Placing greater weight on supplier and enterprise development under the new BEE codes may lead to a greater number of SMME development initiatives (as is the government’s intention) in South Africa. However, the character behind and the quality of the SMME one chooses to develop is the most important factor in whether the SMME will succeed or fail, rather than the number of initiatives available to them, says Sean Krige, Programme Manager for The Hope Factory’s Johannesburg Enterprise and Supplier Development Programme.
It is no secret that one of the greatest challenges we face as a country is the need to grow our economy through growing our small, micro and medium (SMME) sized businesses. The primary reason for this is job creation. The fact that large corporates are shedding jobs in order to remain competitive, and face the challenges of a decade of economic bubbles, downturns and shifts, only serves to underpin this need.
From a policy perspective, one of the elements South Africa has got right in trying to facilitate this is enterprise development (ED) within the B-BBEE codes. This has more recently, through the gazetting of the revised BEE codes, been merged with procurement to constitute 40% of the scorecard under the banner of ‘Supplier & Enterprise Development’.
This may result in a further boom in SMME related support services, initiatives and awareness.
Of course, this assumes that there is a fair amount of work currently being undertaken across South Africa in an attempt to identify, support, partner with and promote black-owned SMME businesses. The jury is out as to exactly how effective much of this activity has been, although Government, through the introduction of the newly created Supplier & Enterprise Development element of the codes, seems to think that more energy needs to be applied within a supply chain context.
While The Hope Factory strongly agrees with this new emphasis on supplier and enterprise development and promotion of black-owned SMMEs, sadly we have found that often it is whom one chooses to work with that has the single biggest bearing on the outcome of whether or not that SMME succeeds or fails.
Unfortunately, the so-called perfect selection process remains elusive – even for the experts. The Hope Factory’s programme factors in a 20% to 25% entrepreneur drop-off rate in the first year, and has elected, at this stage, to not incorporate any external psychometric testing. Instead we have adopted a more intensive and qualitative approach assessing each entrepreneur under two themes: business growth potential and the entrepreneur’s willingness to engage in personal growth and development.
These two themes have been proven time and again over the centuries, from Steve Jobs to Raymond Ackerman and anyone of us who has run a business. It is always a partnership between the horse (business) and the jockey (entrepreneur), and making sure that when the gates open, they are ready to race.
I am a strong advocate of development through mentorship, it remains key to SMME business growth in South Africa. Therefore, in addition to measuring the success of The Hope Factory’s programme through the usual business growth and development measurables, we are also working towards achieving a higher entrepreneur retention rate on The Hope Factory Enterprise and Supplier Development Programmes.