Enterprise development is an inexpensive way to implement broad based black economic empowerment (BBBEE).
It is also globally recognised as an effective way of reducing poverty.
Enterprise development as an aspect of BBBEE is often misunderstood and therefore underutilised. Many companies are not sure how to integrate enterprise development into their transformation strategy. Developing black-owned and black-run businesses can be an inexpensive way for a company or organisation to implement an aspect of its transformation agenda.
What else counts as enterprise development? Support such as preferential credit terms, preferential pricing structures, mentorship and business skills training given by large companies to emerging black-owned businesses can be seen as enterprise development.
Compared with other forms of empowerment, such as bringing in a black shareholder, enterprise development is more easily achieved and relatively inexpensive. It also has the advantage of building the capacity of smaller suppliers, giving them the ability to do larger deals, gain valuable experience and improve their profitability and sustainability, while increasing value to the ‘parent’ company. For example, if a company offers its truck drivers the opportunity to become subcontractors instead of remaining employees, it is empowering them. By giving them business skills training and providing terms for them to pay for the trucks, the company earns points for enterprise development.
The structure of an Enterprise Development strategy will depend on a number of variables such as the size of the ED budget and whether the aim is to invest in building businesses in your company or organisation’s value chain, or take an ‘arms length’ view and invest in businesses outside of the value chain.
It will also depend on whether there is the desire to invest in a long term or short term programme.
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