I was recently in South Africa and discovered a small business that has created a project that is helping lower the country’s massive unemployment rate. And on top of providing jobs to people in the local community, the project saves the businesses a significant amount of money.
Spier Hotel and Conference Centre, located outside of Cape Town, South Africa, is a four-star resort that produces award-winning wine, and plays host to programs that attract locals and tourists from around the world. After realizing that supporting local industry and local communities was most sustainable for their business, Spier began what their management likes to call the “enterprise development approach.” Such an approach promoted the development and innovation of small businesses conceived by Spier staff at all employment levels, as well as those from the local community.
Stateside, we’re familiar with business strategies where small businesses invite hard working and high-achieving employees to own a stake in the company. Spiers' entrepreneurial model is similar, but quite unique. Their ED approach of bringing local entrepreneurs into the supply chain has resulted in the growth of several independent service businesses that Spier then contracts for work.
These spin-off businesses are owned and managed by former employees who successfully pitched their ideas to Spier, which then built the infrastructure and bought the necessary tools for the business owners. Doing so was a small cost to empower the community and outsource less, , says CEO Andrew Milne.
“It is important that the business owner you choose to support has entrepreneurial flair, the appropriate skill set to run the business, and is open to assistance and guidance,” says Milne.
Such an owner is Bernie Samuels who five years ago started his own laundry operation, called Kleinbegin Laundry (Small Beginnings Laundry). Spier is his biggest and most lucrative contract. By contracting Samuels’ laundry business, Spier has saved a third of what they were previously paying to an outside business that didn’t always deliver.
I spoke with Milne and Samuels about how a US business could go about adapting such a model.
1. Figure out the goal of the new business. According to Milne, Spier’s initial objective was to analyze their supply chain and find ways to support more local, black-owned businesses (in a post-apartheid era South Africa), which would then stimulate job creation within the supply chain.
“This led to us identifying possible outsource opportunities by assisting in the establishment of small businesses that we could give ongoing support as a key customer,” says Milne. “We then set very clear annual objectives as an executive team to identify one or two enterprise development opportunities.”
2. Create a climate within the company where enterprise development is encouraged. Spier welcomes ideas from the bottom up, and makes it clear that the management buy-in is an option from the very beginning. They encourage “the little guy” to feel empowered and comfortable about developing ideas themselves. “It is not just a top-down push from management,” says Milne.
3. Ensure the sustainability of the small business. Spier actively looks into finding what they deem suitable partners. They tap into various networks to find new suppliers. They then mentor each new business owner, and help him/her to establish clients beyond Spier.
“To succeed, you must be committed to the business, and willing to put in more than 100% effort,” says Samuels who works long hours and demands perfection from himself and his staff of eight.
4. Recognize that starting a micro-enterprise isn’t always a capital-intensive exercise. Think strategically and opportunistically. Be selective with the local sourcing when looking for new products and services.
“Much of our approach has been resourced-based,” says Milne. “While some seed capital was usually required, the majority of support for the enterprises came from resources and expertise existing within the business.”
From Samuels’ side of the business opportunity, he makes sure to “research products well so that [he is] delivering a top-quality service that fits with [his] clients’ ethics and values.” Samuels tries to always be up on new products and methods in his industry to make the results of his labors as perfect as possible for his clients.
5. Show the triumphant results quickly. Samuels’ successful laundry business demonstrates to other Spier staffers and local businesses that a local supply can work. Seeing the success has encouraged innovation and drive within the community. By maintaining a good relationship with Spier, Samuels has come back to his client with other pioneering ideas like the car wash and a window blinds business. And at the end of the day, Samuels’ recognizes it’s a growing process and therefore is ready for feedback from his mentors.