Bolstering efforts to support high potential businesses to grow revenues and reach the next level of growth should be one of the solutions considered to help the country reach its National Development Plan (NDP) goals to create an estimated 11 million jobs by 2030.
Scale ups are high potential businesses that have been resilient enough to outgrow challenges that many small businesses face in the start-up stages. These businesses stimulate high levels of entrepreneurial activity and can drive the creation of sustainable jobs.
Heather Lowe, Head of Enterprise Development at FNB says the contribution of start-ups to economic growth and job creation is invaluable, but these businesses should not be neglected as they grow. High potential businesses still need support and mentorship in order to fulfill their legacies, contribute to sustainable economic growth and help the country to be more competitive.
Lowe says there is a growing misconception that scale-ups are already established and no longer require guidance and support. Despite their achievements, these businesses still face challenges on a daily basis and should be assisted in order to realise their full potential and grow into sizeable organisations.
“One of the biggest challenges faced by scale-ups in South Africa is effective leadership. Entrepreneurs that are able to transform start-up businesses into scale-ups need to possess a range of leadership qualities and should be able to adapt to the ever-changing global business environment,” adds Lowe.
Not only should these entrepreneurs have a long-term vision, but the skills to upscale themselves, their teams and the entire business and its operations.
According to Lowe the reason why a lot of scale-ups get stuck and fail to grow revenue is because they are not adequately geared for growth. In the hope of growing their businesses to the next level, entrepreneurs attempt to seize opportunities, but often get burnt in the process.
For example, for a scale-up business to successfully make the transition from trading locally to servicing the export market, it needs resources, management and leadership capabilities, financial assistance, employees with the right skill set and production capacity to ensure a smooth transition. This does not only place additional strain on entrepreneurs, but presents businesses with a new set of risks and challenges.
Although the government, investors and the private sector should be commended for developing initiatives aimed at supporting and promoting scale-ups and high potential small businesses, more needs to be done for the country to reach its job creation targets.
For instance, Small Business Development Minister, Lindiwe Zulu launched the National Gazelles programme last year, aimed at supporting 200 small businesses with a high potential for growth. In the private sector, Vumela and Edge Growth, two leading brands in entrepreneurship and venturing, recently launched 10X Entrepreneur™ to help talented entrepreneurial leadership teams to scale up their teams and businesses.
While the benefits of these types of initiatives will be realised in the longer-term, it is encouraging that we have already begun laying a foundation and are heading in the right direction.
“As the country continues to grapple with a challenging economic environment, more pressure is placed on the bottom line of businesses, threatening the creation and sustainability of jobs. We need to continue working together to develop an environment where big and small businesses can thrive to ensure the sustainability of the economy,” concludes Lowe.