OBSTACLES ENCOUNTERED  BY SMALL ENTERPRISES BOTH  LOCALLY AND INTERNATIONALLY. PRESENTED BY SHAUN GOVENDER CEO THE BUSINES...
Overview <ul><li>OVERVIEW </li></ul><ul><li>Small enterprises both locally and internationally experience many similar cha...
Role of entrepreneurs <ul><li>ROLE OF ENTREPRENEURS </li></ul><ul><li>Entrepreneurs create jobs and are  critical to the w...
Contribution of entrepreneurs to GDP <ul><li>CONTRIBUTION OF ENTREPRENEURS TO GDP </li></ul><ul><li>Brazil – SMME approx 8...
Why the entrepreneurial route <ul><li>WHY THE ENTREPRENEURIAL ROUTE </li></ul><ul><li>Necessity driven – survivors rather ...
Common challenges for SMMEs <ul><li>COMMON CHALLENGES FOR SMMEs </li></ul><ul><li>Fear of failure </li></ul><ul><li>Lack o...
Common challenges…fear of failure <ul><li>COMMON CHALLENGES…FEAR OF FAILURE </li></ul><ul><li>70 % feel there are great op...
Common challenges…lack of access <ul><li>COMMON CHALLENGES…LACK OF ACCESS </li></ul><ul><li>Opportunities </li></ul><ul><u...
Common challenges…lack of access <ul><li>COMMON CHALLENGES…LACK OF ACCESS…CTD </li></ul><ul><li>Funding </li></ul><ul><ul>...
Common challenges…low skills levels <ul><li>COMMON CHALLENGES…LOW SKILLS LEVELS </li></ul><ul><li>Lack skills </li></ul><u...
Drawing on international models…Barcelona Activa <ul><li>DRAWING ON INTERNATIONAL MODELS… BARCELONA ACTIVA </li></ul><ul><...
Drawing on international models…Barcelona Activa <ul><li>DRAWING ON INTERNATIONAL MODELS… BARCELONA ACTIVA…CTD </li></ul><...
Barcelona Activa - key focus areas <ul><li>BARCELONA ACTIVA… KEY FOCUS AREAS </li></ul><ul><li>Entrepreneurship </li></ul>...
Barcelona Activa - key focus areas ctd… <ul><li>BARCELONA ACTIVA… KEY FOCUS AREAS…CTD </li></ul><ul><li>Employment </li></...
Barcelona Activa - key focus areas ctd… <ul><li>STRUCTURE OF SMALL BUSINESS ENVIRONMENT IN SA </li></ul>
Challenges in the small business developmental environment in South Africa  <ul><li>CHALLENGES IN THE SMALL BUSINESS  DEVE...
Breakdown of entrepreneurial organisations in SA <ul><li>BREAKDOWN OF ENTREPRENEURIAL  ORGANISATIONS IN SA  </li></ul><ul>...
Latest trends in emerging economies…growth of co-operatives <ul><li>LATEST TRENDS IN EMERGING ECONOMIES… GROWTH OF CO-OPER...
Challenges with co-operatives in South Africa  <ul><li>CHALLENGES OF CO-OPERATIVES IN SA </li></ul><ul><li>Literacy level ...
Challenges with co-operatives in South Africa  <ul><li>CHALLENGES OF CO-OPERATIVES IN SA…CTD </li></ul><ul><li>Marketing <...
Interventions for small businesses in South Africa
B-BBEE codes…ED <ul><li>B-BBEE codes…ED </li></ul><ul><li>3% of NPAT towards  Enterprise Development </li></ul><ul><li>Tre...
Recommendations <ul><li>RECOMMENDATIONS </li></ul><ul><li>Funding </li></ul><ul><li>Corporate SA </li></ul><ul><li>Policy ...
Recommendations <ul><li>CASE STUDY… </li></ul><ul><li>Making businesses procurement ready </li></ul><ul><li>presented by <...
Recommendations <ul><li>ENTERPRISE DEVELOPMENT </li></ul><ul><li>New entrants into the market economy </li></ul><ul><li>Mi...
Recommendations <ul><li>INFORMAL BUSINESS NEEDS </li></ul><ul><li>Finance  </li></ul><ul><li>Marketing </li></ul><ul><li>C...
Recommendations <ul><li>RESEARCH FINDINGS INFORMAL SECTOR </li></ul><ul><li>Compliance </li></ul><ul><ul><li>Legislative <...
Recommendations <ul><li>FORMAL ECONOMY… BARRIERS TO ENTRY </li></ul><ul><li>Compliance </li></ul><ul><li>Stringent procure...
Recommendations
Recommendations <ul><li>IMPACT </li></ul><ul><li>Number of interventions   80 </li></ul><ul><li>Number of SMMEs attending ...
