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Venture Capital – VC funding – Is it the right way to go?

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Apart from the fact that VC (Venture Capital) funding is almost impossible to get, especially here in South Africa.

Is raising business growth funding the right way to go?

What are the true costs and risks to the business founders and are there alternatives?

There has been a lot of money sloshing around the startup world for the past few years. Cheap and accessible capital has advantages: More founders get the opportunity to pursue big dreams and previously “unfundable companies” not only raise huge amounts of money, but some ultimately achieve unicorn status.

Discussions about the downside of this trend are usually related to systemic risks, like the perpetual bubble talk, but few are discussing the problem as it relates to founders — more capital equals more risk. But who is bearing this risk, and what really is the downside? Sure, capital providers are taking this risk — but they aren’t the only ones.

What is the right balance between Risk & Reward ?

 

Venture capital increases risk for founders

On a short-term basis, raising VC reduces a founder’s personal risk by allowing the team to draw a salary. Founders don’t need to put development costs on a credit card or face short-term economic hardship. But while counter-intuitive, raising venture capital makes your startup riskier in two key ways.

You limit your exits 

VC cash comes at the cost of reduced exit flexibility and the burden of an increased burn rate. Viewed probabilistically, the most likely positive exit for a startup is an acquisition for less than $50 million. This outcome has little benefit to VCs, and they will happily trade it for an improbable shot at a higher outcome.

Think of venture capital as a power tool — in the right hands, power tools can solve some real problems.

I regularly see entrepreneurs agonize over a percent of dilution, while ignoring the fact that they are surrendering their most likely exit options for a low-probability shot at building a superstar startup. Billions of dollars have been outright wasted by founders selling future value that didn’t materialize, while surrendering present value that could have been navigated to great success. My advice: Don’t give up your present for a future you haven’t validated.

You increase burn to dangerous levels 

Beyond signing away exit options, new venture capital typically is raised to fund higher burn rates. That increased burn rate is a great investment when it is being used to fuel a model that is working. More often, the increased burn is used to search for a model that works, and the company quickly learns that capital has no insights; it’s just money. Then the company cannot sustain the burn, the CEO decides to cut the burn way too late and cannot manufacture enough VC enthusiasm to keep the dream alive.

Every dollar you spend is a dollar of dilution. One rough rule of thumb is that startups should be able to triple their post-money valuation in two years. If you can’t figure out how to get 3 X leverage on every dollar you spend, you’re better off not spending the dollars — or raising them in the first place.

Founders need to think of venture capital as a power tool — a fairly dangerous one — but instead often mistake it for some magical, infinitely renewable resource. In the right hands, power tools can solve some real problems. Used incorrectly, they can chop off your hands.

VC’s need billion-dollar exits — you don’t

Billion-dollar exits are brilliant, but they shouldn’t be how founders calibrate success. The mania for billion-dollar valuations is the result of the business model of the venture capital market — not some legitimate definition of startup success.

Here’s a very rough illustration of billion-dollar VC fund logic:

  • VC raises a billion-dollar fund, needs to triple the fund to be successful
  • VC makes ~30 major investments
  • VC breaks even on 10, loses money on 10, needs remaining 10 to be worth an average of ~$300 million in proceeds to their fund
  • VC can only expect to own 20-30 percent of any given company (often less); anything less than $1 billion exit of your business isn’t a success in this model

This is why there is so much focus on billion-dollar exits. Not because this outcome is high frequency, but because a few massive funds need it to be so. Let’s not just point fingers at the billion-dollar funds. Similar VC math causes irrational trade-offs for founders whether their investors have billion-dollar funds or quarter-billion-dollar funds.

Capital has no insights; it’s just money.

As a general rule of thumb, assume that your exit needs to be approximately the size of the VC fund to “matter” in its returns. Of course, this is the tail wagging the dog, as the capital gatherers are encouraging irrational behavior of founders with a sales pitch of “go big or go home.” No one says the truth, which is “go big or ruin your life.”

 When your business fails, which probability says it most likely will, that VC has 29 more shots on goal. You destroyed your single startup, not to mention the wasted sacrifice over years of your life. In most VC deals, the investor is taking much less risk than the founder.

