The BBSDP, another Resource for Entrepreneurs in South Africa

Last week I attended a Department of Trade and Industry (Dti) workshop at the Eastern Cape Development Corporation better known as ECDC. Our hosts, Donald, assisted by Vhutsilo took us through the presentation in which they outlined what the Black Business Supplier Development is and how it works.

The objective of the programme is to leverage the competitiveness of black owned enterprises to broaden their economic participation. In layman terms, this means providing support to improve the ability of these targeted enterprises to compete in the market.  In the process, this should help them to be viable and sustainable.

What support is provided?

Black owned enterprises that require loan finance can access the programme to finance the development of their fundable business plans. This is much like the small business support programmes provided by SEDA, Khula and NYDA. A lot of emphasis needs to be put on FUNDABLE.  In my work as a small business advisor, I have seen the mass production of business plans, much like making fat cakes for sale at your local spaza shop. The difference is that in most instances the fat cakes are quality & they will literally fly off the shelf before the end of the morning. The mass produced business plans on the other end are cut and paste jobs, which are not worth even the paper they are written on.

The BBSDP also provides financial assistance in the form of grants to black owned enterprises up to R1 million. The grant provided is linked to the turnover of the business. It can be used to buy production assets such as tools, equipment and machinery. We were told the turnaround time for an application is 4 to 6 weeks, however from experience you are better advised to read that as 4 to 6 months, and I mean exactly that.

Other forms of support include assistance with the development and implementation of management systems. This is an excellent intervention considering that, according to the Nedbank Small Business Seminar, 82% of South Africa businesses that fail do so because of internal factors such as poor management, poor bookkeeping and record keeping, poor cash flow management, lack of sales and marketing systems and poor staffing. The other 18% fail because of factors external to the business such as poor economic conditions. The programme also assists enterprises in the development of and implementation of quality management systems, the purchase of accounting software, and skills training in business management, tendering and contracting.

Corporates require their suppliers to be BEE verified so that they are able to score points in their BBBEE scorecards. The BBSDP provides assistance with BEE verification and getting a BEE Certificate. For small businesses with turnovers below R5 million, the process to get a BEE certificate is very simple and costs about a grand. A cost benefit analysis would indicate that it is cheaper to self-finance your BEE certificate than going through the sometimes very cumbersome Dti processes, but again, some may see it differently.

How is this all done?

Network Facilitators are the foot soldiers of the BBSDP. Trained facilitators are tasked with identifying black owned businesses in need, carrying out assessments to determine the nature of the need, qualifying the enterprise, determining the required intervention and its scope and recommending required interventions. The Dti is currently looking for suitable people to train as Network Facilitators. If you are interested you can log on to the Dti website at www.thedti.org.za and download the application form, the closing date is 30 September, 2011.  The training carries a fee of R3,600 to ensure commitment, we were told. Personally I think this fee could be shared, with the service provider paying maybe half and the Dti subsidising the other half. Capacity building in the small business development sector is very minimal yet the challenges are enormous. Experienced small business practitioners would rather work for the big firms or work only with established successful businesses. The many practitioners who are servicing the lower end of the market which cannot pay for business advisory services require capacity building programmes to be more effective and productive. Yes I agree they benefit in terms of more business for them but the benefits to small businesses are even greater. A Dti that delivers on its mandate is a direct benefit derived from capacitating small business development practitioners.

Who qualifies for this programme?

To qualify, enterprises must have a 51% black majority shareholding, a turnover of between R250,000 to R35 million per annum, must be an existing business with over 1 year in operation and 50% of management positions held by blacks.

I hope this article will help my readers access this most important resource. I also look forward to sharing ideas with small businesses and development practitioners working in South Africa and the continent. Drop me an email if you need clarity on any issues developmental.