Small business is seen by many in South Africa as the saving grace in the fight against unemployment and with the track record of small business success, measured interventions to bolster this sector receive a lot of attention.
One such intervention is Shanduka Black Umbrellas (SBU), a business incubation programme in South Africa that is focused on supporting small black business on its path to achieve sustainability. SBU is arguably the top business incubator in South Africa, recognised for the solid interventions it is making to corporatize black businesses.
2015 was a watershed year for the incubator, as it celebrated six years in existence and won the Randall M. Whaley Incubator of the Year Award at the National Business Incubation Association in the United States.
To top it all off, they appointed Ms. Seapei Mafoyane as the new Chief Executive Officer. Seapei is a bold woman who believes that South Africa needs sustained long-term impact interventions to make notable strides in small business development. She defines this as her mission in her role as CEO.
SLA contributor Asanda spoke to her to understand how she sees the small business landscape in South Africa going forward and most importantly, the role SBU will play in the years ahead.
You have spent a significant amount of your professional career in strategy and financial services, how did you make your way to small business development in the not-for-profit space?
I worked in strategy and the financial services in various capacities for my entire career and this was in line with my undergraduate degree in the sciences. I came into direct contact with the small business development area during my MBA studies at Wits Business School a few years ago.
My research focused on an area that was not explored at the time, the challenges facing black female entrepreneurs in South Africa. It was during this time that I realised I had to be selfish and follow my heart. So you could say my dissertation led me to Shanduka Black Umbrellas.
Everyone is talking about small business development and how it can be the saving grace for the current economic climate is South Africa, why do you think it is receiving so much attention?
I think we have the buzz that we have now in South Africa because of the realisation of the dire needs in this country in terms of entrepreneurial activity and the economy as a whole. Sustained security of the black person is no longer in the employ of the white person. Black people can now dare to dream.
The challenge is to ensure that it is not just a buzz but that we have a coordinated approach from the various stakeholders that will ensure that we start seeing the upside to it.
What role has Shanduka Black Umbrellas played in the past to grow black business?
Shanduka Group has played a key role in setting the stage for the face of black business in the country. They led the pack in the establishment of a black-owned investment holding company in S.A. and it was a natural progression to have a foundation that focuses on both small business development and education.
What sets SBU apart is the clear focus that says, ‘we know we cannot be everything to everyone.’ So we chose to respond to the need of 100% black-owned businesses, which also happens to be the greatest area of need in terms of entrepreneurial activity in the country.
The businesses that are incubated at SBU are what we call the ‘cream of the crop’ in terms of entrepreneurial potential. We incubate businesses that will be sustainable so that they can improve the economic conditions in the country.
Our focus is not on survivalist businesses, but game changers and high impact entrepreneurs that can grow into large corporations and employers.
Over the last five years, SBU’s statistics have shown that out of the 100 business owners that walk through our doors, only 5% of them get to be incubated. This is because we have a clear focus on long-term sustainability and choose to support businesses, which can meet our strategic objectives which are aligned to the country’s National Development Plan (NDP).
What sets your business incubator apart from other incubators in the country?
We conducted extensive research on the trends in small business development and we found that 84% of small businesses fail within the first 24 months of operation and out of that, 90% are black businesses. Reducing the failure rate especially of black business is extremely important and that is why we have our mandate to respond to this group in particular.
When a business is accepted into our extensive 36-month program, they need to create a minimum of four jobs during that time. Other structures in South Africa on the other hand create on average 1.2 jobs and when you look at other developing nations, the figure sits at 3.3 jobs over the same period.
Our other focus is to ensure that at least 50% of the businesses that graduate from our program are sustainable. The national average of success currently stands at about 20%. SBU have maintained a statistic of 70% graduation sustainability over the last few years.
What has the business incubation industry and government not done well thus far?
What has not been done well is the maximising of all the available resources in the system to help execute the mandate.
The value chain for small business is still very disjointed and if we are to make the progress needed, this needs to change.
What are your priorities as the Chief Executive of SBU?
No doubt sustained long term impact. However there are a few things that need to happen for that to be realised. We want to not only see businesses doing well but as they graduate, they need to stay a part of the alumni of successful businesses which others starting up can look to for advice, mentorship and potentially market access.
I believe that it is this kind of growth that is needed in small business to start seeing long term, sustained impact. Outside of my work, my greatest passion is the restoration of the dignity of the black person and entrepreneurship is one of those vehicles that can help in the achievement of that.
What have you found to be the greatest challenges facing entrepreneurs?
I have found that the greatest misconception that exists with entrepreneurs is that they need funding to get their businesses going. I have found the main challenge as refining of the business model to ensure that there is a unique value proposition and a plan for scaling the business.
Having said that, SME’s need to take it a step further to understand how to support it once they have scaled it. Other challenges you find are:
- The business is often the person and they tend to be married to their ideas and they are not open to taking in other peoples’ sound advice; and
- The inability to adapt the offering to suit the demand of its clients. Most entrepreneurs do not take well to rejection and unless they are able to deal with this, it can be a stumbling block for their growth potential.
What would you say is the one thing SBU needs to work on?
Only 38% of incubated businesses at Shanduka Black Umbrellas are female, in a national population of 50% females. This is a gap that needs to be filled. Women tend to approach entrepreneurship differently, espousing the nurture inherent in them as opposed to the courage often required to start & run a business.
Women have made great strides in politics as seen in our parliament and in other growing sectors and we need to see this boldness in the area of entrepreneurship.
I do believe we will get there as a country as a whole and we, SBU included, need to drive that message of confidence in the abilities of women in business.
What advice do you have for business owners who say this journey is far more than what they bargained for?
You need to be clear about why you want in, in the first place. You need to fill yourself up with hope, belief and pure audacity because there will certainly be bumps along the way and when you reach them, you can dip into your bag of goodness to stay afloat.
Want to see women you know featured on SLA? Tell us what amazing things women are doing in your communities here.