Welcome to the second edition of the Small Business Hub newsletter. In this edition, we tell you about the exciting partnership between SEIFSA and Aurik Enterprise Development, concluded on 22 June 2018. We also welcome Pavlo Phitidis, who writes for us in the “Eliminating Barriers” section. Many know Pavlo from his 702 Radio show.
The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) has partnered with Aurik Enterprise Development (Aurik) to help small and medium enterprises (SMEs) in the metals and engineering sector grow and thrive.
SEIFSA represents the interests of the metals and engineering industries, with its members ranging from giant steel-making corporations to micro-enterprises employing fewer than 50 people. Aurik, on the other hand, is headed by Pavlo Phitidis and specializes in developing and implementing supplier and enterprise development programmes.
Commenting on the partnership, SEIFSA CEO Kaizer Nyatsumba said: “We are very confident that our exciting partnership with Aurik will afford our SME members the opportunity to grow their businesses into profitable, systemized and sustainable corporations.”
He said small businesses have traditionally struggled to sustain their operations in a challenging economic environment, adding that bigger businesses needed to find the right partners to become part of their supply chain systems. He said the partnership with Aurik will enable SEIFSA to address these issues.
Aurik CEO Pavlo Phitidis said that in the last 14 years, Aurik has assessed over 18 000 entrepreneurs and assisted over 1500 SMEs across all economic sectors. He said that during 2015/16, when the South African GDP growth rate fell from 1.4% to 0.3%, the average annual turnover rate for the SMEs supported by Aurik grew by 59.8%.
Mr Phitidis said a growing, vibrant metals and engineering sector was crucial in stimulating and growing economic activities in other sectors of the economy. He said it was paramount that the metals and engineering sector attracts talent and encourages competition which generates innovation and attracts investment.
“Making this happen requires, amongst other things, close collaboration between big and small business. With this objective in mind, we are proud to have entered into a strategic partnership with SEIFSA,” Mr Phitidis said.
Mr Nyatsumba said SEIFSA was excited about the strategic partnership with Aurik, with its “extraordinary track record”, and is confident that the partnership would impact positively on the metals and engineering sector and the broader South African economy.
A word from Pavlo Phitidis
Collaboration is the key to unlock commercial success
A growing, vibrant steel and engineering sector grows our businesses and secures our future. This means our sector needs to attract talent and encourage competition which, in turn, generates innovation and attracts investment. To sustain such momentum, it is critical that all who both want to and can play a role be invited into the opportunity. To this end, effective transformation is key.
Making this happen requires, amongst other things, close collaboration between big and small business in our sector. With this objective in mind, and for the benefit of both large and small members, Aurik is proud to have entered into a strategic partnership with SEIFSA.
Aurik accelerates and supports high-potential SMEs to move to the next level. They work with the owners of these businesses to strengthen their underlying systems to grow and scale in a sustainable way. As a result, the ability of these SMEs to provide products and/or services into corporate supply chains is greatly enhanced – to the benefit of both parties.
The new B-BBEE Codes require an increased focus on local production, more support for small businesses and a more pro-active approach to Enterprise and Supplier Development. This pillar was made into a priority element and merged with Preferential Procurement in order to emphasize the link between the two. This has encouraged larger entities, which have to contribute 2% of their net profit after tax (NPAT) towards Supplier Development and 1% of their NPAT towards Enterprise Development, to find more meaningful and impactful ways of meeting these required targets.
Where many companies were treating their Enterprise Development spend as “just another CSI initiative”, it has now become apparent that this approach hardly supports the outcomes of the contributing entity. ESD means nothing if it doesn’t support the larger organisation’s Procurement Spend Targets with black-owned EME and QSE suppliers. In addition, the required ESD spend should ideally support strategic goals such as increased localization or increased demand in the measured entity’s products/services. This is why the trend is shifting away from a compliance-driven approach (one that secures points without measuring the impact on the beneficiary or the sponsor), to one that achieves specific objectives, as outlined in the overall strategy of the large entity.
So what defines a successful intervention, both from a corporate and from an SME point of view? For the sophisticated corporate strategist, indicators of success might include:
- the amount of measurable procurement spend that can be shifted to the SME beneficiaries and, therefore, the number of additional procurement points gained;
- the quality of service delivery from the SME to the corporate and its ability to meet service level agreement standards;
- the actual cost per point once procurement points and bonus points are factored in;
- the total increase in revenue for beneficiaries which have received assistance; and
- the increase in contributions to the fiscus from the supported SMEs, just to mention a few.
Since the inception of the Codes, Aurik has assisted over 100 blue-chip companies with various elements of their ESD strategy to meet the above objectives.
From an SME point of view, the major benefits of participating in a well-designed programme may be measured in terms of increased profitability, more robust and more scalable business systems, greater customer diversification, better financial record keeping to facilitate access to funding, and increased operational efficiencies, just to name a few. In the last 14 years, Aurik has assessed over 18.000 entrepreneurs and assisted over 1500 SMEs across all economic sectors. During 2015/16, when the South African GDP growth rate fell from 1.4% to 0.3%, the average annual turnover growth rate of the SMEs supported by Aurik grew by 59.8%.
With this extraordinary track record, we at SEIFSA are excited about our strategic partnership with Aurik, a trusted advisor and reliable provider that can assist our larger members with meaningful SME strategies that will positively impact our sector and our economy, whilst meeting the BEE requirements for points. At the same time, we are confident that, by working with Aurik, we will also afford our SME members the opportunity to grow their businesses into an asset of value that is profitable, systemized and, therefore, sustainable and sellable. A stronger SME base will help stabilize the secto, and also contribute to job creation in South Africa.
Together, let us make a positive impact on our recovering economy!
Every week, the Small Business Hub will feature “Pavlo Phitidis Presents”, which will highlight the burning questions every small business owner wants answered. The excerpts are taken from his 702 Radio show.
This week we highlight: