Blindly donating a portion of your business’s hard-earned profits toward maintaining a glowing B-BBEE scorecard might ensure compliance on paper, but no contributor should be satisfied with simply ticking all the boxes. Your ESD contribution, representing the largest chunk of a business’s B-BBEE rating, is not meant to be a handout. It is set aside to help grow and develop potential suppliers into strong competitors that stimulate the economy and provide employment opportunities, and as any entrepreneur knows, cash-flow is just one ingredient to a successful business.
It is for this reason that Edge Growth has always maintained a commitment to the spirit of ESD, and not merely its requirements, as the approach that yields the best results. Any ESD supplier that your business chooses to work with must therefore have industry-specific experience and a firm knowledge of business incubation and development, if your funds are to create lasting and meaningful impact for your beneficiaries.
At Edge Growth, we ensure one of the industry’s highest ESD success rates through carefully planned alignment and synergy between our contributors and their beneficiaries. By pairing industry heavyweights with small suppliers in similar or adjacent sectors, our contributors can offer business development guidance and support – not just funding – that will ideally develop the supplier into a key part of the enterprise’s value-chain. For example, a software enterprise has little to teach a farmer or artisan about how to run their business, and even less to gain from their success. Small businesses fail, or fail to grow at the rate they would like, for many different reasons – lack of funds is only one among them.
In our years of experience in the South African SME market, we have identified four primary factors that lead to wasted B-BBEE budgets, that achieve little in the way of national development and entrepreneurial upliftment.
- Lack of access to market
- Lack of access to customised funding
- Unclear or inappropriate business model
- Skills gaps and lack of entrepreneur development
Receiving funding without the guidance on how to use it wisely can only limit the results that are possible. In fact, our experience shows that SMEs who receive ESD funding alone experience, on average, -18% growth, while those who receive ongoing business development support grow by an average of 130%.
Only ESD providers with years of experience in a variety of different fields are equipped to clear away all four of these stumbling blocks and accelerate meaningful business growth. It is impossible for a business to grow when its management processes and skill-set are not keeping up with the demand, which is why ongoing business support is a vital facet of every ESD implementation we undertake.
With the economic output of SMEs in South Africa accounting for 52% of total GDP, and the SME sector already providing 60% of all employment opportunities, growing the South African business landscape is about more than just funding. It’s about passing on technical skills, business experience and entrepreneurial guidance to a new generation of business owners. It takes experience and skill in both business and finance, and an ESD supplier with a strong track record in diverse business sectors, to make your ESD programme a success.
Use our checklist to find out what you should be asking when looking for a service provider and make sure you have all the essential components covered.
