A case for quality in enterprise development - Tshikululu Serious Enterprise Development workshop 2010

A Case for Quality in

Enterprise Development

Copyright Raizcorp (Pty) Ltd

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By Allon Raiz

TWO LIVES

A• Private Education

B• Private Education• Private Education

• Tertiary Education

• Starts Working in Family Business at 22

• Leaves family business @ 24

• Starts own business @ 25

• Private Education

• Tertiary Education

• Starts Working in Family Business at 22

• Family business goes insolvent @ 26


An emotionally invested Mentor



• Business Fails

• Starts new business @ 27 and sells it.

• Builds large business, sells it. Builds another


• Business Fails

• Becomes a struggling insurance broker

• Still battling at 43��

TWO LIVES

C• Born in Alex

D• Born in Alex• Born in Alex

• Schooled in Alex

• Father is a poor plumber based in Alex

• Dream is to become a travel agent

• Gets bursary to the USA

• Born in Alex

• Schooled in Alex

• No Father, mother is a domestic worker

• Dream is to run a beauty parlour/hair parlour

• Finds a NVC programme


• Gets bursary to the USA

• Fait intervenes

• Builds her father’s plumbing business (Millionairess)

• Educates her brother and sister at private school

• Finds a NVC programme

• Starts own parlour

• Business fails within first year

• Working in a bakery as a teller��

An emotionally invested Mentor

What do they have in Common?

• A • They were “selected” based on their “blue heart”

• C

on their “blue heart”

• Someone believed in them

• They were surrounded with a team

• They were now part of a “community”

• They now employ 10’s of


people

• They are now doing the same for others (virtuous cycle)

Entrepreneurial Questions?

• If I have an idea, does that make me an entrepreneur?

• If I have been a survivalist hawker for 8 years, am I an entrepreneur?• If I have been a survivalist hawker for 8 years, am I an entrepreneur?

• If I have never started or run a business before, am I the ideal entrepreneurial mentor?

• If I have great academic qualifications, and no experience running or starting a business, am I the ideal mentor?

• If I have 30 years experience but no people skills, am I the ideal mentor?

• Do I need the same type of mentoring for my finance issues and my


• Do I need the same type of mentoring for my finance issues and my self doubt issues?

• As an Entrepreneur, which do you pay first; the tax man or the landlord?

Not Selecting the

Entrepreneurs

Correctly/at all

Some causes for low levels

of impact in ED

Not selecting the Mentors

correctly

Learning is not practical

enough


Providing low-touch support

Challenge 1

We are not Selecting the

Entrepreneurs correctly/at

all


The Challenge with the current ED Approach

Not Everyone is an Entrepreneur

Only 4 -7% (GEM Report 2006/7/8/9)

Is a hawker an entrepreneur?

Only 4 -7% (GEM Report 2006/7/8/9)

Not every Entrepreneur is Successful

96% of businesses will fail in 10 years

Not every Business is Growth Business

Self Employed Vs Growth Entrepreneurial


Self Employed Vs Growth Entrepreneurial

Challenge 2

We are not Selecting the

Mentors correctly



Not every person with experience can communicate well and shift peoplecommunicate well and shift people

The are often paid by the hour. Many are ex corporate without entrepreneurial experience.

Not every academic can communicate well and shift people

They often cannot relate to the practical application of knowledge

Is an old professor a good mentor?


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They often cannot relate to the practical application of knowledge

Not every academic with experience can communicate well and shift people

Challenge 3

Entrepreneurship is a complex

endeavor requiring multiple endeavor requiring multiple

types of inputs (high-touch)


Becoming an entrepreneur cannot be taught in a classroom alone.


classroom alone.The combination of classroom learning, The combination of classroom learning, inin--business business learning and learning and

mentoring increases uptake by a staggering 80%.mentoring increases uptake by a staggering 80%.

Entrepreneurship is as much about learning business skills as it is about learning personal skills.

A single dimension approach to ED cannot work

The dynamic nature of the entrepreneurial challenge


The dynamic nature of the entrepreneurial challenge means that different inputs will be required at different times.

Is an old professor a good mentor?

Challenge 4

Entrepreneurship cannot be

effectively taught in an academic effectively taught in an academic

format only, it must be practical

and experiential


Studies have found that entrepreneurial training that uses the business plan as the foundation


that uses the business plan as the foundation does not work

Schwartz (2006) states that entrepreneurship curriculum reform is more a matter of educating teachers rather than students


teachers rather than students

Schwartz - the development of entrepreneurship education is closely tied to the teacher’s own learning process

Questions

What happens when you take a shotgun approach to Enterprise Development?approach to Enterprise Development?

