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ADVANCING ENTREPRENEURSHIP OP-ED

It’s lonely being an entrepreneur — technology and automated business platforms are your friend

It’s lonely being an entrepreneur — technology and automated business platforms are your friend

In 2010, there were 590,000 registered small businesses in South Africa. By 2022, this number increased to 710,000. By the end of 2023, roughly one in every 10 adults will run a business of their own. 

Determination makes you run, never stop

Gotta win, gotta run ’til you drop

Keep the pace, hold the race

The mind is getting clearer

You’re over halfway there

But the miles, they never seem to end

……Run, on and on

Run, on and on

The loneliness of the long distance runner — Iron Maiden

This may well be the mantra of South Africa’s entrepreneurs right now. It’s lonely out there. Yet, it’s a reality that entrepreneurship will be the only route towards making a living for many South Africans. So the urgency to build entrepreneur capacity in South Africa and make a dent in our 54% unemployment rate is greater than ever.

Record levels of investment are being made into entrepreneur development. Still, research shows that our entrepreneurs lack critical skills — particularly in the areas of financial management and sales and operations — to have what it takes to build successful businesses.

When your lonely eye is fixed on the bottom line, where to turn to plug these gaps in skills? Ironically the answer lies in technology and the emergence of automated business platforms to address the lack of skills and stem the utter loneliness many entrepreneurs feel as they face the headwinds of power cuts, high-interest rates and dwindling customer spend, among other negatives.

A new report on Future Entrepreneurs by entrepreneur education nonprofit, Heavy Chef Foundation in partnership with various SMME-focussed organisations, has revealed three major shifts in the entrepreneur education landscape.

Firstly, entrepreneurs continue to experience a disconnect with the learning support they currently receive, with seven in 10 saying that they currently don’t have access to entrepreneur support programmes in their community, mentors or impactful networking opportunities. 

Secondly, entrepreneurs demonstrate a preference for learning that integrates with the entrepreneur lifestyle — in fact, six in 10 want learning that they can manage and direct.

Lastly, recent evolutions in digital technologies, automation and AI technologies’ integration into the mainstream align with these very same learning habits as it relates to the personalisation, control and access of learning data.

Growth in entrepreneurship

These three shifts are important in the South African context where there are not enough jobs — a fact that will not be changing in the medium to long term. In response to this crisis, South Africans are starting businesses of their own; some due to innovation but many out of sheer desperation.

In 2010, there were 590,000 registered small businesses in South Africa. By 2022, this number increased to 710,000. By the end of 2023, roughly one in every 10 adults will run a business of their own. 

Looking towards the viability of entrepreneurship as a source of making a living, especially among youth, where one in 10 are not earning or learning opportunities, the need for current and future entrepreneurs to be upskilled and supported in the right ways is more urgent than ever.

The good news is that there are record levels of investment going into entrepreneur development by both public and private institutions. It is estimated that R26-billion was allocated to Enterprise Supplier Development Programmes in 2021, increasing by 14% year-on-year. SMME development funds of large corporations currently can range between R100- to R500-million per fund.

Following the same trajectory, investment into education technologies in South Africa is larger than ever, with venture capital funding alone into EdTech startups totaling R120-million last year. 

Taking community into their own hands

At a grassroots level, entrepreneur communities are also picking up the baton to upskill themselves with seven in 10 sharing that other entrepreneurs are their most valuable sources of learning. We see it in community initiatives all over the country.

Like Youth Ventures Africa’s Youth Market in Diepsloot, which organises regular informal markets as action learning experiences for women and girls in the community.

The Test Hub in Heidelberg hosts local mentorship sessions, Siki’s Koffee in Khayelitsha is a regular gathering place for local entrepreneurs, and Workshop17 has turned its coworking spaces into vibrant lifestyle and learning hubs for entrepreneurs across the country.

Yet, despite the best intentions and actions from all levels of society, the proverbial needle is not moving.

Over the last four years, the Heavy Chef Foundation has been tracking how entrepreneurs rate their own business skills, across all demographics and types of businesses.