This is just fine for a subset of founders. It’s great that Ferrari’s exist, but it doesn’t make sense for the average person to mortgage their home and their future to buy one when Toyota Prius can fetch groceries just fine.

Maze puzzle solved

Exit value is a vanity metric

If one of your goals is making money, focusing on the exit price is a bad idea. It’s quite possible to sell a startup for a billion dollars and make less than someone who sells theirs for $100 million.

For example, the Huffington Post was reportedly acquired for $314 million, and Arianna Huffington made about $18 million. Michael Arrington sold TechCrunch to the same buyer for $30 million and reportedly kept $24 million. To a VC, TechCrunch’s sale would have been a “loss,” and many VCs would have pushed Michael not to sell. Yet Arrington was more successful, financially, than Huffington.

Practice efficient entrepreneurship

One argument I’ve heard from many VCs is that a founder won’t build a billion-dollar startup unless they go all-in from the start. This is nonsense — to become a billion-dollar business,a founder first needs to build a $10 million business. Founders shouldn’t jump to the end game before they’re ready. You focus on the first step and still become a huge player in the end.

Don’t give up your present for a future you haven’t validated.

This is empirically true — just look at Wayfair, Braintree, ShutterstockSurveyMonkey, Plenty of Fish, Shopify,Lynda, GitHub, Atlassian, MailChimpEpic, Campaign Monitor, Minecraft, LootCrate, Unity, CarGurus and SimpliSafe to name just a few. None of these startups embraced the “billions or bust” mentality at the start, though many are worth billions now. Most took very little venture capital until after they proved out product/market fit and knew how they could use the money to accelerate growth. Some didn’t take any capital at all.

All were hyper-efficient in the way they used capital from Day One. Several have gone public, a few have been acquired for billion-dollar sums. I don’t fetishize bootstrapping, but there is a lot to learn by studying how these founders built huge businesses with efficient use of capital.

Smart people, dumb money 

I was very happy to build and sell a startup for nearly $100 million, and while I would have liked to build a billion-dollar business, too many founders treat the probability of either outcome as close to equal. Earning billion-dollar exits is startup nirvana, for sure. But selling for $500 million is a home run, $100 million exits are amazing and $50 million exits can change the lives of families for generations. Even a “humble” million-dollar exit can make huge difference in a founder’s life.

venture_capital-travel

The point is, don’t be so quick to irrationally trade all of those options! Only trade these options when you’ve proven enough to have confidence that the future value of your company will be much higher. Capital has no insights. Don’t trade a solid business for a lottery ticket.

Irrationally raising money to scale something that doesn’t work does not result in building a big business. Founders should focus on smart growth and use VC to support that — instead of treating it like a steroid. Make efficient entrepreneurship your mantra. By all means, dream big — I’m not arguing that founders build small companies, solving small problems. If you have a legitimate need for capital, by all means raise it. But on the flip side, don’t sell your chance for success by giving up optionality and prematurely scaling burn rate in the name of fundraising glory.

Venture capital isn’t the right choice for most businesses, but when used well, it can be very powerful. Unfortunately, many VC-backed founders are using it incorrectly.

Source: Techcrunch


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Unemployment – South Africa’s Ticking Time-bomb

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Employment has been declining steadily in South Africa over the past two decades. The unemployment rate was 22 percent in 1994, 25 percent in 2014, and 26.7 percent currently. According to Statistics SA, employment growth in most sectors is well below real GDP growth. Growth in South Africa’s economy has been mostly jobless.

Statistics SA released the country’s latest unemployment figures on May 15 2018, indicating that the unemployment rate has remained unchanged in the first sector of 2018, at 26.7 percent. Unemployment among young people between the ages of 24 and 35 is 35.4 percent, and there are nearly 3-million young people in South Africa not currently in training, education or active job-seeking.

The government has invested in programmes such as the Youth Employment Services [YES] initiative, but even that initiative has strict limitations, an urban focus, and excludes the agricultural sector. Upon further analysis, it becomes clear that 100,000 fewer jobs were recorded, but that that number was too low to effect an impact on the overall unemployment rate. Seven of the nine provinces reported a decline in employment rates, and agriculture lost 3,000 jobs.

