Page 40 - IDC

6 CITY PRESS, 11 JUNE, 2017

business

Striving to make it

big in business?

Here’s how the

IDC can help

you, writes

Caiphus Kgosana

o, you have a business plan that you think
will make you the next Patrice Motsepe?
It could be in manufacturing, mining or
the services sector, but the initial
investment required is probably a major
Sstumbling block to making this dream a
reality.
Chances are you don’t have a rich uncle who can lend
you millions to buy assets and set up the infrastructure
required to begin mining or production at scale.
However, if your business plan is sound and has the
potential to kick-start a sustainable enterprise that can
create jobs, the Industrial Development LOOK UP David McGluwa, head of operations at the IDC, says that the development funder is encouraged by the growth in the number of young black industrialists
Corporation (IDC) could become a PHOTO: MICHELLE BAO
valuable partner on your journey.
David McGluwa, who heads A
operations at head office and
regions across the country, PROJECT IN Entrepreneurial
unpacked how entrepreneurs
with dreams of making it big PARTNERSHIP
in the sectors that the IDC
funds can go about presenting WITH THE
a business case for financial
and non-financial support. IDC
The first tool to have when
applying for funding from the IDC,
he says, is a viable business plan. go-getters wanted
“We don’t have an application form
so our application is a business plan.”
He said the problem the IDC often experiences with
first-time applicants is the submission of business plans
that are drafted by external “experts” who know very
little about the entrepreneurial process or what the
business aims to achieve. This ends up frustrating the
funding process. McGluwa said while the corporation has funded some
“You end up going up and down because when you ONLINE APPLICATION astute young businessmen who have gone on to create
engage with the owners who want the money, there is successful enterprises, South African youth were
not a link there. We find a lot of these consultants who The IDC has created an online portal that makes it easy facility. He said it would assist to speed up the generally prone to starting businesses in areas they feel
draft business plans do it from MBA books, cut-and-paste for those seeking funding to submit application forms application process. Potential IDC clients receive SMSes comfortable in, but which the IDC would not consider for
and Google; but it doesn’t speak to the heart of the and track every step of their application process. that alert them to what information is required of them funding.
business.” Applicants must log onto idc.co.za and proceed to the throughout the assessment process. These include car washes, shisa nyamas or the taxi
If the business plan is workable and paints a picture of “apply for finance” function, where they can submit their “Sometimes a client waits for information, but they do operating business.
a business with true potential, the process moves to the application. not know that the IDC is also waiting for them to give “Most young people have never had exposure to a
second phase. A basic assessment is done on the Once they have submitted the application, they will additional information. That is where we sometimes manufacturing company, so it’s very difficult for them to
application to determine whether the business has receive a tracking number that they can use to track the experience delays. This portal will assist him or her to start a business in an area that they have not been
economic merit and whether it will, in the long run, be process and view all the stages that the application goes track their respective applications,” he said. exposed to. What they know from growing up – tuck
able to repay the loan advanced by the IDC. through, from assessment through to due diligence. The McGluwa says it normally takes between one and shops or carwashes – we see a lot of those enquiries
Four key components are assessed to determine this: portal has been available since May 1. three months to go through the application stage, coming through.
. Management team (What is their background? Who David McGluwa encourages people to make use of this assessment and disbursement of the granted loan. “We sit with a lack of innovation among young people.
are they?) It’s more like: ‘my neighbour has this business, I must
. Market analysis (The size of the market. Where will also have one’; instead of looking at a market gap [and
you get orders from?) determining] ‘what can I come up with to close that
. Technical aspects (The operational side. If it’s a viable and what additional help is required. funding enquiries and take it up to the basic assessment market gap?’”
manufacturing business, does it have the right Pre-investment support involves a number of facets, stage.” However, he is excited about the drive led by the IDC
equipment? Where will it get raw material? What including linking applicants with experts in the relevant Entrepreneurs can also access these services at regional and the department of trade and industry to create new
volumes can it produce?) business sector to provide guidance on issues such as offices located in each province. McGluwa said the black industrialists.
. The financial model at a basic level (Will the access to markets and the correct machinery to use. The minimum IDC business loan was R1 million. McGluwa said new black industrialists were investing in
business be able to repay the loan and will it be post-investment arm assesses the business’ order book There is no limit to how much a business can receive, sectors that were driving the economy, often in spaces
sustainable?) once in operation and its finances to determine if it can but if it’s more than R1 billion, it is likely that co-funding where few black business people have operated before.
The IDC also has a business support programme that cope or needs more money to expand operations. options with other financing institutions will be explored. “We are seeing black people in the active industrial
provides advice and support for entrepreneurs before The Pre-Investment Business Centre is based in A total of R4.5 billion has been made available over a sectors that drive the economy of South Africa. They are
their funding request is awarded and afterwards to assess Gauteng at IDC headquarters in Sandton. “They have a period of five years to support youth entrepreneurs who moving into that space, and that is the exciting part.
whether the capital injection has made the business walk-in centre at the office and they assist people with have bankable projects in sectors that the IDC funds. “It has exceeded all our expectations.”

