(Successful) entrepreneurship is a key driver to economic growth, writes Gillian Klawansky.
According to the Global Entrepreneurship Monitor, entrepreneurial activity in South Africa dropped worryingly by 34% (from 10.6% to 7%) in 2014. Yet, in a country where unemployment is at almost 40%, boosting entrepreneurship is more vital than ever.
“The reality is that we still live in an unequal society that has gross unemployment, which further escalates the levels of poverty in our country,” says Matsi Modise, MD of the SiMODiSA Association, an industry-led initiative that aims to build a strong entrepreneurship ecosystem by specifically addressing and determining what can be done to overcome the barriers that SMEs and start-ups face.
“We have a country that’s still the breadbasket of the continent, but if we’re to remain globally competitive, we need to fix two things: first, the education system that will yield an educated and skilled labour force, and second, our ability to embrace entrepreneurship,” says Modise. “If done well, high-growth entrepreneurship can create much-needed employment opportunities, create and expand industries, and create African solutions for global problems.”
Modise explains: “At SiMODiSA, we aim to connect the key players that are here to develop, capacitate, skill, incubate, fund and educate entrepreneurs in South Africa. Leaderex, which is aimed at developing world-class leaders and companies, has given SiMODiSA an opportunity to curate a robust and integrated entrepreneurship agenda that will showcase the South African entrepreneurship ecosystem.”
Raizcorp CEO and founder Allon Raiz is enthusiastic about the Leaderex model. “The ability to be part of the broader ecosystem of leaders and entrepreneurs, and the opportunity to be able to participate and learn concurrently, are what attracted us to take part,” he says.
Raiz also stresses the need for effective entrepreneurship amid the undeniable obstacles new businesses face. “Currently in South Africa, there’s been a notable increase in corporates shedding jobs, as is the case with Telkom and Anglo American. With entrepreneurship contributing to two thirds of new job creation, it’s become more crucial than ever that entrepreneurship be encouraged and instituted to help reduce unemployment, create potential exporters, and build the substrate of the South African economy.”
It’s optimistic to see an increase in the number of new businesses sprouting up in new areas, says Raiz; however, the sustainability of these businesses remains questionable, “because our macro-economic conditions remain a hindrance, as does our labour law”.
Sustainability has always been at the core of what Raizcorp does. “A one-size-fits-all approach to small business development across Africa doesn’t work; therefore our programmes are tailored to provide business support for enthusiastic, growth-hungry entrepreneurs, by offering them a platform that fosters learning and guidance, which can then be translated into practical business success,” explains Raiz.
Despite such initiatives, the state of entrepreneurship in South Africa undoubtedly remains unsteady. Events such as Leaderex, therefore, are imperative. Jeff Miller, non-executive chairman for Seed Engine and Seed Academy, which provides practical entrepreneurship training, incubation and mentoring to start-ups and early-phase entrepreneurs, notes: “Entrepreneurship is a key to economic growth in South Africa, but it can only be a key driver if entrepreneurs become successful and are able to scale their businesses and create employment opportunities.”
Regrettably, says Miller, as a country we don’t actively engender a culture of entrepreneurship. “Leaderex creates an excellent (and necessary) platform for all members of the ecosystem to come together. One of the biggest challenges we face in this country is that there are great initiatives and projects for entrepreneurial development, but co-ordination is a weakness. We need to actively find opportunities for players in the entrepreneurial ecosystem to collaborate more,” he says.
Miller echoes the need to assist entrepreneurs in finding funding, which is also integral to the entrepreneurial assistance the Seed Academy provides. “Money is oxygen to small businesses, and a key to business growth is funding,” he says.
Miller offers the following practical funding tips for entrepreneurs:
- Have a crisp and to-the-point business plan;
- Understand the key metrics that will make your business successful;
- Provide a real and achievable financial model that includes the income statement, balance sheet and cash flow. If it sounds too good to be true, it usually is; and
- Ensure that your product has market fit, solves a specific problem and that customers will embrace your offering.