Business Incubators at every training facility would help develop more successful SMMEs
In a free-market economy, small business is the foundation upon which employment and economic
growth are underpinned. South Africa, however, has one of the highest SMME failure rates worldwide,
with five out of every seven failing in the first year. Rajan Naidoo, the Managing Director of EduPower
Skills Academy, believes that learnerships and the training providers that facilitate them should be
playing a direct role in driving entrepreneurship to increase start-up sustainability and success.
“Tens of thousands of young South Africans are enrolled in learnerships each year and this has created a
vast training network,” says Naidoo. “If every training provider was able to operate a business incubator,
we could create a platform and support framework that would encourage budding entrepreneurs to
pursue the formation of start-ups.”
With 30 years of experience in education and Skills Development, Naidoo has witnessed many career
development models. Whilst he concurs that learnerships provide the skills to enhance employability, he
believes that youngsters will need to create their own opportunities to reduce unemployment in South
Africa through the development of entrepreneurial skills.
“Entrepreneurship is best suited to certain personality types. These are the risk-takers, problem solvers,
hard workers, who are innovative and creative and good leaders, with an understanding of social needs
and the ability to access a network,” he states. “Most of these qualities are innate but the knowledge,
experience and skill still have to be nurtured.”
Types of Entrepreneurs
According to Naidoo, there are generally two types of entrepreneurs. The first is the passionate
individual who has great ideas. For them, a business incubator will provide support and the opportunity
to build a viable enterprise which otherwise, may fail due to insurmountable barriers or lack of experience.
The second type of entrepreneur has the right instincts but lacks an idea for a business. They need
business incubators that provide a “Business in a Box concept”. This is a business, modelled on a
franchise, where someone else develops the business model and the entrepreneur buys into and
These entrepreneurs, however, still face a high possibility of failure. It is, therefore, imperative to lower
the risk factors for start-ups, says Naidoo. “Most SMME failures are avoidable if better business
practices are followed. In an incubator, best practices can be entrenched upfront and monitored through the early stages of the business operation, increasing the sustainability of the startup,” he explains.
The three areas identified by Naidoo as business risks which can be mitigated through improved
business practices are:
1. Capital and access to resources
This is a stumbling block because entrepreneurs generally lack the skills to present their business
cases in a compelling manner. The expertise and skill developed within incubators will, therefore,
add to the credibility of the entrepreneur’s proposition and more easily aid the attraction of capital.
Common mistakes in accounting, record keeping and cash flow management require the guidance
of an experienced mentor to ensure the new startup does not risk preventable loss.
Incubators can develop market and industry knowledge as well as brand-building and
communication (including digital) skills that are crucial for startups to find their niche in the
Naidoo believes that in addition to best practices, it is extremely important to ingrain the social aspect
of business in young entrepreneurs. They need to add social value to their communities and when
providing employment, are responsible for treating their employees in a just and fair manner. They also
need to ensure their goods and service are of a quality, price, safety and environmentally compatible
standard. The right value systems will ensure that everyone wins. Incubators, therefore, need to foster
these value systems in our burgeoning entrepreneurs.
“With thousands of skills development training providers throughout South Africa, the introduction of
business incubators at institutions – where education is already taking place – could create the right
conditions for fledgling businesses to grow and flourish, to become socially valuable entities that
enhance communities, create jobs and uplift the economy,” he concludes.