Questions… <ul><li>QUESTIONS AND DISCUSSION </li></ul><ul><li>Shaun Govender - CEO The Business Place </li></ul><ul><ul><l...
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Obstacles encountered by small enterprises both locally and internationally - Serious Enterprise Development 2011

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Obstacles encountered by small enterprises both locally and internationally - Serious Enterprise Development 2011

  1. 1. OBSTACLES ENCOUNTERED BY SMALL ENTERPRISES BOTH LOCALLY AND INTERNATIONALLY. PRESENTED BY SHAUN GOVENDER CEO THE BUSINESS PLACE SERIOUS ENTERPRISE DEVELOPMENT WORKSHOP 28 SEPTEMBER 2011
  2. 2. Overview <ul><li>OVERVIEW </li></ul><ul><li>Small enterprises both locally and internationally experience many similar challenges and some very different ones </li></ul><ul><li>These shape their structure, modus operandi, rate of success, reason for existence, size and creation of jobs </li></ul><ul><li>They vary from legislative to access to funding, government/political involvement, community requirements, availability/lack of skills, resources, infrastructure and markets  </li></ul><ul><li>Comparisons can be made with SA and some Latin American countries, which become even more interesting when seen against first-world nations and how such obstacles are being resolved </li></ul>
  3. 3. Role of entrepreneurs <ul><li>ROLE OF ENTREPRENEURS </li></ul><ul><li>Entrepreneurs create jobs and are critical to the well-being of society </li></ul><ul><li>They drive and shape innovation </li></ul><ul><li>They contribute to productivity </li></ul><ul><li>They are a catalyst of economic growth and competitiveness </li></ul>
  4. 4. Contribution of entrepreneurs to GDP <ul><li>CONTRIBUTION OF ENTREPRENEURS TO GDP </li></ul><ul><li>Brazil – SMME approx 80% to GDP / job market </li></ul><ul><li>US – SMME sector approx 85% to GDP / job market </li></ul><ul><li>Sweden – SMME sector approx 85% to GDP / job market </li></ul><ul><li>South Africa: </li></ul><ul><ul><li>Formal SMME sector less than 30% to GDP / job market </li></ul></ul><ul><ul><li>Informal SMME sector… </li></ul></ul>
  5. 5. Why the entrepreneurial route <ul><li>WHY THE ENTREPRENEURIAL ROUTE </li></ul><ul><li>Necessity driven – survivors rather than entrepreneurs </li></ul><ul><li>Opportunity driven. </li></ul><ul><li>Unsuccessful job seekers </li></ul><ul><li>Controllers of own destiny </li></ul><ul><li>Freedom and happiness </li></ul>
  6. 6. Common challenges for SMMEs <ul><li>COMMON CHALLENGES FOR SMMEs </li></ul><ul><li>Fear of failure </li></ul><ul><li>Lack of access </li></ul><ul><li>Low skills levels </li></ul>
  7. 7. Common challenges…fear of failure <ul><li>COMMON CHALLENGES…FEAR OF FAILURE </li></ul><ul><li>70 % feel there are great opportunities for entrepreneurs </li></ul><ul><ul><li>Entrepreneurs are greatly respected and hugely admired </li></ul></ul><ul><ul><li>It is great to be an entrepreneur </li></ul></ul><ul><ul><li>Good career choice </li></ul></ul><ul><li>Less than 30% admit they would actual start a business </li></ul><ul><ul><li>Aversion to risk </li></ul></ul><ul><ul><li>Regulatory environment </li></ul></ul><ul><ul><ul><li>Government policy </li></ul></ul></ul><ul><ul><ul><li>Employment protection </li></ul></ul></ul><ul><ul><ul><li>Bancruptcy laws </li></ul></ul></ul>
  8. 8. Common challenges…lack of access <ul><li>COMMON CHALLENGES…LACK OF ACCESS </li></ul><ul><li>Opportunities </li></ul><ul><ul><li>SMMEs lack of credibility </li></ul></ul><ul><ul><li>Perception of inferior quality and sub-standard service </li></ul></ul><ul><ul><li>Tender processes and procurement policies not aligned to SMMEs </li></ul></ul><ul><ul><li>Pricing not competitive and lacks economy of scale </li></ul></ul><ul><ul><li>Networks limited </li></ul></ul>
  9. 9. Common challenges…lack of access <ul><li>COMMON CHALLENGES…LACK OF ACCESS…CTD </li></ul><ul><li>Funding </li></ul><ul><ul><li>Banking system risk-averse and non-developmental </li></ul></ul><ul><ul><li>ITC listing </li></ul></ul><ul><ul><li>Surety </li></ul></ul><ul><ul><li>Lack of credible Business Plans </li></ul></ul><ul><ul><li>DFI – processes too lengthy and bureaucratic </li></ul></ul>
