1. PRESENTATION : SA SMME CONFERENCE THURSDAY, 26 OCTOBER 2006 BIRCHWOOD HOTEL BENONI

2. National & Provincial Priorities National Goal: Halving poverty and unemployment by 2014 Provincial Priorities: Enabling faster economic growth and job creation Fighting poverty & building strong, sustainable communities Developing healthy, skilled and productive people

3. Fundamental Assumptions Entrepreneurs create and build the future They can be found in every walk of life A few entrepreneurs can make a difference; but when there are many, a region or community simply takes off Most have become entrepreneurs in spite of the system and not because of it

4. Defining the Entrepreneur Joseph Schumpeter (1934) describes entrepreneurs as “responsible for the change of the economy using new technologies or upgrading an old one”. Peter Drucker (1979), enlarge the definition and focus it on opportunity. Endeavor is not just about creating a enterprise, but doing it allied to a real opportunity. Louis Jacques Filion (1986), define entrepreneurs as being the kind of people that conceive, develop and realize visions.

5. Market Challenge 1.Why do people not start businesses? What are the barriers? Fear of taking risk Educational limitations Apartheid legacy Cultural elements

6. Market Challenge 2.Why do businesses fail? Access to capital Under capitalisation Poor management Poor record keeping Access to markets Over estimation of market Quality of people

7. Market Challenge 3.How do we foster improvement? (grease the wheels of enterprise) Info and advice Mentorship Training Facilitation Incentives Finance Affirmative procurement

8. ASGI-SA Key Constraints Barriers to entry & competition in sectors of the economy Regulatory environment and burden on SMMEs Addressed through: Encouraging establishment, growth & sustainability of SMMEs Procurement quotas for SMMEs Making finance & other opportunities accessible to SMMEs

11. ENTREPRENEURS WHO HAVE TO BE PUSHED ENTREPRENEURS WHO RESPOND TO SUPPORT AND HELP ENTREPRENEURS WHO JUST “GET ON WITH IT THE ENTREPRENEUR AXIS --------------------------------------------------------------------------------------------------------------- ENTREPRENEURIALSTRONG ON TALENT LIES BURIEDENTREPRENEUR TEMPERAMENT CHARACTER THEMES

12. THE SUPPORT INFRASTRUCTURE

13. Reasons for Business Failure

14. Non-Financial Support Interventions Financial Management Support –Accounting/bookkeeping –Setting up a debtors/creditors system –Setting up a stock control system Technical Support –Assistance with IT hardware and software –Product testing & development –Feasibility Stidies –ISO Accreditation –Factory Layout HRD Support –Assistance with setting up HR policy & systems –Setting up a payroll system

15. Non-Financial Support Interventions Operational Support –Business administration –Mentorship & coaching –Assistance improving turnover Planning Support –Business Plan –Productivity Improvement Plan –Business Turnaround Plan Legal Support –Joint venture agreements –Purchase agreements

16. Financial Support  To provide financial support to SMMEs efficiently and timeously including but not limited to the following:- -Guarantees -Bridging Finance -Debtors Factoring -Re-Financing -To facilitate access to capital from financial institutions and other institutions such as Khula, NEF, Umsobomvu etc. -Incentive

17. General Finance Programme  Pilot (R50 000 – R2 000 000) To provide both long and short term debt finance for the following: - Start-ups - Expansions - Acquisition of assets - Working capital

18. Leverage Programmes TO FORM STRATEGIC PARTNERSHIPS -Joint Funds with major banks -Guarantee Schemes

19. INVESTMENT CRITERIA GEP GENERAL FUNDGEP GUARANTEE/ JOINT FUND OwnershipSA Citizen Business locationGauteng Finance Required - Minimum - Maximum R 50, 000 R 2, 000, 000 R 20 000 R 1, 000, 000 Industry FocusAll sectors (preference will be given to industry targeted through GDS Strategy Tenders/ Contracts Minimum Requirements-Business Plan -Projected Financial Statements -Economic viability -Entrepreneurial involvement -Black Owned/Managed -Demonstrate commitment Criteria to be determined by concerned parties

20. Funding Questions QuestionAnswer What is the money needed for?The answer yields the loan amount needed. Is it a short term or long-term need? The answer determines the length of the loan. What will you give up for the capital? The answer determines what sort of requirements the owner must adhere to in order to get the money. What rate of return can be expected from the success of the business? The answer indicates how much interest on a loan or return on investment a business can afford to pay.

21. FUNDS TIME Gestation Prototype Roll-outInception Growth Expansion Maturity Fixed Expenses Variable Expenses Startup Collateral Debt Founders Angel Investors Venture Capital Government Agencies Equity Breakeven Business Plan which addresses: 1.Technical Risk 2.Market Risk 3.Growth Risk 4.Financial Risk 5.Management Risk Skills DevelopmentBusiness Services Business Development Life Cycle

22. Vision Africa’s leading enterprise development and business support agency. Mission To enable entrepreneurs. Values Professional Accountable Focused Accessible Vision, Mission & Values

23. To facilitate increased SMME participation in mainstream economy and their contribution to economic growth, development and employment in Gauteng Our Goal

24.  Provide efficient and timely financial support to develop SMME’s  Provide efficient and timely business development support to SMME’s to increase professionalism of SMME’s  Contribute to the creation of an enabling environment for SMME growth and sustainability  Identify business opportunities, enhance business facilitation and business partnerships  Facilitate increased SMME participation, including women, youth and people with disabilities in the province’s growth sectors, and GPG’s priority socio-economic development projects  Ensure efficient and effective management of GEP Our Strategic Priorities

25. Thank you