Category: Enterprising School Leavers | Opportunity mediation services | 6 April, 2014 - 18:00← BACK
PROJECT CONTEXT: THE CHALLENGE THAT OUR PROGRAMME SOUGHT TO ADDRESS
For nearly a decade, the Business Place Philippi and the Clothing Bank have been working with hundreds of self-employed, low-income people in and around Cape Town. Most of these self-employed individuals did not originally set out to be entrepreneurs – they started their small businesses out of necessity because they could not find other employment. They are called “necessity entrepreneurs” who aim to sustainably support their families but who lack entrepreneurial attributes, despite their managerial competencies.
These two successful, Cape Town based organisations – The Clothing Bank and The Business Place Philippi – have joined in partnership to help necessity entrepreneurs access much-needed entrepreneurial skills and successfully manage their businesses, and thus also to tackle the unemployment challenges facing South Africans.
The Clothing Bank (TCB) is a holistic 2-year Enterprise Development training program that empowers unemployed mothers to start a small retail business to help them become financially and socially independent. The Business Place Philippi (TBPP) is a business support centre, based in the Philippi township of Cape Town that assists aspiring or current business owners by providing information, referrals, training, workshops networking opportunities. The core of each Business Place branch is the information centre, where clients are able to receive assistance in working out the next steps to start or expand their businesses.
Together, TCB and TBPP have started the Micro-Franchise Accelerator (MFA), which is discussed in this learning brief.
INTRODUCTION TO THE MICRO-FRANCHISE MODEL
The MFA helps necessity entrepreneurs develop entrepreneurial skills and successfully manage their businesses by matching them with business-in-a-box recipes. These so-called “recipes” for successful businesses are micro franchises, which are adapted to each potential franchisee’s skills and aspirations. This strategy is aimed at reducing the new business failure rate, and creating a long-term sustainable solution to unemployment.
The MFA is a centre of excellence that offers a portfolio of proven, commercially viable and replicable-at-scale business models (franchises), as well as a strong support ecosystem to carefully chosen franchisees. This offer dramatically reduces the start-up risk for the non-entrepreneur seeking self-employment. As such, the MFA has a job creation solution that relies on the proven success rate of franchises and on their ability to create rapid employment opportunities. Franchises are much sought after in South Africa because they are easy to adopt and are low-medium risk enterprises. They appeal to low-income populations that seek out small business entrepreneurship ventures in order to survive because they cannot find other employment.
The MFA has started with a few franchise models that will later be replicated and expanded. These come from a pool of potential franchisees available through The Clothing Bank and TBPP. The MFA offers micro franchisees a tailored solution to their employment and income needs, and not a one-style-job that fits all people. As a result, the vision is to have a portfolio of franchise options that could cater to all franchisees various aspirations. In 3 years, the MFA will have 8 different franchise models on offer.
OUR PROGRAMME STRATEGY
The MFA is a centre that offers a range of aspirational, proven, commercially viable and replicable solutions for “necessity entrepreneurs”. The franchisees can make a R5,000 monthly income, and are sustainable and independent after 2 years of the program.
We have built a successful methodology that follows 5 key strategic actions:
IMPLEMENTATION TO DATE
The MFA started off by spending a few months on the first step of identifying potential franchise models. We developed a small business model and a database of potential franchisors. We remain on the lookout for new franchise examples and innovative ways to improve our existing options.
To date, the MFA has achieved three main things:
1) Building workable processes and best practice: The MFA has built and consolidated its processes for the 5-step, core methodology (outlined above). Manuals and best practices are in place to document each process.
2) Tracking success: The MFA currently has 4 franchise models in its portfolio and a total of about 25 franchisees running their own business. The four working core models in the MFA portfolio are: sewing franchise, a cobbler franchise, a Nail Salon; and we are testing a micro bakery model. We meticulously document the successes and best practices of these new ventures and keep these in our records.
3) Our selection of franchise models: The MFA wanted franchise models that had a proven track record of success, were commercially viable and replicable, and that met the aspirations of the target audience. Additionally, the MFA founders wanted to use their existing business ventures as starting points. As such, the following franchise options are currently available:
The sewing and the cobbler micro franchises use the lightly damaged garments and shoes from The Clothing Bank that cannot be sold as they are without repairs. This franchise model involves selling these garments and shoes in bargain boxes – for a minimal price – to the franchisees, who then mend the clothes or shoes and sell them for a profit. It provides them with highly attractive brand-named items and then gives them the creative freedom to alter items as desired and to add their own personal touch. Currently there are 14 sewing franchises and 8 cobbler franchises in operation, each making a profit of at least R5,000 per month.
The Nail Salon micro franchise is an attractive beauty venture geared at low-income women who want to run a small nail salon from their home. This franchise model was piloted in October 2013 with 4 women, and their businesses are currently under evaluation and showing early signs of success. Furthermore, we have learnt from these 4 salon case studies and have subsequently improved the model and built additional partnerships. We are ready to launch 50 of these micro franchisees.
The Micro Bakery franchise is a model that we are currently developing with partners specialised in baking bread. The franchise involves running a small bread shop that purchases supplies from a service provider, and focuses on making healthy affordable bread for the community. This franchise is still in pilot phase.
IMPLICATIONS FOR OTHER IMPLEMENTERS
The MFA believes skills development is very important for tackling unemployment, but that bridging the link to self-employment is critical. We have learnt that self-employed individuals are not always “entrepreneurs” in the classic definition, but are often “necessity entrepreneurs” or people who go into business out of necessity. They can only really be successful in the long-term if they are provided with the structure and support to get started, and if they have the skills and know-how to maintain their businesses over time.
A few factors underpinning our success:
In addition, we have the following:
15 St Michaels Rd, Cape Town
This Learning Brief provides a summary of how micro-franchises provide small business opportunities for unemployed people. The Micro-Franchise Accelerator gives an introduction to this approach, a programme and implementation strategy, and implication lessons for other interested service providers wanting to know more about how to roll-out similar employment enterprises.