The reasons for unemployment growth are complex, but the intense regulatory pressure, rising input costs, and the overall difficult environment South African businesses have to do business in, all play a role. Administrative costs are high, and employers bear a heavy burden in having to provide services to employees that government cannot.

That is not to make light of the burden employees themselves bear, taking into consideration aspects such as the spatial planning legacy our country has. Simply getting to work is no mean feat for a large percentage of employees in South Africa.

Lastly, the effect of the changing world of work cannot and should not be discounted. South Africa’s labour market is not future-proof. According to Statistics SA, nearly 75 percent of employees in South Africa are low-skilled or semi-skilled.

Youth employment should be prioritised, and not become another over-regulated initiative with very little incentive for business owners. The easier it is to do business, the more business will be done.

Automation is a very real threat to job creation, especially in an environment where the cost of labour is rising. According to Martin Ford, futurist and author of “Rise of the Robots: Technology and the Threat of a Jobless Future”, explains the jobs that are most at risk are those which “are on some level routine, repetitive and predictable”. In plain language, that would mean lower-skilled jobs with defined decision-making.

This would mean that where jobs are created, these need to be future-proofed. Creating large numbers of jobs where no or low skills are required, is simply displacing the problem, not solving it. In South Africa, the need is for jobs where low or no skills are needed, as that is the bracket in which most employees fall. There is, in fact, an oversupply of labour. In solving South Africa’s problem, consideration should be given to a plan that will protect these employees.

What would a solution look like? Firstly, entrepreneurship should be encouraged, and more should be done to lessen the administrative burden on small and medium enterprises [SMEs]. SMEs should be heavily incentivised for creating jobs. Incidentally, more than 80 percent of commercial farmers in South Africa meet the definition of exempt micro enterprises (EMEs) in terms of the AgriBEE sector codes — and the argument for a lessened administrative burden applies to them too.

Secondly, youth employment should be prioritised, and not become another over-regulated initiative with little incentive for business owners. The easier it is to do business, the more business will be done.

Lastly, employers should ensure that social responsibility receives equal attention to profitability in all business models. Corporate social responsibility enhances a business’ standing and image for both prospective customers and prospective employees. The days of cutthroat business, in which the bottom line was the only factor considered, are well and truly behind us.

Let us not lose sight of the time-bomb that is unemployment in South Africa because of two or three relatively stable quarters. The time to plan and find solutions to this problem is now, as we cannot afford to lose any more ground.

Suggested read – Check out https://smartmoney.co.za 

  • Source: Huffington Post – Jahni de Villiers – Head: Labour & Development, AgriSA

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BEE – What you need to know

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How Do I Become B-BBEE Compliant?

BEE (B-BBEE) is an important part of doing business in South Africa so its best that you understand every aspect about it. Use this comprehensive guide to ensure your business is compliant and performing at its best.

Content in this guide

  • What Is Black Economic Empowerment (BEE)
  • Why Is BEE Referred To As B-BBEE?
  • Who Must Comply With BEE?
  • Legislation
  • How To Qualify For BEE
  • Understanding What Each Pillar Means
  • What Are Codes Of Good Practice For Broad-Based Black Economic Empowerment?
  • Levels (Of Compliance)
  • What Is SANAS?
  • Rating Process
  • What To Look For In A B-BBEE Partner

What is Black Economic Empowerment (BEE)

 

Black Economic Empowerment (BEE) is a government initiative aimed at increasing equity and uplifting black business owners, stakeholders and employees. The government refers to BEE as ‘positive discrimination’.

BEE is the process by which previously disadvantaged South Africans have been empowered through the transfer of ownership. Compliance with BEE principles are regulated by Codes, which provide details on how BEE should be implemented.


Why is BEE referred to as BBBEE?

 

When Black Employment Equity (BEE) was first implemented in the nineties, there was no coherent strategy towards its implementation. When the South African Government gazetted updated Codes of Good Practice at the beginning of 2007, it made the implementation of Black Economic Empowerment (BEE) a legal reality.

