Ramaphosa undertook to expand government’s incubation hubs, including setting up digital hubs in the townships in all the major provinces. These will significantly complement Public Private Partnership-funded incubation hubs such as Riversands Incubation Hub, which are critical components in government’s plan to stimulate the economy by further opening up opportunities to start-ups and SMEs.
“We welcome President Ramaphosa’s focus on promoting a more inclusive, entrepreneurial economy through small businesses, and in particular to expand incubator support to go beyond training to implementation of skills developed. At the same time, it’s important for entrepreneurs and SMEs to make an equal effort to meet this goal,” says Riversands CEO Jenny Retief.
Much of the success of small-scale business is dependent on how proactive its owner is. Incubation hubs provide excellent grounding for success, but ultimately it’s up to the SME to become a sustainable operation. This effort starts with filling your knowledge gaps, hard work putting new skills into action and discovering the funding opportunities out there, says Retief.
“Government has established institutions to assist SMEs in terms of information, training and financing. These are not always obvious, so it’s important to do the research in order to find these platforms and leverage them,” says Retief.
One of Riversands’ key roles is to bridge the gap between entrepreneurs and the many players in the funding space, including numerous government funding initiatives by the Department of Trade & Industry, National Empowerment Fund, National Youth Development Agency, Industrial Development Corporation, the Land Bank and Small Enterprise Finance Agency, among others.
“Establishing the most fitting funder, then qualifying for that funding, can be tricky for entrepreneurs, who need to be finance literate and understand legal eligibility for each particular funding opportunity. At Riversands, we facilitate business coaching and training sessions to enable our entrepreneurs to become fundable and access these opportunities. An annual highlight is our FundEX event, which gives entrepreneurs the opportunity to interact with a variety of funders including banks, government funders and alternative funding platforms,” says Retief.
In respect of government funding, the general criteria is that the business should be majority black-owned, and also be registered with a tax clearance certificate, VAT number etc., and comply with all regulations such as CIPRO, SARS etc. Many SMEs that are eligible for funding are unable to secure it due being unable to produce the financial documentation required, which includes up-to-date management accounts, latest financial statements, budgets and forecasts, etc.
“While government has recognised the need to extend funding to small businesses, there is still a distinct lack of capacity building support to enable them to access this funding. This is where incubation programmes come in. At Riversands, we have a team of coaches and mentors who guide entrepreneurs and business owners in how to build the financial records and systems so their businesses can qualify for funding,” says Retief.
Again, the outcome of all interventions, be they from government or the private sector, is always dependent on the SME’s own input, says Retief.
“The bottom line is that while funders need to stretch further to reach entrepreneurs, to make themselves better known, these entrepreneurs need to make their own efforts to connect and ready themselves to tap these resources. Only then will the latent economic value of entrepreneurs in our economy reach its full potential.”
Find the right fit
Signing up with an incubator requires more than simply filling out an application. You need to be clear about which type of incubator would be the best fit.
South African entrepreneurs are spoilt for choice, with well over 100 business incubators in diverse industry sectors, from mining and manufacturing to IT and marketing.
“After you identify an incubator that seems best suited to your needs, do your research. Ask questions. Look at its track record and what it has achieved so far. Speak to some of the companies that have benefitted from the incubator programme, and find out how they benefitted,” suggests Retief.
“Aside from physical spaces or shared services, there may be a range of value-added services from infrastructure assistance, security and regulatory compliance, assisting you to access to grants or loans, opportunities to network with advisors and investors, and align your business with strategic partnerships. A good incubator has a robust team of mentors that delivers all these aspects of support,” says Retief.
