The Department of Small Business Development (DBSD) commissioned Mthente to undertake a study that would investigate the effects of economic challenges and slow growth on SMMEs and Cooperatives. We were asked, among other things, to recommend policy responses that would support SMMEs and Cooperatives during periods of economic recession. One story of a passionate and resilient entrepreneur from Hout Bay provides insight into the kinds of issues faced by the small business sector.
I am often asked: What makes an entrepreneur and what does an entrepreneur need to build a sustainable enterprise? There isn’t really a short answer, but three of the most important ingredients are definitely: Passion, Resilience and Networks.
These are more than just words to put up on a wall. They translate into real emotions and approaches to business life, and can make or break promising enterprises. Nozipho Dube from Ecogift is an example of one such entrepreneur: she is driven by passion, strengthened by her resilience and empowered by the networks she has developed and drawn on.
Nozipho is a Cape Town entrepreneur, operating a CMT (Cut, Measure and Trim) business that employs 23 people full-time. She exemplifies the traits of passion and resilience, and recognises the importance of networking as the key to her success, but faces challenges in trying to scale and stabilise the business.
Entrepreneurship is about finding the Passion
The idea for Nozipho’s CMT business was planted while working for Embrace Dignity, an NGO that assists women wanting to leave a life of prostitution. It was this passion to help women get out of prostitution that was the first seed for her current business venture. She developed a business plan around making school uniforms, as uniforms are easy to make, are standard and do not follow trends. Her vision was to use the women the NGO was working with to manufacturer the uniforms and for the NGO to sell them, believing this was a way to ensure sustainable employment for these women. The business plan unfortunately was not realised. It was, however, when the NGO later sent Nozipho on a visit to visit UN Women that she really started to dream big. Being inspired by the women she met there she decided to review her life. Nozipho picked up her school uniform business plan, tweaked it to focus on protective clothing, and established Ecogift.
The South African Government’s National Development Plan and the Black Industrialist Policy was encouraging manufacturing as a growth area, as this sector was identified as core to the overall industrialisation process to drive economic growth. Nozipho therefore felt she was on the right track with her plan to manufacture work uniforms.
Entrepreneurship is about Resilience
Entrepreneurship has become a sexy notion, inviting us all to become the next Richard Branson or Patrice Motsepe. But a business owner takes a lot of knocks, and being a successful entrepreneur takes a huge amount of resilience. Many hard lessons were in store for Nozipho.
“I grew up sewing, since the age of 7. I sewed with my mom. She was very stylish and made all her own clothes. So, I have sewing in my blood, and because of this I thought creating a business around sewing was going to be easy. Boy was I wrong … I knew it was going to be hard, but I didn’t think it would be this hard. Doing this as a business, there are so many moving parts to it.”
Nozipho strategised that she would not open a factory until she had a full order book. She would outsource production for orders instead. The fledgling business got a break in October 2014 when De Beers Marine put in a large order for flame-retardant boiler suits. But then the manufacturer delayed production by a month.
“This is De Beers. And this is my first order, and I must go and say, ‘I’m sorry, you’re getting your uniforms a month late.’ Because, you know, factories shut down in December. So that was hard for me. After that first experience, I just thought: ‘I don’t need this headache. I can’t wait until my order book is full. I need control. I don’t want the stress.’ So, in March 2015 I got my first premises and hired a supervisor to assist me with the production.”
Another order worth R250 000 was returned. This devastated Nozipho and she went into a slump. She had to dig deep and speak to herself: “It’s ridiculous for me to be lying here in bed at half past eight in the morning,” she remembers telling herself. “Nobody’s going to solve this problem. No-one’s going to do it for you.”
Her sense of responsibility toward her employees helped her to shake herself out and get going again. This was rewarded with orders being received from Sportsman’s Warehouse and Truworths.
Entrepreneurship is about building the Network and finding Money
“It’s hard to find money. It is hard, hard, hard.” Nozipho became a member of the clothing and textile cluster because she wanted to get closer to the retailers.
“I wanted to find out what they were doing, what was happening in the industry. And it so happened that I began to interact with them. So now if I don’t have an order at least I can pick up the phone and say ‘Do you have extra work for my factory?’.
“I’m also trying to collaborate with other women more and more. A lot of women actually helped me along the way – and men, too – but there are many women who went all-out for me when I started the business.”
Because of a relationship with African Marine Solutions and De Beers, Nozipho feels that exploring the maritime space might work to her advantage. “I used to actually be a member of SAOAGA (SA Oil and Gas Association), so I think it’s time to renew that membership and start networking in that space.”
Another company loaned Nozipho a machine, delivered it at no cost, and allowed her to use their mechanic to set it up, despite not doing any work for them in the end. For Nozipho, it’s an approach built around assisting others to stabilise in the industry, which in turn grows the industry itself. She has tried to access government funds and grants but notes that such applications are time consuming to complete. “When a small business faces cash flow problems, there is an immediate need for money. If you wait for loans and grants through government agencies, your business would already be dead when the money finally arrives.”
Entrepreneurship and Policy
So how does Policy response impact an entrepreneur like Nozipho? Has the Black Industrialists Policy helped, for example?
Despite ISO9001 certification, and three years in business, she says: “I’m not feeling it yet. It’s been a real struggle. I think I can understand why. You have to prove yourself to a point before people can start to say ‘Okay’.”
Nozipho’s current goal is securing that elusive big order. It’s a catch 22, because funding is a huge barrier. But she also understands that you have to create your own opportunities. This year, she’s started looking at tenders. “It’s hard to find the money if you don’t always get the work. I’m just at the point where I think I’m ready to take the business to scale, so I’m looking for a long-term contract that will give me that stability.
“If we could figure out a way of scaling – that is the answer, because then we can also become more efficient. To do workwear with fourteen people – we are only half of a line, but to expand to a full line, we need the orders.”
A way forward
Nozipho’s story illustrates the challenges that small businesses face – with key limitations being around the access to finance and technology. It is the partnerships and networks that they forge that assists with access to cash for operations, technology and growth. For Nozipho these relationships have been developed with big businesses through their value chains, which have opened doors for her, offered her financial support and guidance. This is what small businesses need. It is this that assists them through economic crises and hardships.
For government it is important to identify the root causes of small business constraints and develop policies that focus on encouraging resilience. Policy interventions need to focus on the features that make small businesses vulnerable at all stages of their growth. These policy interventions need to focus on including quicker and easier access to finance, the provision of information and networks, funds to invest in technology and innovation, and overall skills development. If this investment is made during the stable periods, our small businesses will be more robust to confront the challenges of economic downturns.