Even though most think of Black Employment Equity as BEE, as the process was refined, its name changed to Broad-Based Black Employment Equity (B-BBEE) in order to encompass not just Blacks, but Coloured, Indians and the Chinese populations of South Africa.


Who Must Comply with BEE?

 

Size is relevant in determining the levels of B-BBEE compliance. All organs of state, public entities and any private enterprise that undertakes business with a public entity must implement the Codes.

Any business providing goods or services to another business that is subject to BEE (B-BBEE) compliance may also need to provide evidence of its own BEE (B-BBEE) compliance.

The size of your business is significant in determining the required levels of BEE (B-BBEE) compliance. The Codes provide for three levels of compliance based on the size of your business:

  • Exempted Micro Enterprises (EMEs), which are businesses with an annual turnover of less than R10 million. This is a new amendment, EMEs were previously businesses with an annual turnover of less than R300 000 and less than five staff members.
  • Qualifying Small Enterprises (QSEs), which are businesses with an annual turnover of between R10 to R50 million.
  • Medium to large enterprises (M&Ls), which are businesses with an annual turnover of more than R50 million.

 

Advantages of BEE compliance

  • Allows participation in the formal South African economy
  • Companies will favour you as a client, particularly those aiming to acquire at least 50% of annual procurement from companies with BEE (B-BBEE) certificates.
  • Able to bid for Government tenders, apply for licences, get permits and are favourably considered for procurements by the Public Sector and all BEE (B-BBEE) verified enterprises.
  • Have access to tax incentives and financial grants, specifically aimed at the BEE (B-BBEE) programme.
  • Avoid long questionnaires relating to BEE (B-BBEE) when tendering for a contract.

Legislation Governing B-BBEE

 

There are three important pieces of legislation that control B-BBEE, namely:

Employment Equity Act (1998)

The Employment Equity Act applies to black people, all women and disabled people, in addition, stipulates the requirements for affirmative action to ensure that qualified people from these groups are equitably represented in all occupational categories and levels of a company.

The Act is binding on any business that employs 50 or more staff, or that has an annual turnover of more than R2 million to R25 million (depending on the industry in which you operate).

Skills Development Act (1998) and Skills Development Levy Act (1999)

These provide a framework for improving the skills and employment prospects of black people.

These Acts also make it compulsory for certain employers to contribute a percentage of their payroll (known as the Skills Development Levy) to a fund that can be used to train staff. The current generic B-BBEE scorecard awards points for skills development, but only for that which is over and above the payment of this levy.

Preferential Procurement Policy Framework Act (2000)

This allows any State entity to give preference to black people when awarding contracts. It also aims to boost SME development, create new jobs and promote local enterprises in specific provinces. Currently, the regulations of this Act are based largely on ownership, but this is likely to be revised in order to align it with the B-BBEE Act and Codes.


How to Qualify For BEE (B-BBEE)

 

There are four steps you’ll need to take to ensure you qualify for BEE (B-BBEE), including:

Step 1 – Select Your Company’s Annual Turnover

The size of your business is significant in determining the required levels of BEE (B-BBEE) compliance. The Codes provide for three levels of compliance based on the size of your business:

Exempted Micro Enterprises (EMEs), which are businesses with an annual turnover of less than R10 million. This is a new amendment, EMEs were previously businesses with an annual turnover of less than R300 000 and less than five staff members.

Qualifying Small Enterprises (QSEs), which are businesses with an annual turnover between R10 to R50 million.

Medium to large enterprises (M&Ls), are businesses with an annual turnover of more than R50 million.

Step 2 – Match the Turnover to the Scorecard

EMEs are exempt. However, these businesses will automatically receive a level associated with its percentage of black ownership, such as:

Black ownership BEE (B-BBEE) Status Level Procurement Recognition
100% Black Owned EME Level 1 135%
>50% Black Owned EME Level 2 125%
<50% Black Owned EME Level 4 100%

The annual turnover must be verified by an accredited accountant, auditor or rating agency.

QSE’s used to be able to choose four out of the seven BEE Scorecard elements to score their points. However, from 2014, QSEs must comply with all 5 elements of the revised BEE (B-BBEE) Scorecard to score their points.

M&L must comply with all 5 elements of the revised BEE (B-BBEE) Scorecard to score their points.

