A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010

A Case for Quality in
Enterprise Development

By Allon Raiz

Copyright Raizcorp (Pty) Ltd

TWO LIVES
A B
• Private Education • Private Education
• Tertiary Education • Tertiary Education
• Starts Working in Family • Starts Working in Family
Business at 22 Business at 22
• Leaves family business @ • Family business goes
24 An emotionally invested Mentor 26
insolvent @
• Starts own business @ 25 • Starts own business @ 27
• Business Fails • Business Fails
• Starts new business @ 27 • Becomes a struggling
and sells it. insurance broker
• Builds large business, sells • Still battling at 43
it. Builds another

TWO LIVES
C D
• Born in Alex • Born in Alex
• Schooled in Alex • Schooled in Alex
• Father is a poor plumber • No Father, mother is a
based in Alex domestic worker
• Dream is to become a travel • Dream is to run a beauty
agent parlour/hair parlour
• Gets bursary to the USA • Finds a NVC programme
• Fait intervenes An emotionally Starts own parlour
• invested Mentor
• Builds her father’s plumbing • Business fails within first
business (Millionairess) year
• Educates her brother and • Working in a bakery as a
sister at private school
teller

What do they have in
Common?
• A • They were “selected” based
on their “blue heart”
• Someone believed in them
• They were surrounded with a
team
• They were now part of a
“community”
• C
• They now employ 10’s of
people
• They are now doing the
same for others (virtuous
cycle)


Entrepreneurial
Questions?
• If I have an idea, does that make me an entrepreneur?
• If I have been a survivalist hawker for 8 years, am I an entrepreneur?
• If I have never started or run a business before, am I the ideal
entrepreneurial mentor?
• If I have great academic qualifications, and no experience running or
starting a business, am I the ideal mentor?
• If I have 30 years experience but no people skills, am I the ideal
mentor?
• Do I need the same type of mentoring for my finance issues and my
self doubt issues?
• As an Entrepreneur, which do you pay first; the tax man or the
landlord?


Not Selecting
the
Entrepreneurs
Correctly/at all

Some
Learning is causes for Not selecting
not practical low levels the Mentors
enough of impact in correctly
ED

Providing low-
touch support


Challenge 1

We are not Selecting the
Entrepreneurs correctly/at
all


The Challenge with the
current ED Approach
Is a hawker an entrepreneur?

Not Everyone is an Entrepreneur
Only 4 -7% (GEM Report 2006/7/8/9)
Not every Entrepreneur is Successful
96% of businesses will fail in 10 years
Not every Business is Growth Business
Self Employed Vs Growth Entrepreneurial


Challenge 2

We are not Selecting the
Mentors correctly


current ED Approach
Not every person with experience can
communicate well and shift people
The are often paid by the hour. Many are ex corporate without
entrepreneurial experience. Is an old professor a good mentor?

Not every academic can communicate well and
shift people
They often cannot relate to the practical application of knowledge
Not every academic with experience can
communicate well and shift people


Challenge 3
Entrepreneurship is a complex
endeavor requiring multiple
types of inputs (high-touch)


current ED Approach
Becoming an entrepreneur cannot be taught in a
classroom alone.
The combination of classroom learning, in-business learning and
in-
mentoring increases uptake by a staggering 80%.
Entrepreneurship is as much about learning business
skills as it is about learning personal skills.
A single dimension approach to ED cannot work
The dynamic nature of the entrepreneurial challenge
means that different inputs will be required at different
times.

Copyright Raizcorp (Pty) Ltd Is an old professor a good mentor?

Challenge 4

Entrepreneurship cannot be
effectively taught in an academic
format only, it must be practical
and experiential


current ED Approach
Studies have found that entrepreneurial training
that uses the business plan as the foundation
does not work

Schwartz (2006) states that entrepreneurship
curriculum reform is more a matter of educating
teachers rather than students
Schwartz - the development of entrepreneurship
education is closely tied to the teacher’s own
learning process

Questions

What happens when you take a shotgun
approach to Enterprise Development?

