The Good, the Bad and the Hungry

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I have proverbially ‘some good news and some bad news’ for entrepreneurs and the potential entrepreneur sector which in the view of many, comprises unemployed South Africans, or conservatively some 10-million people.

The good news is that more money is now available to support small or micro businesses and those launching their own enterprises. It should also be easier to get your hands on some capital from the government institutions as we are heading for an election and what better way to make friends?

But the bad news is that 98 of you will be back on the streets in just over three years after starting your business.  The global average for new businesses reaching the 3 ½ year mark is 7.6% compared to 2.1% for South Africa according to Liz Zambonini, CEO of Enterprise Development Initiative at The Hope Factory.

So just where does this leave the situation?

The Small Enterprise Finance Agency is to pump R1.4-billion into funding small businesses over the next three years according to Economic Development Minister Ebrahim Patel who also pointed out that a rationalisation process would save them R20-million in costs.  (As an aside this begs the question: ‘Why wasn’t the money saved in the first place and what is SEFA costing taxpayers, particularly in salaries’?)

But critics point to other, more telling factors affecting the success rate of entrepreneurial programmes with finance low on the list.

Zambonini says South Africa doesn’t just need more entrepreneurs, it needs better entrepreneurs.  Its un-employment crisis requires the creation of jobs – and rapidly according to the Global Entrepreneurship Monitor (GEM) 2011 Report with South Africa remaining one of the more poorly-performing countries in entrepreneurial activity.

She points to skills development, entrepreneurship training – including at high school level and an improvement in general levels of education as topping the list of what needs to be addressed.

Dr Rob Smorfitt (MBA) who holds a doctorate in entrepreneurship and author of a number of books provides an extremely erudite analysis: ‘I find it depressing that so many people know so little about starting a business. I think a large contributor to this poor situation is due to the extensive role of government in SME development. Would-be business owners are seldom evaluated properly, mainly because the evaluators themselves are incapable of assessing them.

‘The technical skills and the ability to sell the product or service are however a whole different story. So if the correct opportunity has been identified, the would-be business owner has the technical skills and the ability to sell, who cares whether his financials are correct. Do them for him!! Manage them for him. However the problem is that here we will try to make every SME owner an accountant and business plan writer. No one is evaluating the OPPORTUNITY. This is where they fail – before they even start!!!’

R9.5-billion has been allocated over the next three years to boost the competitiveness of South African businesses in general. Whether this achieves the set goals or panders to poor productivity (something that seems to be built into our national psyche), jobs for pals or the financing of boutiques, remains to be seen.

Certainly in the entrepreneurial promotional arena pumping tons of cash into a ‘machine’ designed for limited amounts of fodder might appease a few in the short-term.  It will not solve South Africa’s huge unemployment problem and it is not the ‘fishing rod’ our hungry youth need.

Perhaps those who ‘know’ best, among them the politicians, accountants, bankers and ‘business managers’ should look at appointing a trouble-shooting body that holds all levels of this ‘machine’ accountable and responsible.  A group drawn from those who really know what is needed such as Herman Mashaba, Allon Raiz, Nkhensani Nkosi, Khanyi Dhlomo, Adrian Gore, Jabu Stone, Jenna Clifford, Basetsana Khumalo, Gayton McKenzie, Cyril Ramaphosa, Patrice Motsepe and Mark Shuttleworth – all successful entrepreneurs.

I leave you with this quotation

Most entrepreneurs are merely technicians with an entrepreneurial seizure. Most enterprises fail because you are working IN your business and not ON your business – Michael Gerber.

Michael Gerber

References

http://www.thehopefactory.co.za/documents/South%20Africa%20failing%20its%20entrepreneurs.pdf

http://smesinsouthafrica.blogspot.com/2012/04/smes-why-so-many-start-ups-fail.html

By Wren Mast-Ingle

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About Author

Tuming Lee Magongoa simply known as "Tuming Lee" is firstly an award-winning entrepreneur, secondly a multilingual children's book publisher and magazine publisher and thirdly, the Editor of KICKSTART Business Magazine. Her company Tuming Lee Media (TLM) does not only provide grassroots entrepreneurs with knowledge to start their own businesses in the pages of its magazine, but it also gives success classes, business classes and innovation classes to this very market. The decision to supply entrepreneurial education was based on the premise that 70% of businesses don't make it past year one, despite all the information that's available on the internet, in books , on TV, on radio and everywhere else. She discovered that the high failure rate is caused by the failure of entrepreneurs to apply the knowledge they gain. And that's where TLM comes in, to help newbies with the organisation and application of business knowledge in a way that will unlock the entrepreneur's full potential and yield positive results.

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