Spotlight on Business Incubators

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With well over 300 organisations in South Africa whose primary function is to facilitate the growth of small businesses (twice as many as there are in India, whose population is 25 times bigger than ours!) we have to ask, are we stimulating actual SME growth or are we simply creating a false economy of growth facilitators?

Another pertinent question is: are business incubators any good? Do they really do anything to help start-ups in concrete, practical ways? Or should we simply give the money directly to the entrepreneurs? Many an entrepreneur will argue that what they really, really need is the cash – not the mentoring, not the talk shop, not the advice clinic, or e-learning module – just the money!

There’s been some discussion on various social media forums, and different opinions cast. There is understandable frustration that if you need transport to get your goods to market, then sitting through lectures on accounting, for example, has limited value. Until such time as you have a business generating the cash, the talk shop seems irrelevant.

Fetola’s position is that one must fix the leaky bucket first. In our experience, money alone doesn’t fix a business’ problems. Unless one builds a solid foundation or repairs the wobbly underpinnings, long term success will elude the entrepreneur. Throwing money at a business makes it harder, in fact, to properly analyse and attend to problems.

Our statistics over ten years show that long-term survival rates for businesses that have emerged from our incubation programmes stands at a remarkable 87% almost three times higher than the national average, which is below 30%! This suggests that when done well, business incubation can indeed be tremendously beneficial. Those corporates who experience their supply chain needs being met by competent entrepreneurs who consistently deliver quality services and products on time, will vouch for the benefit of the grooming that facilitates fully functioning SMEs.

So, do incubators work? Yes most definitely, if there is a shared responsibility for making long-term growth happen. For those who are selected to participate in a business incubator – whether a weekend crash course offering rudimentary skills, or an intense and monitored two-year one like the SAB Foundation Tholoana Enterprise Programme – the responsibility ultimately lies with each entrepreneur. He or she must optimise the advantages and opportunities afforded by coaching and mentoring, market access and education, and apply them in their own business to achieve lasting success.

Catherine Wijnberg
CEO and Founder of Fetola