FROM PET IDEA TO MARKET SUCCESS ROADBLOCKS

LITTLE KNOWLEDGE OF MANUFACTURING,
In October last year, young entrepreneur Nhlanhla Dlamini was setting up his factory. Since AGROPROCESSING AND EXPORTING
When he left McKinsey, Dlamini did not know how
then, he’s employed 30 people and next month his first shipment of pet treats will be export- to design and set up a factory, the process of
ed to the US. He discussed his growing manufacturing business with Caiphus Kgosana acquiring raw materials, exporting products and
accessing markets. For all those critical things
around the factory, he partnered with technical
Right in the heart of the Maneli Pets’ factory in Sebenza, an experts who understood these processes and the
industrial hub east of Johannesburg, is a high-tech piece of infrastructure investment required. They were able
equipment that looks like a 1960s time machine. to reassure the IDC with their in-depth knowledge
The machine is a specialised vacuum freeze dryer. While and technical know-how across the value chain.
it won’t transport you back in time, it is technology that dates
back to early space travel when astronauts needed food that ACCESS TO FUNDING
could stay fresh for a year. Although he had saved up a bit while working, this
Imported from China, the gigantic machine with its own would only cover the initial research and some
overhead rails is the centre piece of the production process monthly expenses. Dlamini needed access to huge
at Maneli Pets, a black-owned manufacturer and exporter of amounts of capital to do the full research and
high-end pet treats to the US, the EU and Japan. development, create networks, partner with
Maneli Pets is the brainchild of Nhanhla Dlamini, a Soweto- technical personnel, set up the factory and all
born entrepreneur who studied in the US. In 2015, the 32-year- its technical machinery, employ staff, create
old left his plush corporate job at global consulting firm McKin- the products, and source export clients. That
sey to explore the feasibility of starting a full-on food manufac- is where the Aweuthu Project and, later, the
turing operation for the export market. IDC came in to assist.
Last October, City Press profiled Dlamini as he was setting
up his factory. Next month, the first order of his premium REGULATORY HURDLES
pet food product branded Roam will be shipped to a US client The factory is now ready to package its final
that has already placed tons of orders. products and export to clients overseas. But the
The Industrial Development Corporation (IDC) funded the FLESH START Raw ostrich, crocodile and other game cuts are used to make pet treats Nhlanhla Dlamini packaging they’ve chosen, which was designed in
vacuum freeze dryer and other equipment at the factory. It China, is still being assessed by US regulators who
also helped in the conversion of the Maneli Pets factory into or chicken do, but rather duck, rabbit and game. Of the 30 employees, 22 are general workers and half of have their own stringent labelling requirements.
an export-ready facility that now employs 30 people. In the “We have a lot of that in South Africa. The conservation the employment force is female. It is 62.5% black youth- Maneli Pets is also waiting for a full export licence
next two years, the factory will triple its employment force rules here force people to treat animals fairly, and consumers owned, and has an 82.5% overall black ownership. here in South Africa. Regulations require that a
to around 100. love that story that these animals lived a fair life and they Before approaching the IDC, Dlamini first discussed the idea factory must be fully operational before an export
Maneli Pets buys raw ostrich, crocodile and other game cuts weren’t overly harvested for the purposes of food.” with the Awethu Project, a business incubator and seed capital licence can be granted. They have now secured one
from abattoirs in South Africa, which arrive at the factory The products are meat-based snacks that are given to pets financier that provided him with working capital that enabled licence and are hoping to receive the final export
weekly, frozen and weighing up to 4 tons. as treats. The second category of products are occupiers, him to meet potential suppliers, research recipes and test the licence in the next two weeks.
These are then defrosted, cleaned, cut and have a selection which keep a pet busy or entertained. market.
of ingredients mixed into them. They are then cooked using Dlamini says the market for such products in the US alone By the time he approached the IDC, he had technical support
various technologies and placed into branded packages be- is massive as more and more people migrate towards high-end partners who helped with setting up the business and develop-
fore the finished product is shipped to the US, the EU and nutritious treats. ing product samples. He also had an offtake agreement with He has nothing but praise for the IDC’s pre- and
Japan. “The total pet treat and food market in the US is worth about a US wholesaler interested in stocking the product. post-investment interaction with his company. His only advice
Dlamini says the products appeal to pet owners who are $22 billion (R283 billion) and more and more of that is moving He recommends this path to entrepreneurs who have ideas, is for the IDC and other development financiers to set up joint
not price-sensitive but are seeking non-harmful, nutritious into the premium segment. The reason for that is there are but no money to turn them into bankable businesses. forums where entrepreneurs that have successfully applied
snacks for their pets. The appeal is that the meat these snacks more American families with dogs than there are American “Work with a small incubator first to get to a point where for funding can share insights into how they made it work.
are made from is from animals that were raised in their natural families with children. you have a bankable project before approaching the IDC. It’s “If they asked me to come in once every four to six weeks
habitat. “People are increasingly seeing their pet as their child and difficult to go from the streets or a corporate job to having to attend a workshop with other entrepreneurs who have also
“There is a massive movement towards cleaner and leaner treating them as such, and you see that being played out in a fully bankable project that the IDC will look at with a lot been financed by the IDC, to talk to a group of people that
proteins that don’t come from commercial feedlots like beef their spending patterns.” of appetite. Phase your funders.” have applied for funding, I’d be more than willing to do that.”