Step 3 – Determine the Number of Pillars Required For Your Scorecard

The five pillars of B-BBEE are:

  1. Ownership (Direct empowerment)
  2. Management Control (Indirect empowerment)
  3. Skills Development
  4. Enterprise Development
  5. Socio-Economic Development.

Step 4 – Select the Pillars For Your Scorecard

Each of the pillars is worth a certain ‘weight’ in its contribution to B-BBEE compliance. The pillars contribute to overall compliance as follows:

  • Ownership                25%
  • Management                19%
  • Skills Development            20%
  • Enterprise Development        40%
  • Socio-Economic Development     5%.

Ownership, skills development and enterprise development are now considered priority pillars and a minimum of 40% compliance is mandatory, in order to achieve level 1 B-BBEE.


Understanding What Each Pillar Means

It is important to understand the requirements of each pillar.

Ownership (counts 25 points)

When determining the level of black ownership, a business will score points based on the
following:

  • The extent to which black people can influence the strategic direction of the business through their shareholding
  • The current net value of their shares
  • The amount of profit (percentage of each Rand) that accrues to all of these black shareholders.
  • Whether these shares are paid for in full, or will be within 10 years or less.
  • Bonus points are awarded if any of the black shareholders are new entrants (who have not previously benefited from a B-BBEE deal)

Management (counts 19 points)

This refers to the proportion of black people who control the direction of the business as well as those in top management who control day-to-day operations.

Skills Development (counts 20 points)

Skills development measures a business’s investment in the training and development of black employees. Only specific types of learning programmes and learnerships qualify when claiming points on the skills development scorecard.

Enterprise Development (counts 40 points)

If the business offers support programmes, then you can claim points on the scorecard. For example, if you donate a vehicle to one of your black company drivers so that he or she can start a delivery company, you qualify.

Socio-Economic Development (counts 5 points)

Companies that spend at least 1% of net profits after tax (NPAT) on Social-Economic Development (SED) are eligible for 5 points under this pillar.

Social-Economic Development (SED), however, is not Corporate Social Investment (CSI). SED’s criteria demands that those being assisted gain long-term access to the economy and receive a lasting benefit. According to the definition in the legislature, any initiative should “facilitate income-generating activities”.


What Are Codes of Good Practice For Broad-Based Black Economic Empowerment (B-BBEE)?

 

The Codes of Good Practice refers to options that businesses can use in order to evaluate and track their B-BBEE efforts. Within the new B-BBEE regulations companies must meet specific targets. The codes are there to guide businesses into receiving an accurate rating, which it can include on the company profile.

The Codes of Good Practice are legally binding on all state and state-owned entities. These businesses have 10 years to reach this target, which means government will have to use the Codes to measure its B-BBEE compliance when choosing suppliers, granting licences or making concessions. The cascade effect of this focus on B-BBEE compliant companies is that non-compliant businesses will find it hard to grow or maintain their level of business success within South Africa.

On the other hand, private companies will also need to apply the codes if they want to do business with any government enterprise – in order to tender for business, apply for licences and concessions, enter into public-private partnerships or buy state-owned assets.

The Act is broken up into nine Subsections.

  • Code 000: Framework for Measuring Broad-Based Black Economic Empowerment
  • Code 100: Measurement of the Ownership Element
  • Code 200: Measurement of the Management Control Element
  • Code 300: Measurement of the Employment Element
  • Code 400: Measurement of the Skills Development Element
  • Code 500: Measurement of the Preferential Procurement Element
  • Code 600: Measurement of the Enterprise Development Element
  • Code 700: Measurement of the Socio-Economic Development Element
  • Code 800: Measurement of Qualifying Small Enterprises.

Sector Codes Are an Extension of Codes of Good Practice

Companies must also be aware of Sector Codes, which are an extension of the Codes, but apply within a specified industry sector only. For example, there is a Construction Sector Code (a new draft to appear in 2017), a Property Sector Code, Financial Sector Code and Tourism Sector Code. Sector codes are industry-specific interventions and measures driven by major stakeholders in industries where the codes are developed.