Out of 981 businesses who went on SETA New Venture Creation training for 12 months, how


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many businesses do you think succeeded?


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The Effects of a Shotgun –Non Selective approach to Enterprise Development

• Failure rates are extremely high• Failure rates are extremely high

• Funds are effectively wasted

• An already low self Esteem is impacted negatively

• Black Listing by Banks etc

• Debt Trap (increased overheads)


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• Debt Trap (increased overheads)

Question

If you took 31 mentors working in/for Government

programmes and you made them do a basic*programmes and you made them do a basic*in-tray test to see if they could work out the profitability of a hypothetical company, what percentage would work it out?



6.5%

Unpacking the Mentor Challenge a little more


What’s actually going on most of the time

You are my private teacher

Challenge 1 Challenge 2

All I want is your network


How are we choosing them?

Experience Academics


A Case for Quality in

Enterprise Development


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Question

• How many $ Billionaires do you think that Harvard, Stanford and the University of Harvard, Stanford and the University of Chicago have produced?

»103• Harvard – 62


• Harvard – 62

• Stanford – 28

• UC - 13Source – Business Standard Sept 2010

What do these 3 Universities

have in common?

• One of the highest level of student selection in the worldthe world

• One of the best Faculties in the world

• One of the best and most comprehensive teaching methods in the world

• One of the best support infrastructure in the


world

What are the obstacles

• Exclusive policies have historical connotations

• Perceived to be more costly• Perceived to be more costly

• Its hard to change

• Its hard to be pioneering

• There are other models that report success


Raizcorp

• Established in 2002

• For-Profit Model (Not a for-profit masquerading behind a not for • For-Profit Model (Not a for-profit masquerading behind a not for profit) (We are Philosophically aligned)

• Supports in excess of 200 businesses (800 business graduated)

• Urban and Rural Models

• Equity and Fee models

• 6 current Prosperators 2010


• 6 current Prosperators 2010

• 3 new planned for 2011

• International expansion with IFC and others

• Award winner locally and by the WEF

• We have had many failures, but many more successes

Access to

The Raizcorp Hypothetical

SELECTIONAccess to Knowledge

Access to

Support

Access to

Markets

SELECTION


Access to Finance

The Move to Guiding

Self Accrediting

Co

ach

ing

Me

nto

ring

Guiding

Currently being


Co

ach

ing

Me

nto

ringCurrently being

accredited by the British Gvt

The Five Won’ts

1. We will not not select

2. We will not Train only 2. We will not Train only

3. We will not Guide only

4. We will not Mentor

5. We will not provide funding (we leave that to the specialists)


the specialists)

CURRENTLY INCOMPETENT CURRENTLY COMPETENT

CEG MEGPEGITGGuides/Mentors

CEG MEGPEGITG

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& P

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M E ABD CHIGH POTENTIAL

PR

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Entrepreneurs

Filtering for Blue Heart

1. Expression of Interest

2. Interview2. Interview

3. Test

4. 3 Audits

5. Interview

6. Due Diligence

Rural Applicants writing test


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6. Due Diligence

7. Panel Interview

8. Contract Oupa Sekati presenting his business to the panel


What Raizcorp provides


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Infrastructure


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Access to

Support

Personnel


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Access to

Support

Learning


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Access to Knowledge

Learning


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Guiding


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Access to Knowledge

Access to

Support


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Sales


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Access to

Internal Linkages

Sales


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Magic

Access


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Access to

Support

How are we choosing our Guides

Experience AcademicsEmpathy


Creating the Metrics

• Financials

– Profitability– Profitability

– Growth %

• Employees (With a view to self sustainability)

• Cars

• Clients


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• Clients

• NAV

• Products

How do we measure lifecycle

Raizcorp Entrepreneurial Lifecycle MeasurementsLifecycle Measurements

(RELMs)


Sustainability

The Categories


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Results

• 1 in 20 applicants enters a Raizcorp programme on averageprogramme on average

• 36% will fall out or be asked to leave for non-compliance within 1st year (90% of the 36% in first 6 months) – These are replaced

• >15% removed in year 2, and >5% in yr 3


• 95% of those that remain on the programme experience an average growth rate in excess of 20% per annum

A new Era

• Mediocrity is a thing of the past


It takes courage to be


It takes courage to be excellent

QuestionsQuestions

www.raizcorp.com


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www.raizcorp.com

011-5662000