MELITTA NGALONKULU: The value of a thriving small-medium enterprise sector cannot be undermined and that is why the government welcomes the introduction of new ventures and small setups that help curb unemployment and pump money into the market. In fact, small and medium-sized enterprises are the bedrock of most developed nations. With the start of a new year I am sure that many have starting a business as one of their new year resolutions but the red tape that’s involved is not as understandable to everyone. Today we are joined by Bulelani Balabala, who is the founder of Township Entrepreneurship Alliance to speak to us on starting up a business and the complexity of it in South Africa. Hello, Bulelani, how are you doing?
BULELANI BALABALA: Hi Melitta, howzit.
MELITTA NGALONKULU: I am great, President Cyril Ramaphosa has spoken numerously about how the youth should start up their own small businesses but now when we look at it in detail, how simple is it to start a business in South Africa?
BULELANI BALABALA: You know what, I understand the President’s call and it’s a novel call because you look at the economy and the performance of the large-scale companies that are really the ones that are being impacted the most with what’s happening at the current moment, and the saving grace is SMMEs. I think the call in itself is a great call, but it needs to be a supported call, it becomes an empty call when you’re calling people into a space where there won’t be any opportunities for them. Government is the largest procurer in the whole entire country and I think that call must go with opening up the right market…opportunities from a government perspective and starting to mobilise agencies that are under certain departments, for instance, the dti would have various agencies other than that are supposed to then push out SMME development, Department of Small Business Development would have SEDA, they would also have SEFA and then you have other players with all these partners. But the biggest challenge is these government agencies that are there to offer business support for SMMEs are replicating and duplicating their work. So you can imagine if they had a better streamlined funnel they would be able to create more impact for the SMMEs at the end of the day. I think it’s a great call but you can’t have our triangle of development bulky at the bottom, whereas there are no funnels of development on growth, and the entrepreneur is going to stay as a startup for the next 15 or 20 years.
Experience in the industry is essential when seeking funding
MELITTA NGALONKULU: Would you also say that funding is easily accessible in South Africa, is it even a necessity when you want to start up a business?
BULELANI BALABALA: I always say to entrepreneurs, think about it this way, someone is starting out, they’ve got no skin in the game, would you risk your own capital and give it to that person? You only would if you trust the person more than anything. So I really think that getting skin in the game is very important, proofing your own model and concept through the lean startup methodology, show that you’ve done your business modelling canvas, but I think more than that is that you’ve gone out there and you’ve actually tested and tried out [the product] within the market because I really think it goes a long way, especially when you’re going to the private market when you’re looking for funding, whether it’s venture capital or capital coming from groups of friends and so on, it goes a long way if you’ve had skin in the game. But I think just generally across the board, there are certain funding barriers out there. As SMMEs we’re looking for funding or we’re working towards funding with a system that doesn’t speak to the baseline SMME development. You see it across the board in what is called the township economy, it’s now recently been labelled the unseen economy, which, in fact, is a seen economy, it’s just that we choose to look past it and we look at it from a textbook perspective but not from a [perspective of] we want to learn and we want to be part of it.
MELITTA NGALONKULU: You’ve been one who’s been really, really great at starting up a business in the township and building it and growing it into a business that will be recognised even by corporate companies in the suburbs. So how did you go about it and what tools would you give to the next person?
BULELANI BALABALA: I really think that it’s literally from the day you start, you start with the mentality of being big. So you start big, start aligning your processes, your systems because I think I had a clear decision to make, I could have taken a different route and there was nothing wrong with that route but I could have decided to go the tender route, and some of my friends did, but I decided to start building in systems and processes to start building and aligning a corporation but not just a corporation anywhere but one that would operate from the township and do work for national and multi-national brands and organisations. I think to a degree we have been able to achieve that within the 13 years of existence of that particular business. I really think it’s a mindset thing because when you have told yourself that you are small, you will probably be small forever but if your mindset is aligned to growth and you are fixated around delivering solutions, and consistently delivering those solutions on problems to clients, you don’t have a choice but to grow at the end of the day because one of the scarce commodities is service delivery, strangely so. But you see high-rise buildings everywhere [due to] service delivery, so if you’re able to solve a problem and deliver the service and deliver it to the client consistently, you’re in business.
Bridging the gap between township SMMEs and corporates
MELITTA NGALONKULU: Now, Bulelani, would you say that larger companies are actually willing to work with companies that are established in the township or is it a thing for a company to be deemed as successful and credible it needs to be located in town?
BULELANI BALABALA: My answer to that question is in two parts, on the first part there’s a quotation that says you don’t know what you don’t know, and what I pick up with a lot of these corporates that I have met in various departments, whether it’s enterprise development, corporate affairs, CEOs and so on, they literally some of them don’t even know what’s going on in the baseline market. I really think a little bit of education goes a long way because that creates that ‘O’ factor and that ‘O’ factor is when they start to open up to new opportunities, new entrants in the market. I really think that what’s pivotal is being able to bridge the gap where the SMMEs are in the township versus where the corporates are because corporates are looking for insights because within the townships that’s where the masses are. But I think we are talking past each other because you have this one trying to emulate that one, you have this one on the other end looking for insights from that one, but they are talking past each other. I think being able to build the right sort of bridge, synergies go a long way. But I really think that I have seen corporates play a massive role in more than just ticking boxes from an enterprise and support perspective and actually going as far as supply development. But just as well because the good sometimes goes with the bad, and you’re guaranteed of that, and you have the ones that do it just purely for the points, and I really think being able to create a more inclusive market, drives the impact and the development that we are looking for in terms of our GDP and economic growth.
MELITTA NGALONKULU: Three tips for a person who would like to start up their business this year.
BULELANI BALABALA: Start. Stop thinking about it. Start. We hide a lot of great business concepts and ideas behind thinking. Stop thinking about it. Start. The second thing, research, research and plan. The simple things that you can do, I punted them much earlier on but do the business model canvas, it’s free, go onto the internet and search for it. The other thing that you can do is the lean startup methodology. The third thing in point number two is go out there and practically prove your model. The third thing for me is the moment you have proved your model, understand one thing that your first funder, your early funders, your early adopters, should be your clients, those are the people who you should be focusing on in terms of driving funding. Don’t chase funding because you’re going to be chasing stress and capital debt, start building it from the clients’ money. The best way that you know that you’re going to make money is that it will force you to drive and deliver more value.
MELITTA NGALONKULU: That was Bulelani Balabala, the founder of Township Entrepreneurship Alliance.