A good Enterprise Supplier Development (ESD) Programme has the potential to be life-changing for a small business by helping to expand its market access. ESD, which forms part of the B-BBEE Code of Good Practice, involves the upliftment of a small company that a larger company may want to procure from in the future.
However, in practice, ESD is not without its challenges. The main concern with ESD programmes is the mismatched expectations between what the corporate and SMEs are getting versus what they think they should be getting, including investment in skills development, funding, and procurement.
Vivian Reddy, head of the access business unit for Edgegrowth, an ESD specialist firm, shares the top 8 mistakes SMEs make regarding ESD programmes, along with solutions for each one.
1. Entering a Programme Not Suited to Their Life Cycle Stage
Solution: Know Thyself
“Small businesses should be aware of their growth stage and whether they are ready to become an ESD partner. Incubator stage businesses are still in the idea stage and may not have produced revenue yet. Accelerator stage businesses have put their business ideas into practice and have been able to generate revenue. However, these companies require extra resources to catapult them to the next level.” – Kealeboga Mokolobate, ESD expert.
2. Not Checking the Service Provider’s Track Record
Solution: Research Your ESD Programmes
Most ESD programmes happily share their case studies and selection criteria. See examples like Pick n Pay, SAB, Sun International, Protea Hotels by Marriot, and Tsogo Sun. Find a full list of South African ESD programmes here.
3. The Corporate Doesn’t Buy the Product or Service the SME Produces
Solution: Know Whose Lives You Are Changing
“To stay sustainably in a good supply chain, you need a good fit with the company supporting you. To establish this fit, understand where your product/service is most suitable and whose lives it affects. Avoid assumptions and ask your current customers. Perhaps there is something small you could add to your offering to move into a new market.” – Kealeboga Mokolobate, ESD expert.
4. Entering Multiple Programmes Without Capacity to Implement Learnings
At the end of the day, an enterprise should leave an ESD programme empowered to survive in the business world. It’s a challenge when developing enterprises move from one ESD programme to another with nothing to show for it. Monitoring and evaluating these enterprises is essential to track growth and success and identify areas of weakness or further intervention.” – Khanya Okumu, ESD Specialist at Old Mutual.
5. Not Extracting the Most Value by Failing to Implement Learnings
Solution: Learn How to Implement New Ideas
1. Choose three ideas you want to try.
2. Decide when, how, by whom, and with what measured outcomes this should be done. Determine how you will measure results.
3. Set a target for results and timing. Allocate resources, including time, and do not accept half measures.
6. Entrepreneurs Attending Programme Events Themselves Instead of Developing Their Teams
Solution: Invest in Your Team
“Offering skills development initiatives could create a desirable workplace for both current and future staff. Employers who invest in training and staff development not only reap productivity benefits but also have a better chance of retaining employees.” – Kay Vittee, CEO of Quest Staffing Solutions (Pty) Ltd.
7. Not Taking Advantage of Access to Procurement People
Solution: Learn from Breva Founder Gladys Mawoneke
Despite being a relative newcomer in the competitive drinks market, Gladys Mawoneke managed to get Breva onto the shelves of major retailers like Woolworths, Pick n Pay, Shoprite, and select Checkers Liquor and Spar Western Cape outlets. The brand has also made inroads into hotels, including select Tsogo Sun four and five-star hotels. Mawoneke shares the biggest lessons she learned from selling to big retailers and what SMEs can learn about building relationships, getting the right product fit, and mastering systems and processes.
8. Being Critical of Sponsors, Which Does Not Endear Them to Corporates
Solution: Take Care of Your Business Relationships
The quote “all things being equal, people will do business with, and refer business to, those people they know, like, and trust” by American motivational speaker Bob Burg is as true today as ever. Jannie Rossouw, head of Sanlam Business Market, writes, “The golden thread distinguishing lasting business associations from the rest is the authenticity of the relationship; how genuine the business association is.” Read more.