Levels (Of Compliance)

B-BBEE Contribution Level “Old” 
Scorecard Points
Amended
Scorecard Points
B-BBEE Procurement Recognition Level
1 ≥100 points ≥100 points 135%
2 ≥ 85 but < 100 ≥ 95 but < 100 125%
3 ≥ 75 but < 85 ≥ 90 but < 95 110%
4 ≥ 65 but < 75 ≥ 80 but < 90 100%
5 ≥ 55 but < 65 ≥ 75 but < 80 80%
6 ≥ 45 but < 55 ≥ 70 but < 75 60%
7 ≥ 40 but <45 ≥ 55 but <70 50%
8 ≥ 30 but < 40 ≥ 40 but < 55 10%
Non-Compliant < 30 < 40 0%

Customers (public and private) will prefer to interact and procure from companies with higher B-BBEE status (for its own recognition), level 1 being the ultimate goal. These are the current B-BBEE status levels:


What Is SANAS?

sanas-logo

The South African National Accreditation System (SANAS) is recognised by the South African Government as the single National Accreditation Body that gives formal B-BBEE recognition. A B-BBEE Certificate can be issued by any Verification Agency so long as they are approved to do so by SANAS. The Certificate can only be issued once a full verification has been performed and the documentation presented by your company has been verified. SANAS certificates are a formal recognition that an organisation is competent to perform specific tasks.

Ratings Agencies must perform the assessments strictly according to the guidelines set out by the Department of Trade and Industry (DTI). On successful completion it will issue a certificate with the Level (1-9) of BEE (B-BBEE) compliance appropriate to your enterprise.

  • A certificate will be issued, which is relevant to all companies requesting it.
  • B-BBEE must be validated by a SANAS accredited verification agency.
  • Self-accreditation is no longer recognised or accepted.

B-BBEE Rating Process

The rating process only applies to QSEs and M&L’s:

Step 1: Application, Approval and Payment

  • Measured Entity (ME) requests an Application Form
  • Client Manager sends Application Form to ME
  • ME completes and returns Application Form to Client Manager
  • Client Manager sends Application Form to Verifications Manager
  • Verifications Manager reviews and approves application against prescribed criteria.
  • Client Manager sends Quotation and/or Invoice to ME.
  • ME approves the quote and pays a commitment fee (65% of quoted/Invoiced amount).

Step 2: Pre-site Visit and Legal Processes

  • Client Manager prepares and sends SLA and other contracts for signature by ME
  • Lead Analyst visits ME for a briefing, to explain the verification process and to agree on Verification Plan, Team and deadlines.
  • ME prepares all required documents and sends them to Client Manager.
  • Client Manager signs-off Document Register acknowledging receipt and hands documents over to Lead Analyst.

Step 3: Analysis, Site visit, Reporting and Certification

  • Lead Analyst performs a basic analysis and measures entity against scorecard.
  • Lead Analyst visits ME on site for Verification as agreed on Verification Plan.
  • Lead Analyst prepares Verification Report and Recommendation for Verifications Manager.
  • Verifications Manager performs Vertical Assessment and Quality Assurance on report and then approves recommendation report.
  • Client Manager sends Verification Report and Rating to ME for approval.
  • ME approves Verification Report and Rating.
  • Verifications Manager issues a Rating Certificate and Final Report.
  • Client Manager sends Rating Certificate and Final Report to ME.

Who Should Manage B-BBEE Processes In a Business?

The best way to structure the management process is as follows:

  • Chief Executive Officer – Ownership and Management Control
  • Chief Financial Officer – Preferential Procurement and Enterprise Development
  • Employment Equity Committee – Socio-economic Development, Skills Development and Employment Equity.

The Employment Equity Committee needs training, as they are likely to have limited experience in making strategic recommendations to the CEO on these issues. The CEO should sit in the Employment Equity Committee along with someone with HR experience.

Did You Know?

Unlike State-owned entities, private companies are free to develop their own procurement policies, which may include different criteria and different weightings to that of the generic B-BBEE scorecard.


What to Look For In a B-BBEE Partner

When looking for a new partner, specifically for B-BBEE, companies arguably rush through the process. This could leave your business open to having two unaligned partners at the top, trying to force the business into opposite directions, thinking that they each know what’s right for the company.

