Unveiling the Hidden Path: How ESD Office Catalyzes Entrepreneurs’ Access to Corporate Opportunities

Pre-2010 marked a period where government entities dominated the development of SMMEs, leaving entrepreneurs to rely on support from various government entities. However, in 2004, the implementation of the B-BBEE (Broad-Based Black Economic Empowerment) codes brought about a significant change. These codes mandated that corporates allocate 3% of their net profit after tax (NPAT) to Enterprise Development initiatives, later expanding to include Enterprise and Supplier Development (ESD). To a large extent, the private sector was now mandated to drive the development and growth of black enterprises by providing financial and non-financial support. In 2008, the promulgation of the codes of good practice further enhanced the support instruments for black enterprises through the introduction of the ESD Matrix, offering better guidance and clarity. Over the years, the codes underwent revisions to unlock market opportunities and establish rigorous targets for preferential procurement from black-owned businesses, qualifying small enterprises (QSEs), and exempted micro enterprises (EMEs).

As a result, from 2010 onwards, corporates took the lead in small business development through ESD, giving rise to a multi-billion ESD industry. One notable outcome of the B-BBEE codes was the establishment of ESD offices within corporates. These offices were entrusted with designing and implementing ESD programs to support black-owned SMMEs within and beyond the corporate supply chain. Evolving from mere information and compliance desks to strategic divisions, most ESD offices now contribute to the corporate agenda by driving commercial objectives, ensuring B-BBEE compliance, and delivering social impact. The revised codes, with their increased emphasis on supplier development and preferential procurement, have elevated the role and status of ESD offices as agents of change in procurement. Consequently, ESD and BEE commitments are now integral to procurement category strategies and strategic sourcing conversations, facilitating collaboration between ESD offices and procurement divisions to achieve supply chain transformation.

In light of the above, ESD offices have been empowered to promote the growth and sustainability of black-owned SMMEs by providing them with access to finance, markets, business and technical support, and compliance assistance. The primary objective of ESD offices is twofold: firstly, to enhance the operational and financial capabilities of small black businesses, enabling them to grow, be sustainable, and create jobs; and secondly, to enable corporates by diversifying their supply chains, distribution and value chains through the integration of small black-owned businesses, thereby delivering social impact and improving the B-BBEE scorecard.

The most crucial function of ESD offices that entrepreneurs must embrace is their ability to provide key support to entrepreneurs, including (1) insights into corporate procurement and business opportunities, (2) understanding of the requirements for accessing procurement and business opportunities, (3) business linkages by connecting entrepreneurs with the right individuals in procurement and commercial teams, (4) business readiness support to ensure entrepreneurs possess the necessary language, focus on the right opportunities, and present a compelling business case and image, and (5) structured business development assistance. When ESD offices effectively fulfill these key deliverables, they pave a smooth path for entrepreneurs to access commercial and procurement opportunities.

ESD offices need to be enabled to be effective and achieve their mandate, and the following are critical to ESD enablement (1) the ESD division has a highly skilled team led by a strong ESD leader, (2) there is the availability of financial resources to deliver ESD programme, (3) operates under a powerful Executive (EXCO member) that provides leadership and protection, (4) respect from key divisions like procurement and commercial teams, (5) high level of collaboration from procurement and commercial teams, (6) ESD is present and participates in strategic decision making governance structures within the corporate, (7) strong support and enablement from EXCO, and most importantly (8) support and oversight from Board.

Entrepreneurs should leverage the value proposition offered by ESD offices, including corporate insights, business linkages, business readiness, and structured business development support. Entrepreneurs need to understand that the strategic nature, skill set, capacity, resource capacity, level of competency, processes, and influence of ESD offices within corporates vary. These factors affect the effectiveness and efficiencies of ESD offices in supporting entrepreneurs. Once entrepreneurs grasp these nuances of ESD offices, they can adjust their expectations and align their approaches to each corporate's ESD office dynamics, thereby increasing their chances of success in accessing procurement or commercial opportunities and obtaining business support through ESD offices.

Entrepreneurs must steer clear of common pitfalls when engaging with ESD offices. These include blindly seeking ESD support without conducting proper research to identify their specific needs, exhibiting forcefulness or aggression when interacting with ESD offices in pursuit of procurement or commercial teams, neglecting the advice provided by ESD offices and attempting to bypass established corporate processes, and seeking direct engagement with executives while disregarding the importance of ESD practitioners in the process. When entrepreneurs undermine or display arrogance towards ESD practitioners, they risk being ill-prepared and entering challenging situations, including engagements with strict and demanding procurement and commercial teams without any insights. Witnessing unprepared entrepreneurs struggling during presentations, presenting incomplete and incoherent value propositions, and lacking composure while being scrutinized by uncompromising procurement and commercial teams can be disheartening and damaging to the entrepreneur's reputation.

Establishing strong relationships with ESD staff is fundamental for entrepreneurs. Understanding the offerings and processes of ESD offices is key, as is respecting their procedures and adhering to their advice and guidance. Successful engagement with ESD offices necessitates patience, preparedness, adherence to processes, conflict avoidance, and a willingness to accept advice in order to access procurement, commercial opportunities, and support services.

In summary, the establishment of ESD offices within corporates through the B-BBEE codes has provided entrepreneurs with a valuable corporate ally and an alternative pathway to accessing procurement and commercial opportunities. ESD offices play a crucial role in connecting entrepreneurs with the right individuals within corporates, saving them time and resources. They also ensure that entrepreneurs are well-prepared and possess a strong value proposition before engaging with strategic individuals in procurement and commercial teams within the corporate structure. ESD offices then facilitate the provision of financial and non-financial support to entrepreneurs.

ESD officials need to be part of the strategic decision-making governance structure within the corporates, have a strong collaboration with procurement and commercial teams, and ESD office be supported at EXCO and board level.

When approaching ESD offices, entrepreneurs should consider important factors such as the ESD office's roles, skills, level of influence, insights, and ability to drive linkages within corporates. Entrepreneurs should approach ESD offices with patience, respect corporate processes, adhere to ESD office advice, and build strong relationships.

Ultimately, entrepreneurs' success is intertwined with ESD offices' success. Entrepreneurs who embrace the support and guidance offered by ESD offices while adhering to processes and maintaining positive relationships position themselves for growth and success within the corporate supply chain.