  10. 10. Common challenges…low skills levels <ul><li>COMMON CHALLENGES…LOW SKILLS LEVELS </li></ul><ul><li>Lack skills </li></ul><ul><ul><li>Basic life skills </li></ul></ul><ul><ul><ul><li>Attitude </li></ul></ul></ul><ul><ul><ul><li>Value system </li></ul></ul></ul><ul><ul><ul><li>Cultural expectations </li></ul></ul></ul><ul><ul><li>Artisan training </li></ul></ul><ul><ul><li>Effective business training and knowledge </li></ul></ul><ul><ul><li>Financial literacy </li></ul></ul><ul><li>Lack education </li></ul><ul><li>Lack role models and mentors </li></ul>
  11. 11. Drawing on international models…Barcelona Activa <ul><li>DRAWING ON INTERNATIONAL MODELS… BARCELONA ACTIVA </li></ul><ul><li>Created 25 years ago in 1986 </li></ul><ul><li>Municipal entity </li></ul><ul><li>Barcelona Activa started as a business incubator, housing 16 projects  </li></ul><ul><li>Today a local and international reference in the support of entrepreneurs and the creation of employment </li></ul>
  12. 12. Drawing on international models…Barcelona Activa <ul><li>DRAWING ON INTERNATIONAL MODELS… BARCELONA ACTIVA…CTD </li></ul><ul><li>Participants </li></ul><ul><ul><li>Contracts to 1 000 unemployed to learn a trade while working </li></ul></ul><ul><ul><li>100 000 visitors per annum </li></ul></ul><ul><ul><li>Coaching to more than 1 000 new projects a year </li></ul></ul><ul><ul><li>Nurturing of 115 companies through the business incubators </li></ul></ul><ul><ul><li>30 000 participants through the employment centre </li></ul></ul><ul><ul><li>50 000 participants in technology programmes </li></ul></ul>
  13. 13. Barcelona Activa - key focus areas <ul><li>BARCELONA ACTIVA… KEY FOCUS AREAS </li></ul><ul><li>Entrepreneurship </li></ul><ul><ul><li>To spread entrepreneurship and coach entrepreneurs to take the next step from the business idea to the creation of their own business </li></ul></ul><ul><li>Businesses </li></ul><ul><ul><li>To facilitate the future of recently created businesses by generating co-operation networks and contributing to the improvement of their competitivenes </li></ul></ul><ul><li>Human capital </li></ul><ul><ul><li>To increase the professional opportunities that accompany emerging economic sectors, new work cultures and new occupations </li></ul></ul>
  14. 14. Barcelona Activa - key focus areas ctd… <ul><li>BARCELONA ACTIVA… KEY FOCUS AREAS…CTD </li></ul><ul><li>Employment </li></ul><ul><ul><li>To adapt the professional profiles of the people looking for work or wanting to improve their occupation, and to foster labour inclusion of those collectives with greatest difficulties, by responding to the needs of the companies </li></ul></ul><ul><li>Cibernarium </li></ul><ul><ul><li>Collaboration project between EU and Latin America co-ordinated by City of Barcelona </li></ul></ul><ul><ul><li>To develop electronic services, the use of Internet and the information society skills of citizens </li></ul></ul><ul><ul><li>To diminish the digital divide between citizens </li></ul></ul><ul><li>Innovation </li></ul><ul><ul><li>To make innovation the engine for generating initiatives and talent in Barcelona </li></ul></ul>
  15. 15. Barcelona Activa - key focus areas ctd… <ul><li>STRUCTURE OF SMALL BUSINESS ENVIRONMENT IN SA </li></ul>
  16. 16. Challenges in the small business developmental environment in South Africa <ul><li>CHALLENGES IN THE SMALL BUSINESS DEVELOPMENTAL ENVIRONMENT IN SA </li></ul><ul><li>Little/no consolidation of small business development services in SA </li></ul><ul><li>Few rural or peri-urban service-provider sites </li></ul><ul><li>No clarity in the mind of the client on the services available </li></ul><ul><li>Little or no tracking of client progression through services </li></ul><ul><li>Institution reporting often on outputs rather than outcomes </li></ul><ul><li>No dovetailing of services in the system </li></ul><ul><li>Lack of cohesion of services resulting in loss of benefit to the client no shared information + lack of collaboration = inefficiency x lack of strategic alignment </li></ul>
