Supporting Small Businesses in the Western Cape

Tue, 28 September 2010

“The office space that is provided, as well as the bookkeeping facility, computer training and mentorship programme are awesome. It also provides an environment where developing companies can network with passionate and interesting business owners.” Billy Radebe – owner of Executive Endleleni

REPORT 1: Black Umbrellas – Suppoting skilled artisans to develop new enterprises

The Black Umbrellas Enterprise Development Programme in the Western Cape is aimed at supporting artisans in small business. Entrepreneurs with established skills in a specific service or manufacturing/production oriented environment receive support in the form of infrastructure, support services, access to capital, and continuous mentoring with regular on-the-job training.

This three-year project provides the entrepreneurs with a bookkeeping service, marketing support, payment of basic running costs (like rent and telephones), and the use of a shared vehicle. SASIX funds a portion of the total cost of the three-year project which means Black Umbrellas is able to take on an additional 10 skilled artisans from disadvantaged backgrounds that need assistance with business infrastructure and capital to start small businesses.

The Black Umbrellas Craft Your Business Enterprise Development Programme is ongoing. Funding from SASIX was provided for the period September 2009 to August 2010.

Outputs and Impact

As a starting point, all entrepreneurs who register for the Black Umbrellas programme are required to participate in a basic training programme which includes workshops on business and market planning. Based on the outcomes of these workshops, structured mentoring is provided to guide them on the process of establishing their respective businesses. This report is limited to the outputs from the Western Cape office, and from the onset of the SASIX funding cycle. It is based on a maximum sample of 15 entrepreneurs.

Twelve entrepreneurs attended the Business Plan and Marketing Plan workshops, which covered a range of topics from costing and pricing to advertising and promotions. The workshops were conducted between September 2009 and January 2010.

During the workshops, entrepreneurs learned about research methodologies and subsequently conducted their own market research over a two week period. The information they gathered was used to compile a detailed marketing plan.

The workshops also included simple scenario planning to help entrepreneurs understand the impact of changes of circumstances on the business. In addition, these entrepreneurs learned about the preparation and interpretation of basic financial information, and how to incorporate this into their business plans. Entrepreneurs were provided with a template for business planning and required to prepare their business plan for a 12 month period. This included expenditure needs, understanding cash flow, and the impact of debt.

Expenditure

SASIX funding will contribute R63 918 to the total cost of the project. R40 000 of this has already been paid. The remaining tranche payment of R26 918 will be paid to Black Umbrellas as a reimbursement for expenses already incurred by the project.

DescriptionTotal Budget (as per budget approved by SASIX)Total Expenditure to date
Staff costs117 636117 636
Vehicles35 61435 614
Communication costs80 27880 278
Training and mentoring and travel120 045120 045
Bookkeeping86 42586 425
Rent36 63936 639
Operational costs91 45091 450
TOTAL568 087.00568 087.00


Challenges

One of the key challenges experienced by the project is the difficulty in providing uniform solutions for entrepreneurs as they are not a homogenous group and thus have different needs. To this end Black Umbrellas has categorised SMMEs (Small Medium and Micro Enterprises) that are registered with Black Umbrellas into three types:

Scratch businesses

Total start-ups in any industry (These pay R200 per month and their services are capped)

The ideal business

Someone with skills, contracts and a monthly income (These pay R1000 per month and they have unlimited services)

Contractors

Skilled workers who work only when work is available on a contract basis (and are thus only paid when such work is available)

The categorisation allows the project to provide more suitable services and thus give greater value to the entrepreneurs. Consequently the following services are no longer provided as a standard service:

  • Invoicing of customers and collection of amounts due
  • Reduced cost of materials through bulk purchase agreements with suppliers
  • A unique credit line on receipt of a guaranteed quote

Monitoring and evaluation

Monitoring undertaken by Black Umbrellas over the period of project implementation is based on the following:

  • Number of SMMEs: there are 100 SMMEs in the programme
  • Progress of individual businesses: this is done on a daily/weekly basis
  • Financial records of the organisation as well as the financial records of the SMMEs: this is done monthly
  • Mentoring of businesses and their knowledge of business practices: this is still being put in place but training and benchmarks for all businesses have been set in place
  • Development and implementation of a three-year plan for businesses to become sustainable and independent: this is part of the benchmark process and is being done for all the businesses

The information collected to date indicates that seven of the twelve entrepreneurs that participated in the workshops have achieved breakeven and generate a small profit while five are still spending more than the revenue generated by their business. All of the entrepreneurs who attended training have requested and are receiving specific mentoring for their respective businesses.

Conclusions

The programme seems to be progressing well and with reasonable success in assisting the entrepreneurs to establish their businesses and generate income. It is still too early to determine the strength of each of the businesses as they are newly formed businesses.



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