The creation of incubators, whether formal or informal, provides aspiring entrepreneurs with the opportunity to interact with each other thus facilitate peer mentorship and increases networks for the entrepreneurs. You also find that incubators serve as a mentoring platform for entrepreneurs who, through the incubators, have access to support from experienced business people, leaders in industry and or qualified supporters of entrepreneurs. They also get access to resources for instance information and training seminars to improve their skills, office space and technology, which they would not otherwise have access to.

Youth most affected

“Stats SA has recently reported that our unemployment rate has gone up to 25, 5% and the youth are the most affected and most industries are bleeding jobs. As such the country needs to encourage more youth to become entrepreneurs and create jobs for themselves. Those entrepreneurs that are already established, as responsible citizens, need to pay it forward by supporting aspiring entrepreneurs with information, mentorship and support - this is one way we can create jobs and improve skills to grow the South African economy,” she told BBQ magazine.

As Mjadu explains, SME owners are located closer to their communities than big corporates and as such have more opportunities to interact with aspiring entrepreneurs and start-ups. She points out that they can therefore support learners in schools and contribute to entrepreneurship education by speaking about entrepreneurship at career days at schools for instance, serving as role models and mentoring aspiring entrepreneurs in their communities.

She also highlights that businesses can get involved with minimal effort. “Established businesses can evaluate what their businesses can offer (such as premises, training, etc.) and then identify aspiring entrepreneurs in their communities that require those available resources. Key would be to have a formal agreement with the aspiring entrepreneurs in order to protect the two parties,” she says.

So why is important for youth to have the opportunity to shadow a seasoned entrepreneur? As Mjadu explains, a person cannot possibly know everything there is about running a business. She says even if you are an exceptional all-rounder, individuals always have blind spots, such as areas which you are not familiar with.

Assisting with strategies

Mjadu says a fresh pair of eyes, usually looing in from the outside, can quickly spot the gaps in business practices and can also assist with strategies which the business has not yet considered. She stresses that youth need to have opportunity to a seasoned entrepreneur and be shown what it takes to run a business and what can be achieved with commitment and dedication. “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,” she says.

But how do we go about to harness entrepreneurs’ expertise and removing barriers impacting entrepreneurship in South Africa in our plight to improve skills development in this sector? As Mjadu explains, to harness entrepreneurship, we need to improve entrepreneurship education - teach and equip learners with skills that are required for them to become successful entrepreneurs, and that includes creative skills, innovation, gutsy determination and perseverance and saving.

We then, as she puts it, need to ensure that we provide opportunities for aspiring entrepreneurs to improve their skills and increase their chances of survival and this can be done through incubation programmes. Finally, we need to improve access to finance - while it is difficult enough to raise finance for an existing business, challenges are more pronounced for start-ups which are usually run by youth. According to her, financiers require you to prove affordability on a start-up which is difficult to do when there is no track record.

When looking at some of their own success stories, Mjadu says, “One of the well-known formal incubators is the Shanduka Black Umbrellas, which nurtures qualifying 100% black-owned businesses in the critical first three years of their existence by providing incubators that have office infrastructure, professional services and a structured mentorship programme at a highly subsidised rate.

“We also have the SEDA Construction Incubators (http://www.seda.org.za) which were established to provide support services and resources to eligible businesses, with a view of elevating them beyond mere survivalist modes of operation. There is also the Department of Trade and Industry’s Incubation Support Programme, Aurik and Riazcorp in the market. The key is for entrepreneurs to do their research online in order to identify the incubator they qualify for,” she says.

Feeling the pressure

According to her 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.

She says that 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, says Mjadu. “As a country, we need to encourage entrepreneurship from a young age. PastGEM research1 shows that only 11% of South Africa’s youth indicate that they intend to start a business in the next 3 years.

“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.”

So how is the relationship between government and the private sector doing when it comes to establishing incubators? Mjadu says it is important for the private sector to work with government to establish incubators since that would mean that they are complementing programmes, like those of the Department of Trade and Industry (DTI) and SEDA – which government is already implementing.

Mjadu says that her best advice for other companies interested in creating incubators is that the key to creating incubators is to identify the community’s needs, evaluate what skills your company can contribute, evaluate your budget and then proceed to establish them. She says companies should also evaluate whether they should create incubators or sponsor entrepreneurs to undergo training through existing incubators. Mjadu says companies can approach the DTI and do desktop research on existing incubators to get guidance and ideas on establishing formal incubators.

“The perception that business mentors are of use only to struggling, beginner businesses could not be further from the truth. It is in fact the most successful entrepreneurs who actively seek out mentors to ensure continued business success,” Mjadu concludes.

 

 

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