According to the multinational Mastercard’s Index of Women Entrepreneurs (MIWE), South African women are making progress as entrepreneurs, despite the impact of Covid. The report also indicates that South Africa is one of the 12 economies (out of 65) which recorded an increase in the “women’s entrepreneurial activity rate”.
Interestingly enough Grant Thornton’s International Business Report (IBR) has shown that in South Africa, the percentage of female CEOs increased from 11% in 2019 to 30% in 2022. We see this a sign of clear cut progress, as it means that even during times of extreme pressure, South African women continue to enter the business sector and strive for success.
A successful entrepreneur will know when the time has come to grow – that realisation that your business is ready for expansion – the tipping point. Usually, to achieve any expansion additional capital is required, and women owned businesses can find this a difficult environment to navigate. According to a study by the Vaal University of Technology, finance remains a leading challenge for female entrepreneurs in South Africa.
However, there is an alternate way to grow your business: private equity. Private equity is able to provide the finance the business may need along with a reliable partner with sound business practices.
Partnering with PE
Teaming up with a private equity partner means selling a stake in your business: an important decision that requires some serious thought and could allow an entrepreneur the opportunity to access knowledge and experience along with networks that vest with the partner. Something worth considering.
Agile Capital is a private equity fund that invests in diverse businesses in South Africa. “Private equity gives an entrepreneur the opportunity to find the right partner to share the risks and rewards of your business,” explains Liz Kolobe, principal: Agile Capital.
Are you ready?
Only you can decide if you are ready to take this next step. We’ve found that having the right team already in place is extraordinarily important. “You will need a team of people who are skilled at what they do. It means any investor can then trust the business to deliver good performance. Private equity investors back management teams. This is critical,” says Kolobe.
Practical items to consider
We would advise any entrepreneurial business to ensure that all accounting records are in order. This will demonstrate the vigour of the business. It has an additional side effect of ensuring that you have a good understanding of your numbers and this will inform your own outlook.
Identify the important processes and controls in your business. Having controls around the key businesses processes such as procurement and cash management is critical.
This has become particularly important post Covid, due to supply chain management challenges experienced and how it affected supply and demand. It’s a risk factor that you’ll need to include in any report as it directly impacts on how your business operates.
Authentic private equity firms see themselves as a partner in the business, so it’s important to discuss how much input you will let your partner have. A true collaboration allows for good strategic ideas to be robustly debated along with the opportunity to leverage all of the experience, previous knowledge and networks that sit within a private equity team.
Finally
It’s crucial to have clarity regards the vision you have for your business – any good business partner will want to be privy to any the growth opportunities. Clarity regards the vision of your business, means you will be able to identify the skills you will need to add to strengthen these possibilities. You should be looking for a partner who adds value, whatever you perceive that value to be – whether it’s a skillset or a genuine BEE partner. Furthermore, understanding the capital requirements for your growing business will assist in setting what you need from your investors.
Don’t rush in. Take your time to find the right partner. A good fit in terms of values and vision cannot be downplayed. Finding people you can and want to work with is the first and most important step in building a long term partnership.
