Enterprise development ideas for tourism businesses

Of all Cape Town’s responsible tourism priorities, enterprise development is perhaps the one that tourism business owners are least likely to get involved in. Perhaps the problem is of all eight responsible tourism priorities, the benefits of supporting other businesses to grow and succeed are not obvious. Even if they are, developing enterprises seems daunting.

But supporting entrepreneurs in your area need neither be pointless nor difficult. In addition to buying local goods and services, you can do small things to help entrepreneurs improve or diversify their business.

What is enterprise development?

Simply put, enterprise development is about supporting and funding other businesses. In South Africa, we associate enterprise development mostly with start-ups and young businesses. Also, we’re asked to entrepreneurs that are local or from groups that were previously excluded from the economy. Support and funding is aimed at making these businesses grow faster, become independent and succeed in the long term.

What businesses to support?

If your tourism business is to benefit at all from enterprise development, it’s best to focus your efforts on:

  • your suppliers
  • your competitors (you’re reading this right)
  • the providers of other goods and services that make up the tourism experience like tours, tourist guiding, cultural experiences, activities, transport providers, crafts and food, among others.

Benefits of enterprise development

Trying to strengthen your suppliers or improve your offering is intuitive. Like so much else about responsible tourism business practices, you may find that you’re already involved in enterprise development without realising it. Similarly, getting involved in enterprise development sends a clear message about your commitment to the place in which you operate. What you’re really saying is that your business cares about Cape Town having a healthy (and equitable) economy. This caring wins you goodwill from the community, the powers that be and, increasingly, tourists.

Apart from giving business owners and manager peace of mind, a strong supply chain is a source of competitive advantage. Developing suppliers means that you have:

  • Better quality goods or services
  • Reliable delivery of goods and services
  • Better relationship with your suppliers
  • Ability to collaborate with your suppliers to customise goods or services you need
  • More choice from which to buy goods and service

Developing new products and including them in your product offering gives you a unique selling point and helps to differentiate you from competitors. The benefits of giving your competitors a helping hand is less obvious but competition is good for your business, mostly because:

  • If there’s no buzz or choice, tourists are less likely to be interested. Attracting tourists to a destination or activity requires the work of more than one tourism business.
  • Strong competition in an area or a sector raises the standard of offerings, making it more attractive to tourists.

Enterprise development activities

Perhaps remembering how challenging it was to set up their own business, many established businesses are reluctant to participate in enterprise development. Bear in mind though that there’s no rules saying what type of support you should offer, how much and for how long (but you can improve your BEE score through enterprise development).

The range of enterprise development activities is broad. It includes both quick and easy activities as well as long-term, resource-heavy activities. What type of enterprise development your businesses chooses depends on what is within your ability to do, what you have an appetite to do and what will most benefit your business.

The pretty diagram below sums up all the enterprise development activities your business can get involved in. As you can see, support can be monetary or non-monetary.

tourism enterprise development

 

Access to capital

tourism enterprise developmentMonetary support involves either investing in an emerging business or providing access to capital. This includes direct investment, contributing financially without the requirement for the contribution to be repaid, loans, credit facilities or providing guarantees for the enterprise to secure funding from elsewhere. Examples we’ve found of tourism businesses providing monetary support include:

Access to capital in action

  • The Backpack assists staff with micro or small interest free loans to helped start small businesses.
  • Marine Dynamics purchased the photographic equipment needed for their tour photographer to set up his business

Capacity development

tourism enterprise developmentThe offer of management time can help a fledgling business come to grips with business management and set up the systems the business needs. This involves more than just giving an emerging entrepreneur advice now and then.

Coaching is usually short term and aimed towards teaching the entrepreneur one particular skill, like how to be budget or manage stock.

Mentoring is long-term and is more structured. It is best for helping an entrepreneur with little knowledge of business learn and cope with the many aspects of business management. Mentoring other businesses requires a commitment, but like every relationship can be very fulfilling as you watch the business mature.

Capacity development in action

  • Coffeebeans Routes’ suppliers are taught to invoice and do the admin for their businesses. They’re also given help to get banked.
  • Knowing that the success of their Imizamo Yethu stop depended on a quality walking tour being offered, CitySightSeeing Cape Town coached local community members to become guides. 
  • The V&A Waterfront has a buskers programme to help make busking a viable livelihood for the buskers on the property. They hold monthly workshops that focus on business management for performing artists.
  • Because mentoring is more intensive than coaching, it’s often done in partnership with other organisations. Tour operator, Abang Africa partnered with Fair Trade Tourism (FTT) to mentor six community-based tourism initiatives for one year. Participants received tasks and written assignments, were trained in tourism communications, and were given feedback.

