An improved B-BBEE scorecard is just one of the benefits of supporting Enterprise and Supplier Development (ESD) within an organisation. For most enterprises, the real appeal of ESD lies in the ability to make a difference to South Africa’s rate of transformation, and nurturing fledgling companies into the job-creators and market-leaders of tomorrow.
Find out what questions to ask your ESD provider
But selecting a service provider that can deliver measurable results is not always an easy task. Many talk a big game, but fail to live up to the hype when it comes to making a real difference to the prospects of their beneficiaries. This blog outlines four of the most important things to look out for when selecting an ESD service provider, ensuring an ESD programme that is affordable, effective, and transparent from the start.
A high hit rate across industries
It is estimated that as many as 80% of new businesses fail within the first five years. Even with business growth support, an SME’s chances of long term success are far from secure – making it all the more important to vet your service provider carefully, ensuring that they have a good track record of success and the ability to set realistic goals, track results, and predict outcomes. It is strongly advisable that transformation managers ask the important questions at the outset.
Ask about the supplier’s past successes and failures, how they vet and select entrepreneurs for assistance, and what measures are in place for addressing gaps and blind spots within the SME’s operations. It is also a good idea to elicit an industry-specific overview of what the ESD supplier does. A service provider may excel in one area, while achieving lacklustre results in another. Ask them about their past successes and failures, how they conduct their entrepreneur profiling, and how they go about addressing gaps and blind spots in the SMEs. The goal should be to gain as complete a picture of what to expect from an ESD provider before signing on the dotted line.
A custom, holistic approach
A one-size-fits-all approach to ESD is not uncommon among some suppliers, but Edge Growth’s experience shows that such a strategy severely limits the effectiveness of an ESD partnership in the long run. As such, any ESD supplier who boasts a “sure-fire” formula to success, no matter the client, should be viewed with caution by transformation managers.
A far better bet would be to choose a service provider that shows a holistic approach to ESD, with an emphasis on case-by-case customisation in order to optimise outcomes. A well-integrated ESD strategy will define what success looks like, how it will be achieved, and what standards will be used to measure it. It will facilitate the ability to get buy-in from all stakeholders involved, and provide direction to the entire organisation on what ESD will achieve.
The strategy should also be developed with an executive sponsor, as well as the long-term implementation partner, who are tasked with allocating the ESD budget and are held accountable for the project’s success. Failure to ensure your ESD provider has all of their bases covered could see your business having to enlist the help of another provider to fill the gaps left by an inadequately customised strategy – wasting valuable resources that could have been put to much better use with your ESD beneficiaries.
Real commitment to small business upliftment
While an essential part of any ESD programme, funds alone do not ensure success for a fledgling SME hoping to break into new markets. An ESD provider that is results-driven, therefore, will ensure that business development support forms an integral part of their ESD programmes. Paying for expert business mentorship that will assist with developing and supporting the beneficiary is always money well spent. Inexperienced SMEs may not know how to scale up their operations to unlock growth and achieve lasting sustainability, making the services of a strategic ESD provider invaluable to these businesses.
It is vital to ensure that you understand how your investment is being channelled, and the value SMEs are receiving. A reliable ESD provider will be happy to provide you with a comprehensive overview of projected costs for project management, strategy, and ongoing business development support. This means you will have continued peace of mind that your funds are going to where they can do the most good, and are not being fruitlessly wasted or absorbed by an unscrupulous service provider.
At Edge Growth, we are passionate about providing practical ESD strategies and operational plans that are not only tailored to the individual entrepreneurs and corporates, but also provide full transparency, visibility and tangible results.
To find out more about the types of questions you need to ask your ESD service provider download our ESD checklist.
Download ESD Checklist
Growth finance from the Vumela Fund for enables SME to expand locally and internationally both in existing and new markets.Read More