Building businesses

Small business is a priority sector for South Africa. As a result, black economic empowerment scorecards specifically recognise the importance of enterprise development, counted as one of the seven black economic empowerment (BEE) elements.

Companies supporting the growth of small black businesses receive up to 15 BEE points on the generic scorecard, excluding any bonus points. According to the M&G Most Empowered Companies rankings, City Lodge was the best performer in this element, with a score of 18 points, followed by information and communication technology company Allied Technologies (Altech), healthcare group Discovery and transport company Cargo Carriers. Each scored 15 points.

Both monetary and non-monetary contributions are included in the enterprise development scoring, as well as recoverable and non-recoverable contributions.

Contributions should be initiated in favour of a beneficiary entity with the objective of assisting the development, sustainability and ultimate financial independence of the beneficiary.

"Companies are finding more ways to comply with enterprise development through the use of enterprise development funds and facilitators," says Empowerdex research analyst Tholiwe Ngidi. "What is lacking here are measureable outputs. We do not know if it is working, beyond a few success stories," she says.

For many small businesses and startups, cash flow can be problematic, especially when organisational red tape can delay payment for months. As a result, many top-ranked companies, including City Lodge, Discovery, Altech, Gijima and Telkom, offer early payment terms for small and medium enterprises.

"Enterprise development is our way of assisting start-up organisations to gather momentum and become sustainable employers and contributors to the economy. This area also produces very tangible benefits," says City Lodge chief executive Clifford Ross.

City Lodge also pays close attention to improving its performance in all the other scorecard measures contained in the Tourism Charter.

Ross says the group invested more than R3-million in the past financial year to support its enterprise development programme, particularly through cleaning and facilities management company Afriboom and concierge company Ilios Travel. To assist some suppliers with cash flow, the group has also implemented a shorter payment period.

Afriboom and Ilios were included in the programme some years ago, and have received ongoing contracts from City Lodge.

Today, Afriboom staff are employed throughout the group, mainly as cleaners, and Afriboom has a larger workforce than the City Lodge group. Ilios provides a range of concierge and travel-related services at booths within various City Lodge hotels.

Now that both companies have graduated from start-up status, City Lodge is analysing other opportunities in the enterprise development space.

Healthcare company Discovery has taken a slightly different tack with its enterprise development strategy, focusing on innovative entrepreneurs. Its sponsorship of global organisation Endeavour assists innovative and potentially high impact entrepreneurs, while also supporting Discovery's own business operations.

The Awethu Project aims to develop entrepreneurial potential in young South Africans from poor communities, and Discovery offers mentorship and potential service procurement. The group also provides loans to black-owned businesses linked to the health sector and its supply chain, according to Discovery's sustainability report for 2012. Businesses participating in enterprise development initiatives have a shot at real growth.

More than 10 years ago, transport company Cargo Carriers offered five vehicles to a group of sugar farmers in the Malelane/Komatipoort region in Mpumalanga.

The new broad-based enterprise, Buhle Betfu Carriers, was able to buy back 60% of the company's shares, worth R7.5-million, within five years. It now owns 60 vehicles and employs more than 200 people, offering transport to both the sugar and timber sectors.

Buhle Betfu is owned by more than 600 small-scale farmers and has been recognised by timber giant Sappi and the Logistics Association for its achievements.

Meanwhile, Cargo Carriers's empowerment efforts have continued with a new entrepreneurship programme.

"The group acknowledges that finance and business experience is a barrier to entry for historically disadvantaged individuals into the transport and logistics industry," the company stated in its most recent annual report.

Cargo Carriers offers drivers with business acumen the opportunity to become self-employed through its owner-driver programme.

"The focus is placed on drivers who display the relevant business acumen and potential to succeed within the logistics environment."

Although this article has been made possible by the Mail & Guardian's advertisers, content and photographs were sourced independently by the M&G supplements editorial team. It forms part of a larger M&G Most Empowered Companies supplement.

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