Every successful business partnership needs three things:

  1. Someone who can add value to your business
  2. Operate in a growing industry
  3. Bringing additional finances or resources to the table.

A good partnership won’t happen overnight; it could take you up to 18 months to work out the details with your new B-BBEE partner. So, using it as an eleventh-hour attempt to save your business or when there’s a big tender on the line, might not work out for you.

To be successful, it’s better to go into this process with the right motives. A great B-BBEE partnership is mutually beneficial and based on growth potential for all involved.

Align Vision and Values

Partner with someone who shares your vision and values in business. Both partners need to be clear on their roles within the business and what they will need to contribute towards the business. Like all great partnerships, a B-BBEE partnership is also built on alignment.

You want a partner who will bring critical skills, experience, knowledge or maybe resources to the table. Having a partner who is only fronting can damage your business’ reputation. Fronting is when you have a partner in name only in order to qualify for a higher B-BBEE level.

Searching For the Right Partner

Networking in the wrong environment can be detrimental, just like networking in the right environment can be advantageous to you and your business.

Ask people you trust for advice or if they know someone who is compatible with you and your work style. You’ll need to approach this as a long-term endeavour as it takes time to find the right person.

Once you’ve found your new partner, structure the best deal possible through a top notch legal team. This will protect both parties if the partnership doesn’t work out. Include roles and responsibilities within the contract, so everyone is accountable, and knows what will result should the endeavour fail.

Source. https://www.entrepreneurmag.co.za/ask-entrepreneur/doing-business-in-sa-ask-entrepreneur/how-do-i-become-bee-compliant/

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5 things many Start Up Entrepreneurs get wrong.

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When starting a business, it’s easy to get lost in the fairytale of it all. So you’ll start a business and you’ll make a ton of money and then you’ll go on to retire by 30 and live on a private island and sip on foreign named-cocktails. Uhm no. Being an entrepreneur is all about early mornings and late nights, broken dreams and crushed ambitions…. or at least that’s what most entrepreneurs agree on.

Here are 5 things entrepreneurs for generations have been doing wrong:

1) Funding.

So entrepreneurs need funding, yes what for? Many entrepreneurs cannot effectively breakdown what they need funding for. Entrepreneurs tend to think that funding is the alpha and omega of starting a business. Capital is important however, this should not be a determining factor. Many entrepreneurs sell their personal assets such as their vehicles for start up funding. Investors are prone to investing in business’ where the entrepreneur has shown leadership and invested their own money in the business too.

2) Workforce.

As much as you want to, you can’t do it all. You’ll need to hire employees to assist you with your company. Be sure to be completely open with your staff on where your business stands and what your employees can expect as payment. BEFORE employing staff be sure to have a six month runway set aside for salaries. Alternatively be open to share dividends within your business.

3) Marketing.

Wow guys welcome to the 21 st Century!!! Who would’ve thought that in today’s day and age, with access to information all around us entrepreneurs still choose not to pay optimal attention to their business’ Marketing. Bizlinkworld.com is a brilliant way to assist with this, Bizlink World gives you access to the market, this tool is free too.

4) Defined Goals.

Where is your business headed? Why do you wake up every morning? You need to have clear and defined goals. It is not enough to have goals, goals need to be directed and aligned to your business. Use the SMART tool as a guideline: goals need to be Specific Measurable, Attainable, Reachable, and Timeous.

5) Roll with it.

Now as an entrepreneur you’ll know that there’s no such thing as certainty. Deals fall through in an instant, the investor doesn’t pitch to your meeting, someone else has a similar idea. Whatever the external influence it is vital that you adapt to any situation. Your business needs to be adaptable too. Refine your ideas and concepts, create your company culture, get involved with the community, teach skills. There are many ways to state your presence within an industry. Keep reinventing yourself , stay relevant!

Entrepreneurs are risk takers, determined and resilient. Whatever the risks be sure to do enough research on your solution/product/service as well as your target market. It’s a tough industry but if Bill Gates or Steve Jobs are anything to go by, the pay off is pretty amazing.

Keep at it, it gets better.

Candice Coulsen 14/9/2017

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