  17. 17. Breakdown of entrepreneurial organisations in SA <ul><li>BREAKDOWN OF ENTREPRENEURIAL ORGANISATIONS IN SA </li></ul><ul><li>The Business Place stats </li></ul><ul><ul><li>Sole proprietor – 45% </li></ul></ul><ul><ul><li>Close Corporation – being phased out - 40 % </li></ul></ul><ul><ul><li>PTYs 3% </li></ul></ul><ul><ul><li>Partnerships – 2% </li></ul></ul><ul><ul><li>Co-operatives – 10% </li></ul></ul><ul><li>Official stats… </li></ul>
  18. 18. Latest trends in emerging economies…growth of co-operatives <ul><li>LATEST TRENDS IN EMERGING ECONOMIES… GROWTH OF CO-OPERATIVES </li></ul><ul><li>India </li></ul><ul><li>Brazil </li></ul><ul><li>South Africa </li></ul>
  19. 19. Challenges with co-operatives in South Africa <ul><li>CHALLENGES OF CO-OPERATIVES IN SA </li></ul><ul><li>Literacy level among members </li></ul><ul><ul><li>Financial </li></ul></ul><ul><ul><ul><li>Purchasing power </li></ul></ul></ul><ul><ul><ul><li>Pricing </li></ul></ul></ul><ul><ul><ul><li>Profit sharing </li></ul></ul></ul><ul><ul><ul><li>Personal income vs business income </li></ul></ul></ul><ul><ul><ul><li>Working capital </li></ul></ul></ul>
  20. 20. Challenges with co-operatives in South Africa <ul><li>CHALLENGES OF CO-OPERATIVES IN SA…CTD </li></ul><ul><li>Marketing </li></ul><ul><li>HR systems </li></ul><ul><ul><li>Guidelines on roles and responsibilites </li></ul></ul><ul><ul><li>HR policies and procedures </li></ul></ul><ul><li>Operational processes </li></ul>
  21. 21. Interventions for small businesses in South Africa
  22. 22. B-BBEE codes…ED <ul><li>B-BBEE codes…ED </li></ul><ul><li>3% of NPAT towards Enterprise Development </li></ul><ul><li>Trend in SA </li></ul><ul><li>Money available vs money really spent </li></ul>
  23. 23. Recommendations <ul><li>RECOMMENDATIONS </li></ul><ul><li>Funding </li></ul><ul><li>Corporate SA </li></ul><ul><li>Policy </li></ul><ul><li>Entrepreneurs </li></ul><ul><li>Eco-system </li></ul><ul><ul><li>Skills and training </li></ul></ul>
  24. 24. Recommendations <ul><li>CASE STUDY… </li></ul><ul><li>Making businesses procurement ready </li></ul><ul><li>presented by </li></ul><ul><li>Shawn Theunissen </li></ul><ul><li>Head of Corporate Social Responsibility for Growthpoint Properties and founder of Property Point </li></ul>
  25. 25. Recommendations <ul><li>ENTERPRISE DEVELOPMENT </li></ul><ul><li>New entrants into the market economy </li></ul><ul><li>Minimisation of the divide between informal and formal economy </li></ul><ul><li>Stimulation of economic growth </li></ul><ul><li>Procurement opportunities </li></ul><ul><li>Job creation </li></ul>
  26. 26. Recommendations <ul><li>INFORMAL BUSINESS NEEDS </li></ul><ul><li>Finance </li></ul><ul><li>Marketing </li></ul><ul><li>Capacity building </li></ul><ul><li>Opportunities </li></ul>
  27. 27. Recommendations <ul><li>RESEARCH FINDINGS INFORMAL SECTOR </li></ul><ul><li>Compliance </li></ul><ul><ul><li>Legislative </li></ul></ul><ul><ul><li>Technical </li></ul></ul><ul><li>Business Structures </li></ul><ul><ul><li>Financial Management </li></ul></ul><ul><ul><li>Human resources </li></ul></ul><ul><ul><li>Business development </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Growth strategy </li></ul></ul><ul><li>Personal development </li></ul>
  28. 28. Recommendations <ul><li>FORMAL ECONOMY… BARRIERS TO ENTRY </li></ul><ul><li>Compliance </li></ul><ul><li>Stringent procurement requirements </li></ul><ul><li>Relationship and reputation </li></ul><ul><li>High risk </li></ul>
  29. 29. Recommendations
  30. 30. Recommendations <ul><li>IMPACT </li></ul><ul><li>Number of interventions 80 </li></ul><ul><li>Number of SMMEs attending 1 290 </li></ul><ul><li>Number of jobs created 216 </li></ul><ul><li>Value of procurement contracts R24 719 093.00 </li></ul>
  31. 31. Questions… <ul><li>QUESTIONS AND DISCUSSION </li></ul><ul><li>Shaun Govender - CEO The Business Place </li></ul><ul><ul><li>www.thebusinessplace.co.za </li></ul></ul><ul><li>Shawn Theunissen - Head of Corporate Social Responsibility for Growthpoint Properties and founder of Property Point </li></ul><ul><ul><li>www.growthpoint.co.za </li></ul></ul><ul><li>your gateway to entrepreneurship </li></ul>
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