Enterprise Development

“I believe that everyone is an entrepreneur in so far as they have the ability and desire to achieve great things and leave a legacy.”

Adrain Gore: CEO and founder Discovery Health

 

In terms of the BBBEE Codes of Good Practice, Enterprise Development aims to address key challenges facing small businesses, specifically black owned entities that struggle to take their business from survivalist or micro level to a level of sustainability and profitability. Enterprise Development is focused on addressing some of these key issues.

 

a) Key challenge - High Failure Rate

Small business is seen as high risk. Statistics reveal that 80% of South African small businesses will fail in their first 3 years of existence. Reason for this are:

  • Lack of access to finance or investment capital
  • Insufficient collateral
  • Poor education and little entrepreneurial training
  • Insufficient experience
b) Enterprise Development Solutions

The solutions identified by the BBBEE Codes of Good Practice are:

  • Investments, loans, grants, guarantees and the provision of seed capital
  • Access to credit, interest free loans, relaxed security requirements
  • Time spent on training and mentoring of black entrepreneurs / start­ups.

What constitutes Enterprise Development

Enterprise Development initiatives should typically aim to assist and accelerate the development, sustainability and ultimate financial and operational independence of the beneficiaries. This is usually achieved by helping beneficiaries to expand their operational and financial capacity.

 

Examples of Enterprise Development initiatives are:

  • Investments in beneficiary entities (Venture Capital)
  • Loans (both interest free and interest bearing)
  • SEED Capital (Venture Capital)
  • Access to finance through provision of collateral / relaxed security requirements
  • Infrastructure support
  • Training and mentoring support

The above list is not exhaustive but is relevant to this proposal. Each of the above initiatives are “weighted” differently; i.e., a loan that is provided interest-free will count for more than a loan that is interest bearing.

 

Qualifying Enterprise Development Beneficiaries

Although there are two categories of qualifying enterprise beneficiaries, any business that has a minimum black ownership of 25,1 % can be classified as a qualifying enterprise development beneficiary. The only real difference between the two types of beneficiaries is that of enhanced recognition. As an example, an investment with a black owned SME (>50%) will receive enhanced recognition of 25%. Thus a R1 loan will be recognised as R1.25 for BBBEE purposes.

 

Impact for Enterprise Development Funders

Based on our past experience together with the statistics of the top 200 JSE listed companies, the Enterprise Development section of the scorecard is the least used component. Some of the reasons for this are:

  • Enterprise Development is the least understood component of the scorecard.
  • It is viewed as an expensive annual spend.
  • Most companies consider Enterprise Development as another “tax”.

These issues are all misconceptions. In fact, Enterprise Development need not cost an organisation anything. Some of the issues that this proposal will reflect are:

  • Enterprise Development can be done via repayable, interest bearing loans, and
  • More importantly, a loan or investment provided is carried forward to future year’s BBBEE score if the loan remains unpaid
 
Our Clients
Our Beneficiaries
 
 

Our Vision

Our vision is to make a positive contribution to the establishment, development and sustainability of black entrepreneurs or black owned businesses.

 

Get in Touch


Key Contacts
Dean Harding
Email: Dean@SmartED.co.za
Cell: 083 288 8058
Fax: 086 692 0644

Shenaz Jhavary
Email: Shenaz@SmartED.co.za
Cell: 083 459 7866
Fax: 086 692 0644