Financial Returns

If invested wisely, Enterprise Development budgets can be used to impact your bottom line

1. Building Capacity in Supply Chains

Coupled with the Enterprise Development targets are the Preferential Procurement targets, which require companies to procure a proportion of their supplies from empowered businesses.  In some cases it is an effective investment to use your enterprise development budget to build capacity within empowered businesses in your supply chain; increasing their capacity and competitiveness and thereby increasing your ability to procure from them.
Investing in businesses within your value chain is also the most effective form of enterprise development. Providing companies with committed procurement spend enables them to confidently undertake the investment required to increase capacity or make investments in processes, services etc that would make them more competitive. 

2. Effective Supplier Development can impact your bottom line as a buyer:

• Improve the price at which they can offer their services/product; reducing the cost of your input
• Improve the service they deliver; delivery times, turnaround time, reliability; thereby increasing your overall efficiency and costs
• Improve their product quality; improving your product quality and your ability to procure from them
• Increase their production capacity; improving your ability to procure from them
• Increase competition in the market; increasing pressure to improve service, price and quality
• Increased relevance to and understanding of shifting market demographics; through interactions with empowered suppliers

3. Building Capacity in your customer base

Companies can also invest in building competitiveness and capacity within their customers, enabling them to grow and in doing so increase their ability to procure from you. In addition, when a company grants finance (e.g. a financial institution) as a service to a customer thereby enhancing their customer’s capacity, this improves the likelihood of compliant repayment.

4. Improving your brand image

In a business environment increasingly concerned with corporate citizenship, effective enterprise development is a powerful tool to elevate your brand image. Interventions that support local enterprises, create jobs and transform the business landscape will improve employee loyalty and satisfaction and positively influence customer and investor relations; all of which impact your bottom line. This is further emphasized by the fact that job creation and in turn SME growth, is one of the top priorities on the current government’s agenda.

5. Business cannot succeed in societies that fail

Enterprise Development is uniquely powerful (particularly in emerging markets) in its ability to create net new jobs for unskilled and semi-skilled labourers and generate economic growth through the growth of local business.

Its effect on job creation will impact the success and long term sustainability of your business. Apart from the impact of unemployment and the quality of life of millions of South Africans; the high unemployment rate in South Africa reduces the ability of businesses to succeed

 
Unemployment results in:

1. Small markets; as consumer spending is limited
2. Decreased Investor confidence; as instability and social unrest results from competition for limited resources
3. Lack of skills through brain drain; Increased crime forces highly skilled employees out of the country increasing the cost of skilled resources and reducing the availability of resources required to succeed.
4. Low education levels; Lower levels of education result from the inability of the unemployed to send their children to school resulting in higher levels of unemployment as few people possess the education required to get highly skilled jobs
5. High taxes; Disproportionately high taxes required to support the poor which increases the cost of doing business and hence business profitability

Effective enterprise development is the most powerful means of reducing the impact of unemployment on your business’s competitiveness and long term profitability and sustainability.