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Seed Academy, a for-profit social enterprise organization, did a research in South Africa (SA) to determine the relationship between entrepreneurship and job creation in the country. The tabled results established that although there is high entrepreneurial spirit across the country, they are not leading to job creations to the levels urgently needed by SA.

No Job Creation in the midst of High Entrepreneurial Spirit

The survey found out that while 50% of entrepreneurs ventured into business for the right reasons, only about 4% of such businesses employ more than 10 staff. Even more alarming, is the fact that up to 38% of such startup entrepreneurs do not employ any staff at all in their businesses.

Donna Rachelson, the CEO of Seed Academy complained, “Job creation should be a key outcome of entrepreneurial activity. Yet a large proportion of our entrepreneurs have no employees.”

Though little traction for Startups, Businesses Survival Rates are increasing

The survey also revealed that majority of the startup businesses are taking a long time to register some traction. There some businesses that have been in operation for half a decade with little to no sales.

However, the startup businesses survival rates are increasing. A lot of that can be credited to the entrepreneur’s prior experience while in employment. The research found out those entrepreneurs who had over 10 years of prior work experience as employees have better chances of seeing their ventures beyond 2.5 years of life.

While the percentage increase in the age of the businesses is small, the fact it is increasing in a step in the right directions. Our entrepreneurs are resilient,” argued Rachelson.

Start Entrepreneurial ventures as a parallel undertaking to your full-time job

Rachelson further advice would-be entrepreneurs that before jumping with both feet into the world of self-employment. They should first test the waters by running their ventures as a parallel undertaking (side hustle) to their full-time employment.

The survey also revealed that female entrepreneurs are the minority, and ethnic entrepreneur numbers do not reflect the real demographics of SA. Native-owned startups are few and in between.

Entrepreneurs should create Jobs for the large Youth Population

Stats have it that 50% of the youths in SA (aged 15-24) are unemployed. Therefore, entrepreneurs are tasked to come up with job creation programs to absorb this huge population of unemployed youths.

At the same time, they should ensure the youth don’t just get jobs, but also develop skills and business acumen. Rachelson outlines the following recommendations as to how entrepreneurs should take on the task of job creation in SA.

Groom entrepreneurs into becoming ready for funding.

Soft skills development for entrepreneurs and helping them access markets and marketing their products.

Encourage stronger public-private sector cooperation.

Aggressively nurturing the spirit of entrepreneurship across SA.

Improving the ecosystem for funding through streamlining Development Finance Institutions (DFIs), creating angel networks, seed funds, and establishing working relationships with banks.

1,500 Startups took part in the Seed Academy survey

The survey conducted at the beginning of 2016, had about 1,500 correspondents all from startup entrepreneurship background. Their views were gauged, and the results and finding tabulated into a comprehensive report that can be viewed at this link.

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