In spite of the current economic turmoil, a possible ‘silver lining' for small business development may exist in that corporate downsizing and factory layoffs could yield more potential entrepreneurs, says entrepreneurial developer ChemCity business development manager Herman Berry. This could lead to a greater interest in and need for entrepreneur support programmes, such as those provided by small business and entrepreneurial investors.
"The layoff of corporate employees will probably yield more entrepreneurs. These people could bring new ideas and opportunities with them. The quality of ideas and quality of entrepreneurs could improve as a result of their exposure and experience within the corporate environment," says Berry. "ChemCity has a tried and tested enterprise development model, and is well positioned to assist these people."
An opportunity exists for incubators such as ChemCity as well, as there will be a bigger demand for business development support, he adds.
He says, however, that as credit dries up and consumer spending decreases, incubators are in turn going to face the challenge of securing finance for these new small to medium enterprises (SMEs) and of ensuring their sustainability.
ChemCity, a wholly-owned subsidiary of chemical company Sasol Chemical Industries, acts as a business incubator to facilitate the establishment of independent downstream SMEs in the chemical and related sectors. This socioeconomic initiative aligns Sasol with two national strategies, namely job creation and broad-based black economic-empowerment (BBBEE).
Over 1 470 jobs have been created through ChemCity's assistance in implementing 85 SMEs since June 2004. ChemCity is accelerating its enterprise development activities to include developing Sasol suppliers and related or adjacent businesses.
"ChemCity will intensify efforts to develop suppliers linked to the Sasol value chain. This means moving beyond chemicals and related products," says Berry.
Currently, ChemCity employs a focus group approach, identifying seven key areas of interest and importance with regards to SME development.
The renewable energy cluster focuses on developing viable projects that harness or create energy through alternative and renewable sources, while remaining environment-friendly.
ChemCity dedicates considerable time and effort to SME projects that can viably produce biodiesel on a sustainable basis. The team assists entrepreneurs to draw up business plans as well as identify viable feedstocks that can be sourced on a continuous basis. Projects falling within the ambit of the cluster include the production of biodiesel from used cooking oil, which is the most popular source of feedstocks from an SME perspective.
Ethanol gel projects involve all aspects of the value chain, including ensuring bioethanol feedstock availability, production of bioethanol, formulation of the gel and distribution of the final product. All of these projects involve the establishment of ethanol distribution centres based on market related research, with the business development of key role players already under way. The projects additionally seek to engage municipalities to activate free basic alternative energy policies and create opportunities for ethanol gel use.
Solar renewable energy projects are still fairly new in South Africa. Opportunities in this field are currently being explored by the ChemCity team, with a number of projects already receiving assistance.
In consultation with local municipalities and suitable entrepreneurs, the team assists in the development of projects involving converting sewerage sludge from waste water works into organic fertiliser using suitable waste treatment technology.
ChemCity also works with external entrepreneurs in developing business concepts for the collection of recyclable waste such as plastics, glass bottles and paper. ChemCity's role is to ensure that the entrepreneur has access to sustainable supply of waste material, the market for the resale of the waste products to relevant entities as well as a reliable inbound and outbound logistics system.
An area of particular current interest is waste tyre beneficiation into pyrolysis oil, carbon black and steel using pyrolysis technology. An extensive market development study has been done in consultation with a local technology developer, tyre recyclers and processors.
Further, in partnership with the Recycling Oil Saves the Environment Foundation and the National Oil Recycling Association, the team assists emerging entrepreneurs in setting up financially feasible businesses for the collection, recycling and processing of used lube oil in an environmentally responsible manner.
A new area of focus is in assisting external entrepreneurs and municipalities in beneficiating various forms of carbon rich waste, such as cattle manure, chicken dung, wood waste and sewerage into fertiliser, biogas and electricity.
Cosmetic Technical and Business Support
The ChemCity cosmetic technical support group was formed to provide specialised technical support for SMEs within the cosmetics industry. Although the group was initially structured with the intention of providing predominantly technical support, as the number of SMEs being incubated increased and the needs of prospective entrepreneurs became more diverse, it became clear that a more holistic approach was needed during the development of these SMEs, leading to the inclusion of technical and business support in the cluster's service offering.
Solvents, Acrylic Acid Derivatives and Supplier Development
ChemCity also focuses on chemical projects linked to the acrylic acid value chain. These include the production of crude acrylic acid, glacial acrylic acid, ethyl acrylate and butyl acrylate used in super absorbent polymers, detergents, water treatment, food packing, emulsions and textiles.
Imperative to this focus group is assisting Sasol suppliers grow their businesses, saving businesses that may be failing, and enabling suppliers in transformation to improve their BEE status.
ChemCity assists SMEs in the field of polymer conversion in South Africa by implementing new technologies and identifying alternative polymer conversion solutions. This is achieved through a well established international network of technical support structures, business associates and financial expertise.
One of ChemCity's greatest competitive advantages is its access to Sasol's support, which gives the group access to markets and industry knowledge.
The polymer focus group has access to experts across all functional areas, which provides it with a significant breadth of knowledge.
The focus group has been split into three main areas, namely technical and technology development, business support and polypropylene beneficiation.
The drive behind community projects is empowerment, wealth and job creation at grassroot level with specific focus on BEE and the empowerment of women. Two particular areas of interest in this group are candle-making and cosmetics.
This is the latest focus group in the ChemCity model. The purpose of the group is to monitor and track incubatees for a period of at least one year. This is mainly to identify red flag areas and address business risks that might affect the sustainability of the enterprises assisted by ChemCity.