Expertise: Enterprise Development
Enterprise development (ED) attempts to create sustainable businesses that grow, lead to job creation, and in turn, contribute to the economic growth of South Africa.
While ED is a key area of focus for any business looking to apply the B-BBEE codes and deliver benefit to communities, it is critical to such areas as mining, where the Mining Charter makes far more stringent empowerment stipulations. In such charter industries, meaningful ED can make the difference between obtaining operating licenses or not. Moreover, for businesses serving charter industries, assisting in the ED process can be a competitive advantage.
For firms that are concerned with B-BBEE, the upstream and even downstream supply chains are replete with valuable ED opportunities. The specific mechanism for these involves carving off a portion of the goods and services supplied by large companies, and establishing ED entities to provide these services. These entities are then in turn mentored by the host company, and their large established service providers.
Haute performance has identified the following critical success factors in ED ventures:
- Quantify clearly the value of support needed for the ED venture to reach escape velocity
- Envision an entity that will reach escape velocity after no more than 5 years, with an ROI of at least 30%
- ED businesses must maintain he same exceptional quality standard that the host procures from established businesses
- The ED beneficiary (in other words, the ED business principal) must display the following 5 characteristics:
- Have deep experience in the industry which they will enter as a business owner;
- Be passionate about that industry;
- Be passionate about the local community;
- Be a capable leader with a demonstrable track record of success; and
- Be ready to spend the foreseeable future studying and upskilling
As a point of reference, Haute Performance assisted an Oil Major in two projects to develop a structure whereby distribution of their product to mines would be handled, with the following actions:
- Baseline the existing logistics operations
- Analyse the local market for potential additional volumes
- Build an adaptive, 5-year monthly financial model
- Establish funding requirements, and conduct scenario and sensitivity analyses
- Develop documentation to pitch the exercise to the executives of both our client, and their mining client