Poverty is caused by inadequate income. Effective assistance to small-scale enterprises may benefit the urban and rural poor. Small enterprises have the potential to create employment, reduce poverty and support sustainable livelihoods, as small enterprises satisfy local needs, provide employment opportunities in local areas, increase income, ensure food security and improve health. The Department of Land Affairs has recently introduced policies such the Land Reform Policy to correct the injustices of South Africa’s past. During 2005, the KwaZulu-Natal Department of Agriculture and Environmental Affairs introduced the Agrarian Revolution Programme, in an effort to close the gap between the first and second economy. The Agrarian Revolution and the LRAD programmes encourage agribusinesses through the formation of co-operatives or trusts. The purpose of this study was to investigate the potential of an envisaged processing enterprise with a group of women from an LRAD project, within the Engadini Community Trust. An action research methodology was followed. A training manual was developed and training conducted with the Engadini women’s group through which they prepared a business plan, developed prototype products; conducted market research; estimated prices for the products and developed a marketing plan. The study results indicate that the group would have the technical skills to make a good quality product. The group is likely to face problems ensuring a sustainable supply of raw materials as the current supply of milk would hardly be sufficient to supply the target market sampled during the consumer survey. The success of the dairy processing enterprises depends heavily on the ability of the Engadini Trust to overcome internal social problems. Conflict between the Engadini dairy processing enterprise members and conflict within the larger Engadini Community Trust had a crippling effect on the dairy processing enterprise. The main recommendations for the group are that the group needs to secure a sustainable supply or fresh milk. A dairy processing facility that will meet food safety standards needs to be erected for the enterprise. The location of the dairy processing enterprise needs to be re-considered. To overcome internal conflict within the group, the women’s group needs to gain representation on the Engadini Community Trust’s Executive Committee, to ensure that the dairy processing enterprise interests are considered by the Trust. The main recommendations for small-scale enterprises are that they should ensure to have sustainable supply of good-quality raw materials and a reliable, sustainable market, even if the market is relatively small. Policy recommendations are that Government Departments such as the KwaZulu-Natal Departments of Agriculture and Environmental Affairs and Economic Development should consider adapting policies that will focus on funding individual enterprises, rather than group enterprises. A directorate or sub-directorate dedicated to the development of small and medium sized food processing enterprises should be created. The marketing section of the KwaZulu- Natal Department of Agriculture and Environmental Affairs should provide marketing information for small-scale food processing enterprises available to extension officers and small-scale enterprises.