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Measuring Business Development Support (BDS) Provider Performance

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The second Catalyst for Growth (C4G) report was released at the J.P. Morgan offices on Monday evening the 12th of June.  The report provides an analysis of the performance of Business Development Support (BDS) providers across South Africa.  Currently BDS providers submit their results to this platform voluntarily and all data that is captured is done so anonymously.  At the time of the release of this report more than 20 BDS providers has already signed for the programme.

During a debate with a panel on the findings of the report various aspects of BDS performance was discussed.  Parts of the discussion that intrigued me were both the differences in the process as well as the input into the entrepreneurial development process.

Unfortunately at this stage the dataset being used to analyse the performance data is quite limited, however from the limited data we can start to see some trends emerging. An interesting trend so far has been that the BDS providers with the highest results are not necessarily those BDS providers that are being recommended by the entrepreneurs being developed.

Also the findings reveal that the development of entrepreneurs in programmes vs. bespoke approaches to development have much higher effectiveness when the entrepreneurial company is younger than when they are more mature.

The geographic results indicate a higher growth rate in job creation in Gauteng, with the Western Cape running quite far behind in job creation, yet when the graphs are read in context what is interesting is that the correlation between profitability and revenue growth is higher in the Western Cape than in any other region.  This leads to an interesting discussion on the trade-off between job creation and revenue growth or profitability.

What struck me in much of the conversations around the event was the discussions regarding the input into the entrepreneurial development process.  For instance, can the development process of entrepreneurs from Sandton be compared to the development process of entrepreneurs in Soweto.  Will the measurement process compare input data such as access to water and electricity or financial start-up capital or something as simple as access to data?

Other questions around the dataset have suggested that the performance of entrepreneurs can only really be tracked once they exit the development intervention, this significantly restrains the gathering of data as in many cases the development company might lose contact with the beneficiary and access to their financial performance.

Tertiary education

The findings have suggested so far that Tertiary education in the form of a degree has a negative correlation to entrepreneurial performance.  Once again, this data would need to be interpreted in context in order to extrapolate the findings in more detail.  It could for instance be speculated that entrepreneurs with graduate degrees can become gainfully employed elsewhere at a competitive or even better salary than in the start-up company, while those with a certificate or diploma might not have the same access to market their skills elsewhere leading them to stick it out and make a success of their companies.

What we can notice so far is that the learnings in the industry are at an early stage and in some cases, as in the case of the tertiary qualifications, the data findings from the United States might not necessarily correlate to findings from South Africa.  This might be due to the unique nature of the South African transformation requirements or possibly some other reasons.

What is also important to realise is that the comparison of BDS performance should be done within the context of the strategy of the company.  So for instance if the goal of the company is to develop a specific community, be it online or geographical, it would possibly gain more value in measuring itself against itself with reference to that community.

Read our recent article published in the ED Handbook of the Financial Mail for more information on this.