Guidelines for effective funding
- Establishing business hubs that focus on a single sector or type of product line can be very effective. Through these hubs, resources can be pooled, innovation encouraged, skills transferred, information exchanged and a platform for networking provided by pulling entrepreneurs into each other’s orbits.
- Incubator and entrepreneurial programmes with a higher entry threshold generally have better outcomes. However, this marginalises entrepreneurs with limited education, experience and resources.
- Banks tend to view SMMEs as risks, rather than opportunities. Cash flow is often a problem, so funders can play a role in offering favourable terms, such as shorter settlement terms and providing access to partners who may be able to offer discounts. Funders can also work with enterprise development colleagues to leverage their ability to remove barriers to accessing finance and resources.
- Large companies are beginning to realise that making small businesses part of their supplier base is more than corporate social responsibility – it is good business. SMMEs can be more flexible in providing innovative products and services to meet corporate needs. They can also be quicker and more responsive in delivering services locally, which can save on costs. Their knowledge of local markets can be extremely valuable for large companies trying to enter new markets.
Source: Trialogue Business in Society Handbook 2017.
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