Quo vadis? Attracting customers and managing money 

While subjective, this research shows an increase in leadership and technological skills, but concerningly, a continued decline in critical skills in finances, sales and operations; this means that attracting customers and managing money remain two constant challenges.

Further taking into account the critical continued decline of financial literacy and maths skills among youth, we do not expect to see improvement in critical skills in future.

Technology provides hope on the horizon

The learning habits of entrepreneurs are mapping onto long-expected shifts in technologies that are now becoming mainstream at an accelerated pace.

Consider that the top five learning data needs of entrepreneurs are ease of access to learning; summary view of lifetime learning activity; customisation of needs; portability of data; and personalised learning.

These needs line up to technologies collectively known as “Web3”. Blockchain, digital tokens, crypto, AI and automation all offer distributed solutions that allow entrepreneurs to create, own and control their learning journeys. The impact of these technologies is vastly increasing the sophistication of platforms as a valuable source of skills development for small business owners.

With 76% of entrepreneurs saying they currently use at least one digital platform of some kind to run their business, these platforms have quickly become a trusted partner for entrepreneurs.

This is significant for entrepreneur development as these services are already solving significant skill gaps and are well-placed to accelerate their impact into the future.

Advances in cloud services, especially in fields such as accounting, sales and coding, focus heavily on automation, integration and service. But while these algorithmic solutions solve businesses’ needs, they are also increasingly making hard skills obsolete by doing much of the heavy lifting around critical skills.

Or to put it more accurately — they are redefining the skills needed by entrepreneurs, from doing to editing and decision-making.

As working examples:

Cloud-based accounting platforms such as Xero have evolved from passive accounting tools to becoming a rich source of business intelligence supported with a layer of sophisticated business advisory and educational services.

Incubators such as that offered by Black Umbrellas have broken down barriers to mentorship for emerging black entrepreneurs through their virtual incubation platform. From learning to business tools and impact measurement, their platform has evolved to become an intelligent and adaptive learning partner for the small business owners using it.

No longer do e-commerce entrepreneurs need to learn coding skills to set-up a payment gateway and manage different payment channels when the Payfast platform does it all for them.

Similarly, when choosing a domain or setting up a website, a platform such as xneelo has largely automated the process, making it much easier for entrepreneurs to create a website and get started, and can now focus on sales generation a lot sooner and with less technical know-how.

Our own community platform, Heavychef.com, curates short courses from entrepreneurs, thus giving its learners unmatched access to other entrepreneurs “How To” advice.

Platforms are also partnering up like that of Xero and FNB who recently collaborated to design a sophisticated supplier development programme. These platforms are helping entrepreneurs reconsider their priorities towards new sets of critical skills, such as data analysis and systems thinking.

These new insights support three critical interventions to promote much-needed entrepreneur development:

  • Policy: funding ongoing research and policy development to outline guidelines to integrate and support software-as-a-service platforms as part of entrepreneur education and enterprise supplier development initiatives;
  • Platforms: introduce incentives to accelerate the development of new business platforms and enable existing business platforms to increase their investment into adding entrepreneur learning into their service models; and
  • Programmes: create standards for entrepreneur development programmes to build relationships between platforms and entrepreneur communities and provide skills in the field of data science.

Entrepreneurship can be South Africa’s secret weapon to move the needle on unemployment, leveraging the significant size of investment in entrepreneur development — but this means that the moment to integrate service platforms into entrepreneur development policy, platforms and programmes is now.

The opportunity is a prosperous future where entrepreneurs, especially youth, learn hand-in-hand with the technologies they use in their businesses – the outcome of which is a more equitable society where barriers to starting a business are reduced and the ability to grow is increased. DM

Clotilde Angelucci, MD Youth Capital; Colin Timmis, Country Manager South Africa, Xero; Louis Janse van Rensburg, CEO, Heavy Chef Foundation; Lukhanyo Neer, Chairperson, Heavy Chef Foundation; Mark Frankel, CEO, Black Umbrellas; Philip Delport, CEO, xneelo; and Zinhle Novazi, Director, Heavy Chef Foundation.

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