The development of entrepreneurship, an idea scarcely a few decades old internationally, is even younger in South Africa. As such, it is subject to debates informed perhaps more by theory than by evidence so far.
Approaches differ widely, from those who believe that entrepreneurs are born and are best left alone and unshackled by regulation to those who propagate the idea that even the poorest and most unskilled can be turned into entrepreneurs with enough training and support.
Somewhere in the mix is the idea, which seems to be gaining ground, that helping the “high-impact” entrepreneur gives society the greatest return on scarce developmental spend. Endeavor, a global non-profit organisation, takes this approach in more than a dozen emerging economies, including South Africa.
Malik Fal, Endeavor South Africa’s managing director, says that helping a few already successful entrepreneurs scale remaining obstacles furthers growth and creates more jobs and wealth than spending the same resources on hundreds of small, struggling firms.
At the same time, the stories of these successful business owners and the lessons learnt through helping them must be disseminated as widely as possible to inspire and teach others.
Endeavor South Africa has been following this “portfolio approach” for the past five years in South Africa. More than 750 companies have so far been screened, and 32 entrepreneurs accepted into the organisation’s portfolio.
Among them are Nkhensani Nkosi of the clothing brand Stoned Cherrie, Vinny Lingham of the website-creation tool Yola, Henri Johnson, inventor of ball-tracking technology Flightscope and Carlo Gonzaga of Scooters Pizza.
The entrepreneurs are put through a three-year programme of active support to help develop their expansion plans and arrange connections to execute those plans successfully.
Thereafter, the entrepreneurs remain members of Endeavor’s worldwide network of alumni.
The main challenge of popularising this approach is that it counter-intuitively helps those who are already successful by most standards. One of the main criteria to join is ownership of a business with a turnover of between R3-million and R100-million.
Not surprisingly, Endeavor has had to adapt its approach in South Africa to help counter perception problems, not least because its portfolio is mostly white.
Two new programmes are being launched this year. One is called Excellerator, which is aimed at “smaller companies that are less advanced,” says Fal, “but where we still see the potential for them to become high-impact. This will enable us to get companies from a broader diversity.”
Excellerator will follow the same method as the Endeavor programme: strategic assessments, business development and support, but there will be a clear cut-off after three years.
“Either they will exit the programme if we feel we are not getting traction, or the entrepreneur’s mindset is not really there to scale. Or they will become Endeavor companies,” Fal said.
Fal hopes to recruit 10 companies into the Excellerator programme.
The other programme, Enterprise Learning Circles, will consist of free fortnightly workshops for small business owners held in collaboration with the Gibs Business School. Endeavor hopes to reach about 1 500 business owners through the workshops.
Fal sees Endeavor’s role as crucial in the development of black entrepreneurs, but he warns that the next 15 years will require a different, more difficult approach.
In the first 15 years after 1994 the “low-hanging fruit” were picked by providing access for previously excluded black talent to corporates and government positions.
“Now, more than 15 years after 1994, the issues are different. There have been some side effects of BEE in the sense that now it is easier for a young black educated person to be snapped up by corporate South Africa than for them to take the risk and the long and difficult road of starting a business.”
Fal says, however, that the absorption of black talent into corporates can aid the development of black entrepreneurship by nurturing and developing crucial business and management skills, provided that the most entrepreneurial of them can be enticed out of the corporate sector and into their own businesses.
Fal says a “national discussion” is needed “on what’s beyond BEE for the economic transformation of the country, and how do we make sure that the country does not engulf itself in a culture of entitlement that BEE fosters in some spheres”.
The way to do that is to tell the stories of black entrepreneurs “who have a much more secure claim to wealth because they went through those hardships, of building their own businesses, and are going to provide jobs and wealth for South Africa for years and generations”.
The story of white entrepreneurs also needs to be told because “not all whites are connected to the old, rich families of South Africa”.
“Many white South Africans have built businesses from scratch in hard, difficult situations. It is important to tell their story so that young South Africans who feel that they don’t have a future in this country can see examples of people who stayed in South Africa, who’ve built businesses and are conquering world markets from South Africa,” says Fal.