The marriage of enterprise development and BBBEE compliance

Sometimes we do encounter a union where the two partners are truly meant for each other. The Department of Trade Industry got its matchmaking right when it introduced enterprise development to the broad-based BEE Codes of Good Practice in early 2007.

It even came up with a great lobola - every parent company that invests 3% of its profits in enterprise development may score 15 points on its BBBEE scorecard. But now is the time that we need canny wedding planners to deliver their services in order to facilitate the happy union.

The point of this nuptial analogy is that the biggest organisational headache of the wedding can, and should, be outsourced.

Corporates in South Africa are generally supportive of BBBEE compliance in principle; indeed, most are eager to improve their BEE profiles to fulfil their strategic objectives.

And like any proud parent, they are more than willing to pay for the wedding. But to set up their own enterprise development initiatives is an onerous burden which requires an expertise that most of us don't have.

The answer is that enterprise development should be outsourced to the right professionals.

Then, because companies expect top value for their enterprise development spend, we need to think about the methodology that's used. At this point we should ask ourselves why the many SMME support programmes that have already been established in South Africa have had so little impact.

The 2008 Global Entrepreneurship Monitor (GEM) reports that 9.9% of South Africans are engaged in some sort of entrepreneurial activity. While this is an improvement on the 5% reported in 2006, if you dig deeper the figures are not encouraging: most of these are early stage entrepreneurs; two thirds of them are survivalists who are only running an informal business out of necessity; 7 out of 10 have no knowledge of, or access to, any kind of support; and 41% are unbanked.

Let's not forget that only 4% of businesses in South Africa survive for longer than ten years.

My own work in enterprise development has confirmed the international experience of business incubators - that when entrepreneurs are nurtured in an incubator environment, their long-term success rate soars to 85%.

This methodology is even more productive when comprehensive and systemic support is given to individuals who have the potential to be great entrepreneurs. In my business we have close to a 100% sustainable success with such candidates.

We should not make the mistake of rejecting the practice of screening and selecting candidates for enterprise development. Not everyone has the ability to be an entrepreneur. So let's think smart and support those who do. We should be targeting the right people who have the right qualities, and giving them the very best support.

These are the entrepreneurs who, irrespective of their education, age, race or gender, will go on to grow thriving companies and create multiples of jobs. These are the people who will fulfil the vision of the Department of Trade and Industry.

A serious challenge is that we have a dire shortage of wedding planners to get this union off the ground. There is a gaping chasm in the market here.

Business skills trainers and consultants have a phenomenal opportunity to develop innovative programmes that can deliver effective enterprise development - to our corporates, to our talented emerging business owners, and to the vision of BBBEE - the right way.