Opinion ...
The role of incubators in supporting entrepreneurship
Jill Sawers, Manager, Maxum Business Incubator at The Innovation Hub
 Jill Sawers (standing), manager of the Maxum Business Incubator at The Innovation Hub discussing aspects of his business plan with Mthembeni Mkhize, Executive Chairman and CEO of TCI-Thoreb (Pty) Ltd, one of the companies that has successfully graduated from incubation. |
Small businesses are major job creators that fuel our economy. While the general consensus seems to be that every effort should be made to assist their growth and development, statistics from the USA show that about 60% of start-ups fail within the first five years. Locally, in our relatively entrepreneur-unfriendly environment, the numbers are even higher.
Business incubation is a proven method of combating early stage business failure - a company that goes through an effective incubation period should have in excess of an 80% chance of success. Incubation creates an enabling, synergistic environment from which fledgling companies have facilitated access to finance, expertise (technical and business) and markets. Entrepreneurs can share learning, create working partnerships and do business together, while their companies become financially viable and sustainable for when they leave the incubator, usually within a three-year period.
The incubation process also includes mentors and coaches, who keep a 360 degree eye on business growth, help strategise and act as sounding boards for new ideas. They are often business people who want to put something back into the community and typically have strong networks and a mixed set of skills, from technology, to process and financial acumen and business experience.
Globally many governments have put in place supportive programmes to facilitate and promote this sector of the economy. In South Africa too, small business development is high on the agenda of both national and provincial government. The Gauteng Provincial Government (GPG) for instance, reflects SME development as an objective in their Growth and Development Strategy. And given our historical imbalances, local incubation programmes should place special emphasis on programmes that attract and develop entrepreneurs from previously disadvantaged backgrounds, especially those in the high-tech sector as one of the sectors that spearheads economic growth.
Such pre-incubation programmes that focus on PDIs to prepare them for incubation provide significant opportunities for meaningful corporate social investment. However, finding young black individuals who wish to start their own businesses in the high-tech sector and who have viable business propositions is a challenge. Not only are the benefits of corporate life often more enticing for young graduates, but starting one's own business is challenging and demanding.
In addition, finding financial support for operational expenses to grow the business to the stage where it can generate sufficient return is one of the barriers to entry for aspiring start-up owners. That is why participating in a pre-incubation programme offers significant advantages for an entrepreneur - it provides access to facilities, mentors and markets, thereby enabling more rapid business growth for the young company to reach a position of sustainability.
The results of incubation bear testimony to its success. Since inception in 2000, the Maxum Business Incubator at The Innovation Hub has supported the development of 30 companies, where 183 jobs have been created. Of these companies two have female ownership and six have at least 30% BEE ownership. The overall success rate of growing the start-ups to levels of self-sustainability where they can exit the Incubator has been 80 percent.
For more information contact jsawers@theinnovationhub.com at (012) 844 0032.
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