Enterprise Development (ED) is the process of developing small or medium companies. This is however a very broad definition. In South Africa this definition differs from the rest of the world due to the intention of enterprise development. Let’s have a look at what this means in the South African context.
Companies not Individuals
Enterprise Development is different from other forms of development as the intention and goal of the development is on a company rather than an individual. This distinction might be difficult to make as in some areas the process of business registration is complicated. It is however an important distinction as the sustainability of a company depends on the business being worth more than the sum of its parts, or to put it in another way, a company should become more that the entrepreneur that started it.
Methods of Enterprise Development
The methods of Enterprise Development differ substantially and can vary from training and mentoring to financial investment or grants (Refer to our article on the ESD Beneficiary Matrix for more information on this). Most practices focus on the singular company. Some methods however focus on developing the ecosystem within which the company operates.
The intention of Enterprise Development
Enterprise Development is either done for commercial reasons or positive societal change. Commercially investors would like to see that a small company grows fast in order to maximize the return on their investment. Mostly in South Africa it is done to benefit the broader society in order to stimulate economic activity with a specific focus of Black Economic Empowerment. Enterprise Development could however be even more specific with a focus on the development of a specific region or ethnic group or with the focus on gender equality.
Specific area in the value chain
As is the case in South Africa a lot of the development efforts could be directed at the Supply Chain. Many companies refer to this as Supplier Development (Please refer to the three strategies in your ESD plan for more information about this). Some multinational companies such as Coca-Cola and SAB Miller for instance places the focus of their efforts in the distribution chain. In other instances Enterprise Development could be done with a focus on improving the operations of a company and developing commercial ventures based on the innovations that take place while doing this.
Whatever the goal is of Enterprise Development many developing nations are in desperate need of it as small companies create and sustain many more jobs in developing nations, than do larger companies.