Until recently, business incubation was a fairly new concept in South Africa. However, this landscape is fast-changing, with many corporations launching incubators and the Department of Trade and Industry supporting the establishment of many new incubators.This is the first offering in Small Business Connect’s ongoing focus on incubators and incubation. We spoke to Phindile Mthethwa, regional manager of the Shanduka Black Umbrellas Johannesburg branch.
What does your incubator’s name mean?
Shanduka means change.
How would you describe your focus?
Shanduka Black Umbrellas is an incubation, mentorship and development programme to facilitate the development and growth of the small business market. We offer a three-month pre-incubation programme and a three-year incubation programme.
Where are you based and from which areas do you recruit new incubatees?
The Johannesburg incubator’s address is African Heritage Society House, 325 Rivonia Boulevard, Rivonia. You will find more details at www.shandukablackumbrellas.org and you can call us on 010 590 5555. Our incubatees come from Johannesburg and surroundings.
Which businesses are best suited to join?
The entrepreneurs we select are mostly individuals with proven skills levels (for instance, an apprenticeship) but very little business experience. They must be post-conceptual stage. People with skills who want to start or grow their business are encouraged to apply. There is a rigorous screening process and only those committed few with ability and passion are invited to join.
How do they apply?
The Johannesburg Incubator holds orientation sessions every two weeks where prospective clients are introduced to the programme. At these sessions, they are provided with application forms and a template of a pre-marketing plan. Once these have been completed and returned, prospective clients are invited for an interview with the regional manager, where they will ‘sell’ themselves.
How long do businesses stay in your programmes?
In our pre-incubation programme, the entrepreneurs concretise their business plan and are assisted with basic financial management training and compliance with the Companies Act.
After these three months, they are required to present their business plan to an independent panel that decides whether the entrepreneur is the right fit for Shanduka Black Umbrellas’ strategic objectives. If chosen, the business will then stay in full incubation for three years.
What are the two key elements of your support that sets you apart from other incubators?
We provide a holistic approach to enterprise development, and the two outstanding elements are the relevant training programmes and the mentorship we offer small businesses.
How long have you been going?
Shanduka Black Umbrellas was a project first formed as Black Umbrellas by Cape Town social entrepreneurs Charles Maisel and Mark Frankel in 2005, which proved highly effective in supporting small business. In 2009, the Shanduka Foundation, chaired by Cyril Ramaphosa, partnered with Black Umbrellas, and Shanduka Black Umbrellas was launched.
How many incubatees are now in your programme?
The Johannesburg region currently supports 43 entrepreneurs in its incubator.
What are your fees?
All this is made available for a nominal monthly fee, depending on the stage the business has reached.
This allows entrepreneurs the space to focus on their core business, with the assurance that support is available and overheads are covered. A flat fee of R1 881 applies to the three-month pre-incubation programme. For the full incubation programme, the cost depends on the office space chosen by the entrepreneur.
All office space comes with a computer, internet access, telephone, fax and photocopy facilities, access to meeting rooms and boardrooms, reception service, bookkeeping services and refreshments. Entrepreneurs do not pay for the training and support they receive from Shanduka Black Umbrellas.
One-seater cubicles are R1 480 per month, three-seater clusters are R3 190 and lock-up offices are R5 000.
What commitments do incubatees make before they enter your programme? And what commitment do you make to them?
Our entrepreneurs are required to sign an agreement pledging their commitment to the programme, and undertaking to attend all the training and doing their best to meet the strategic objectives. In turn, we commit to supporting and developing them to the best of our ability.
What is the average sales of your incubatees after on, two and three years in your programme?
Our clients are in different business sectors. Their sales figures vary considerably and are dictated to by the industries they are in and their business size.
What is the best thing you have heard someone say about your incubator?
This programme has helped me focus and be accountable. If I was running this business from home, I hardly think I would have put in as much effort. At the incubator, I meet people who are in the same boat as myself.
And the worst?
This programme has not met my expectations because I did not get any business by being in the incubator.
What was your biggest success thus far?
An engineering firm that has been in our incubator for a year was recently awarded a contract of approximately R9 million.
And your biggest failure?
Terminating clients because they did not meet our strategic objectives, mostly owing to non-cooperation with our programme requirements.
Why are you involved in supporting new businesses?
We are responding to South Africa’s high employment rate and the need to create sustainable jobs. We realise that small business is the source of future jobs. It is for this reason that our entrepreneurs have to commit to creating at least four jobs by the time they exit the programme.
What is your biggest wish for improving support to entrepreneurs in South Africa?
Many small businesses fail because of a lack of access to markets. Our biggest wish is that corporates open their procurement opportunities to smaller entrepreneurs and give them the opportunity to sell their products and services to them.
- Go to SmallBusinessConnect.co.za/lists for a list of incubators.