Out of 981 businesses who went on SETA New
Venture Creation training for 12 months, how
many businesses do you think succeeded?


The Effects of a Shotgun –
Non Selective approach to

• Failure rates are extremely high
• Funds are effectively wasted
• An already low self Esteem is impacted
negatively
• Black Listing by Banks etc
• Debt Trap (increased overheads)


Question
If you took 31 mentors working in/for Government
programmes and you made them do a basic*
in-tray test to see if they could work out the
profitability of a hypothetical company, what
percentage would work it out?


6.5%

Unpacking the Mentor Challenge
a little more


What’s actually going on
most of the time
Challenge 1 Challenge 2
You are my private teacher All I want is your network


How are we choosing
them?
Experience Academics


A Case for Quality in


Question
• How many $ Billionaires do you think that
Harvard, Stanford and the University of
Chicago have produced?

»103
• Harvard – 62
• Stanford – 28
• UC - 13
Source – Business Standard Sept 2010

What do these 3 Universities
have in common?

• One of the highest level of student selection in
the world
• One of the best Faculties in the world
• One of the best and most comprehensive
teaching methods in the world
• One of the best support infrastructure in the
world


What are the obstacles
• Exclusive policies have historical connotations
• Perceived to be more costly
• Its hard to change
• Its hard to be pioneering
• There are other models that report success


Raizcorp
• Established in 2002
• For-Profit Model (Not a for-profit masquerading behind a not for
profit) (We are Philosophically aligned)
• Supports in excess of 200 businesses (800 business
graduated)
• Urban and Rural Models
• Equity and Fee models
• 6 current Prosperators 2010
• 3 new planned for 2011
• International expansion with IFC and others
• Award winner locally and by the WEF
• We have had many failures, but many more successes

The Raizcorp Hypothetical

Access to SELECTION
Knowledge

Access Access
to to
Markets Support

Access to
Finance


The Move to Guiding

Self Accrediting

Mentoring
Mentoring
Coaching

Guiding
Currently being
accredited by the British
Gvt

The Five Won’ts
1. We will not not select
2. We will not Train only
3. We will not Guide only
4. We will not Mentor
5. We will not provide funding (we leave that to
the specialists)


CURRENTLY INCOMPETENT CURRENTLY COMPETENT

Guides/Mentors ITG CEG PEG MEG

CPD
PRE-PROSPERATOR
PROSPERATOR
PITCH & POLISH

BIZGAZE

Entrepreneurs HIGH
REAP

M E D C B A
POTENTIAL


Filtering for Blue Heart

1. Expression of Interest
2. Interview
3. Test
Rural Applicants writing test
4. 3 Audits
5. Interview
6. Due Diligence
7. Panel Interview
8. Contract Oupa Sekati presenting his
business to the panel


What Raizcorp provides


Infrastructure

Access
to
Support


Personnel

Access
to
Support

Learning

Access to
Knowledge


Learning


Guiding

Access
Access to
to Knowledge
Support

Sales

Access
to
Internal
Linkages

Sales


Magic

Access
to
Support

How are we choosing
our Guides
Experience Academics
Empathy


Creating the Metrics

• Financials
– Profitability
– Growth %
• Employees (With a view to self sustainability)
• Cars
• Clients
• NAV
• Products


How do we measure lifecycle

Raizcorp Entrepreneurial
Lifecycle Measurements
(RELMs)

Sustainability


The Categories


Results
• 1 in 20 applicants enters a Raizcorp
programme on average
• 36% will fall out or be asked to leave for non-
compliance within 1st year (90% of the 36% in
first 6 months) – These are replaced
• >15% removed in year 2, and >5% in yr 3
• 95% of those that remain on the programme
experience an average growth rate in excess of
20% per annum


A new Era
• Mediocrity is a thing of the past


It takes courage to be
excellent


Questions

www.raizcorp.com
011-5662000
===

A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010

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A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010