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Sep 07, 2012

Regulatory environment killing small businesses

Africa|Branson Centre|Business Growth|Education|Environment|Flow|Google|Training|Africa|Mauritius|Rwanda|South Africa|Branson Centre|Flow|Tracey Webster
Africa|Business Growth|Education|Environment|Flow|Training|Africa|||Flow|
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The biggest challenge for aspiring entre- preneurs in South Africa is access to capi- tal and compliance with rigorous business laws, says nonprofit entrepreneur support provider Branson Centre of Entrepreneurship.

Entrepreneurs often require extra capital to grow and expand their businesses but are unable to access it, owing to a lack of credit history and collateral.

“This is killing small businesses in South Africa,” asserts Branson Centre CEO Tracey Webster.

The regulatory environment in which businesses operate is also too rigorous for small businesses, she adds.

She points out that it takes about six months to register a business in South Africa with the Companies and Intellectual Property Commission, while the equivalent process can be done in a week in other African countries such as Mauritius and Rwanda.

“This limits an entrepreneur’s potential, slows business growth and discourages [the entrepreneur],” Webster stresses.

Financial and business laws are also too rigorous for small business to comply with and are more appropriate for big businesses, the Branson Centre states.

“A form of tax exemption should be put in place during the first few years of a small business’s existence, which will enable it to grow and make a profit.

There are many things in the regulatory environment that can be improved to help small businesses. Government should pay attention to aspects such as tax require- ments and business registration to ensure entrepreneurships are encouraged and nurtured,” Webster suggests.

Further, the Branson Centre, which has been 100% funded by nonprofit foundation Virgin Unite, now aims to raise 50% of its own budget this financial year.

“We are encouraging corporate businesses to choose us as an option for their enterprise development (ED) spending, and, in doing so, will receive broad-based black economic-empowerment points for their scorecard.

Investing in entrepreneurship is a great way for companies to help create employment and alleviate poverty in South Africa,” says Webster.

Branson Centre Developments

The Branson Centre of Entrepreneurship, launched in 2007, decided last year to reposition itself from being a school to focusing on supporting entrepreneurs who have already started a business but who need assistance in growing and expanding those businesses.

The centre focuses on practical hands-on training through a foundation course ensuring the entrepreneurs have all the basics in place, allowing for a follow-up advanced course which explores growth models. The centre accepts entrepreneurs who already have established businesses.

“We don’t incubate ideas,” Webster states.

The centre typically deals with people from disadvantaged communities who do not have a tertiary education.

“These people successfully started a business and realised they didn’t have the business skills, knowledge or network to expand it, she notes.

“If an application to the Branson Centre is successful, we help entrepreneurs nurture and support their businesses.”

Webster states that an entrepreneur’s business does not have to be profitable to receive assistance from the Branson Centre, but it must be operational.

The centre also opens up networks to financial institutions and organisations that fund entrepreneurial start-ups.

“We spend a lot of time ensuring our entrepreneurs are investment ready and that they have adequate business plans in place so that these institutions will consider funding them,” she explains.

She further adds that the Branson Centre’s training programmes are focused on the specific needs of entrepreneurs.

The centre conducted a research study, the results of which were published in its ‘The Young Upstarts’ report in 2011, and interviewed 800 aspiring entrepreneurs about their most pressing requirements to succeed in business.

“We found that entrepreneurs needed mentorship, access to business knowledge and finance, as well as skills training. Therefore, we decided to focus our training programmes on those skills,” the Branson Centre states.

Last year, the centre assisted 180 entrepreneurs and it aims to assist a further 320 entrepreneurs this year.

“We are about halfway to this target,” Webster states.

Matric Not a Necessity

Webster states that matric is not a prerequisite for being a successful entrepreneur.

“We are continuously surprised by entrepreneurs who have managed to get a business off the ground without a proper education.

“Richard Branson never finished high school or went to university and he created more than 100 operational businesses across five continents, which has created jobs for 50 000 people. That proves that entrepreneurship can alleviate the skills gap and job shortage in South Africa,” she points out.

However, she notes that financial management does prove to be problematic for aspiring entrepreneurs who have not completed matric.

“We are, therefore, very focused on the type of finance courses we provide for entrepreneurs so that they can easily understand cash flow, profits and losses.

As long as entrepreneurs have institutions, such as this one, to turn to for support, there is no reason why they can’t make a success of their businesses. We try to provide as much assistance as possible in ensuring entrepreneurs are able to succeed,” the centre notes.

Google Visit

Webster adds that Internet company Google visited the centre in June, as part of its yearly Make a Difference Day. The company not only assisted entrepreneurs in setting up their own websites and networking platforms but it also provided advertising advice and support.

“We were actually exploring the benefits of social media for business development at the time,” Webster notes.

Entrepreneurs also had the opportunity to have face-to-face meetings with the Google staff to ensure they are running their businesses efficiently, she concludes.

Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
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