Improving profits

tourism enterprise developmentApart from buying goods and services (or procurement as it’s called in the Tourism BEE Scorecard), your tourism business can help emerging businesses by reducing costs. The simplest way to do this is to share your own business’s resources, like your premises and equipment, and to cover some of their overhead and operational costs. Expert advice and professional services is also costly, and you can help with this by helping with financial management, marketing and the more technical aspects of running their business.

Improving profits in action

  • The general manager at Hotel Verde received a packet of homemade shortbread that the team at the site office (during construction days) fell in love with. Looking into the origins of the biscuits, the hotel found a lady baking out of her garage in Bellville. Delicious Biscuits is now a supplier for all biscuits in the rooms, deli and served with coffee in the bar and restaurant. She has employed two more ladies and the hotel’s team have assisted to create packaging for her products, including her name and telephone so that more orders can come in.
  • The Vineyard Hotel have used the same family-run florist for 21 years, helping a small enterprise to grow into a successful business.
  • Under a formal arrangement, entrepreneur Mzukisi Lembeni, the owner and managing director of Imizamo Yethu Tours, receives assistance from the Two Oceans Aquarium on marketing, financial management and other aspects of business management.

Making connections

tourism enterprise developmentAs all business people know, an income statement has two sides, and in addition to reducing expenses, you can the help grow the profits of an emerging business by making their goods and services available to customers and encouraging customers to spend with them. Accommodation establishments either sell tours and products or are asked for recommendations, and tour operators have a choice of attractions they can stop at during a tour. Tourism businesses have influence over tourists’ choices and can give emerging businesses that much-needed market access, be it directly with customers or through resellers like travel agents and tour operators.

Making connections in action

  • Guests with AWOL Tours hire bicycles from the community-driven Bicycle Empowerment Network (BEN). The tour of Masiphumelele township incorporates local businesses for food and souvenir purchases.
  • CitySightseeing sell curios made by local crafters at their kiosk. They also partnered with a local entrepreneur Kgomotso Pooe to offer a hop-on hop-off tour of Langa and Gugulethu, dubbed the LaGugu Tour.
  • The Backpack encourages guests to use tour operators that support local communities. A list of preferred tour operators for township tours has been compiled to ensure that curios and refreshments are bought directly from the community.
  • The V&A Waterfront’s Watershed houses over 155 crafters and serve as a small business development platform centred on craft and design.
  • As part of the Abang Africa/FTT mentorship programme mentioned above, the six emerging businesses were introduced to travel agents, other tour operators and tourism associations when they were hosted at Indaba.

Incubation

Programmes that include many of enterprise development activities are normally called incubators, and these are mostly either government or civil society organisations. We take our hats off to Tsogo Sun for both its Book a Guesthouse Programme, an enterprise development programme for accommodation establishments. Then there’s the Tsogo Sun Entrepreneurs full-year supplier development programme which delivers business foundation skills, coaching and mentorship. We understand that many tourism businesses don’t have the resources to get involved in enterprise development at this scale, but can still appreciate the effort and commitment from Tsogo Sun.

Tips for enterprise development

‘In-kind’ support on emerging businesses is easier than you think. Here are some ideas:

  • Mentor small businesses on how to approach marketing activities. For example, invite them along to networking events.
  • Offer start-up businesses an opportunity to experience your tourism product will help them to understand what is required and expected in the industry. For example, invite new start-up businesses to dine with you if they are starting a restaurant, or stay overnight if they are starting a homestay or B&B.
  • Assist with budgeting or setting up administrative systems – an entrepreneur might have a good business idea but may benefit from assistance in how to cost their product, manage stock, or monitor their financial sustainability. If you offer expertise in any of these areas, you will help to make them stronger.
  • Tour operators can integrate new experiences like visits to local food markets or music festivals into their itineraries. Conference organisers, accommodation providers and restaurants can offer a platform to advertise these attractions to their clients.
  • Engage with beneficiaries along your tour so that their contributions can be improved; this will ensure a better guest experience and hopefully increase business volumes for everyone involved. Also, if there is an opportunity to include additional businesses in the tour, make sure that you support their participation in terms of quality to ensure overall success.
  • Give feedback to craft producers regarding how they might adapt their existing products to be more appealing to visitors.
  • Volunteer to present what you have learned about responsible tourism to local tourism association members and at other business networking platforms.
  • Advertise other local businesses to your guests so that they are encouraged to stay longer (and spend more). Of particular relevance would be those businesses that are also committed to the principles of responsible tourism and offer visitors a uniquely Capetonian experience.

Final words

Enterprise development need not be Everest tourism businesses make it out to be. Like other responsible tourism practices, it’s important to start small using the resources you have. If you’re a small business, it’s likely that you’ll ever be involved in enterprise development at on a big scale, but the impact of your efforts can be big nonetheless. 

Here are two resources for additional information: