Biznes Hub Entrepreneurship Recovery Programme

1.     Vision:

To Build a Collaboration Model that grows SME’s in a COVID19/4IR age, that can become a best practise in SA.

2.     The Problem:

• COVID19 has changed the world that we knew. The parameters of business have been redefined. Each business now needs to find its new normal. Businesses need to clarify how the needs of their clients have changed and how they need to change their business offering to meet those needs.
• Many people within Nelson Mandela Bay have lost their businesses or are needing to rebuild their businesses
• Other businesses have been unable to source funding relief due to compliance issues.
• New business opportunities are emerging, but people need to know how to capitalise on these opportunities.

The Business Case: The State of SME’s Post COVID19

The International Labour Organisation (ILO) estimates that SMEs represent about 90% of businesses and more than 50% of employment globally, while they also provide the main source of employment in sub-Saharan Africa accounting for 89.2% of all employment with the majority of economic units being informal (92.4%). Most of the workers in this sector are self-employed and work every day to earn a living and pay for their basic household necessities. Overall, SMEs are therefore important drivers of the growth of economies throughout the world, including in South Africa.

SMEs however, face significant challenges because of their character – smallness, overwhelming competition from large businesses, low savings, limited capacity to work from home, limited access to technology (e.g. high cost of data), lack of access to credit, poor skills base, unsupportive policy and legal frameworks, limited access to external markets, and limited access to infrastructure such as space, electricity, and more.

The Bureau of Economic Research (2016) estimates there are more than two million SMEs in South Africa of which only 33% are in the formal sector, the remainder being in informal sectors.

Stats SA (March 2020) estimates that more than nine million people are employed by SMEs in South Africa out of a total of 10.2 million employees in the country, excluding the non-agricultural sector.

The situation has been made even bleaker following the recent Reserve Bank estimate that the South African economy could shrink by between 2% and 4% this year as a result of the coronavirus and that there will be limited scope for an economic rebound next year, with growth unlikely to exceed 1%. Consulting firm McKinsey & Company has also warned about far-reaching economic ramifications of the pandemic, which is already disrupting millions of people’s livelihoods, with disproportionate impact on poor households and small and informal businesses.

The Centre for Development and Enterprise Research Study March 2020

The report COVID-19: The Impact on Small Businesses and Gaps in Current Solutions raises important national issues. It was compiled after 233 entrepreneurs from six provinces across 17 industries were surveyed to determine how COVID-19 is affecting their business.

Important Statistics:

·        Over 5 million micro and small businesses in SA

·        By 2030 9/10 new jobs will come from this sector

Survey Results (Of the 233 entrepreneurs)

·        77% are women

·        They employ an average of 6 people

·        85% did not receive any form of government grant

·        Due to COVID19 95% are unable to pay staff

·        50% doubt whether their business will survive

·        93% do not have other income sources

·        In spite of Relief Funds, 86% did not know where to access these funds

·        87% cannot run their business from home

The Solution: The Biznes Hub

The Biznes Hub is an existing collaborative business model developed by Zifundise Training, a Level 2 BBBEE company, where small businesses share resources in an establish office park type set up. The goal of the hub is to create an environment where businesses can flourish through active collaboration and where any entrepreneur can come and benefit from a hot desk and an office infrastructure in a professional business environment.

These small businesses (known as pillar collaborators) have combined their knowledge and skills to be able to offer a range of services to assist struggling SME’s to get back on their feet.

3.     Benefits

For the NM Bay Metro

·        A consolidated and proactive strategy to rebuilding the SME sector of the local economy.

·        A Collaborative Model where people can support and assist each other in taking their place in the mainstream

economy.

·        A sense of community as people face a shared challenge together.

For struggling SME’s and start-ups

·        A chance to rebuild in a safe, supportive environment

·        An established office infrastructure

·        A digitally functional and stable fibre internet

·        Support through available expertise

·        A formal business address

·        A subsidised model that makes rebuilding or starting cost effective

·        A professional environment

·        A collaboration ethos that permeates the work environment

4.     Strategy

• Build a support team of pillar collaborators who are willing to contribute to the rebuilding and growth of SME’s and entrepreneurs who utilize the Biznes Hub
• They provide a network of support skills and services
• Create a short-term support and advice system for non-pliant business who are trying unsuccessfully to source relief funding.
• Identify and screen entrepreneurs who need support to get back on their feet
• Develop of personalised support strategy including financial strategy for each client
• Identify funding and support partners to enable viable cost-effective support for the project
• These would include: NMB Business Chamber, FORUS, NAFCOC, additional identified partners
• A project team would be set up to drive this collaborative model
• Review and write up the Model to be able to reproduce elsewhere

5.     Key Principles:

• The model must not build dependence but must build self-reliance together with inter-dependence.
• The principle of ‘Pay it Forward’ must be inculcated in the hearts of entrepreneurs who are beneficiaries of the model.
• New business opportunities will be explored with a goal of growing employment in the Metro.
• Innovative thinking must drive this process and we need to be willing to tweak and change as we see necessary. No sacred cows.
• We explore ways for the businesses to be able to actively collaborate with each other, capitalising on the strengths of each business.
• We adopt a set of core values that guides actions, behaviours, and decisions.
• We source knowledge and ideas from other external best practises.

www.zifundise.com