Copyright 2012 Foundation for African Business and Consumer Services

Training, Development and Business Incubation

“No great thing is created suddenly, any more than a bunch of grapes or a fig. If you tell me that you desire a fig, I answer you that there must be time. Let it first blossom, then bear fruit, then ripen.”

Our mission with the training, ddevelopment and incubation programme is to stimulate the establishment and growth of small businesses and to increase the number of successful companies. We provide physical business facilities, execuitve development programmes, technical training, product specific-training business support services, mentoring and ongoing business monitoting and evaluation.

 

Business Incubation is central to this programme. FABCOS has three incubators under its management. These are a microtelco incubator that nurtures small telecommunications comapnies, an incubator farm (Homegrown) that builds and develops commercial farming enterprises and a grain milling incubator that focusses on developing micro maize milling enterprises.

 

A Finscope study in 2010 estimated that 91% of formal business entities in South Africa are SMEs and that the total economic output of SMEs in South Africa is 52 to 57% of GDP. It is also estimated that they provide employment to about 61% of the labour force. SMEs are therefore an important contributor to the economy and are considered a driver for reducing unemployment given that the formal sector continues to shed jobs.

 

Understanding the role that SME’s play in the national economy and providing them with adequate office space and training does not explain our value proposition, or what makes FABCOS so unique. Young companies are particularly vulnerable in their early/start-up years and particularly in South Africa where a high percentage of people were excluded from the formal economy. A lack of exposure to the formal sector’s mature corporate governance (due to a widespread lack of employment opportunities) means that there are a significantly higher percentage of inexperienced entrepreneurs trying their luck at starting companies. ICT start-ups, as an example, tend to attract technology professionals with little business experience. Further, the start-up environment can be significantly more hostile in a developing economy, where services remain inadequate, inaccessible or expensive.

 

It is broadly accepted that incubation programmes can increase survival rates dramatically when programmes are well-run and start-ups pay for services: Similar results are found at the Bandwidth Barn in Cape Town (which was started in 2000) with a tenant success rate of 65%: “In the past five years, of the 142 businesses that have passed through our doors, 111 of them are still in operation. This overall success rate is astonishing considering that most companies come to the Barn with little more than a laptop and a dream," (Odette Potter, general manager of the UUNET Bandwidth Barn). In addition to the provision of physical space, clearly there are critical interventions that can be made by incubator programmes that significantly help these individuals, such as management coaching, mentors, help in preparing effective business plans, administrative services, technical support, business networking, advice on intellectual property and help in finding sources of financing.

 

"Our experience has shown a success rate of 75-81 percent for companies participating in our incubation programmes" says Jill Sawyers, of The Innovation Hub in South Africa.