Sunday, March 10, 2013

The SME mindset - Indians

The Indian community in South Africa are an enigma to many other South Africans. The Indian business community are generally respected as being great traders. However, with time they have proven themselves as able business people in big businesses as much as in small businesses. 

They however are not renowned for sharing their business secrets, even within the Indian community. I have had students doing dissertations think they would get the cooperation of Indian business people because they too were Indians. However, they too were unable to get access to the inner “secrets” of the Indian business community.

While lecturing entrepreneurship, I have always encouraged students to start, build and sell their businesses. A business worth RXm is only worth potential wealth of RXm. It is not wealth. It is only potential wealth!!! No wealth. My Indian students will just not accept this as an option. Not one. As far as they are concerned, once you have created a successful business, you keep it. I support the “cash is king” system. Start them and sell them is what I believe will produce the greatest wealth. This allows for you to then buy or start a bigger business, and create greater wealth, with reduced dependence on outside funding.

The Indian community tend to prefer family-run businesses and I have not met any with partners, other than in the professions. 

Wednesday, January 9, 2013

The SME mindset - whites

The first is a series of 4 blogs on the mindset of the four main race groups as I have observed them in South Africa. The intention is not to upset anyone but to try give each an insight into the other, in an attempt to get us moving forward. I have obviously generalised, and therefore ask that all readers not judge me until they have read all 4 of the blog articles. Then your comments are welcome.

However, back to business! Soon after 1994, things started to change – very subtly. It took me a number of years to notice that it was not business as usual. Whites started to battle financially in their businesses. These were SMEs who had previously been great lifestyle businesses. Profit margins kept shrinking and turnover was not growing in a controlled fashion.

Whereas in the 70’s and 80’s you could fairly accurately predict your growth, now you could not! Then the anger began to set in. It was all the fault of the new government. They did not know how or why it was their fault, but it was.

The first event was a new democracy. The joining of the WTO by South Africa was the second event that started the change. The third event was not so much an event as a management approach. Labour was cheap and plentiful, so it was used accordingly. It was easy to hire and fire, and unless you were a habitual offender the Department of Labour was, if anything biased towards the employer. This was highlighted for me when I visited Australia in 2000. I was simply visiting family, but I paid close attention to the SME environment.

What I noticed in Australia was that most of the SMEs I saw were literally one-man businesses. The best example to compare is the garden service. A man with a truck arrives. He has a cherry picker and a bobcat on the back. He offloads, gets the instruction from the client, does the job, and is done in an hour maximum. Then he is off to the next job. He is literally a one-man business - a highly mechanised and efficient SME. 
Compare that to the South African model for garden services. White guy with 10 labourers taking 3 or 4 hours to do the job. White guy shouts instructions, and labour do the minimum work for minimum wage. I can provide a host of examples, from professional to artisan. Or white guy sits in truck and waits until they are done. This is termed management.

The nett result is that the white business owners began to resent the new democratic government. However, they were in error. The real enemy was not our government, but rather our new exposure to the real world of open markets, globalisation and serious competition. Then there was the added factor of the Internet. How many book shops went out of business because of Amazon? I know a few myself!

White SME owners were just overwhelmed with change. No Apartheid, black equality, new government, joined WTO, new competitors, the Internet, globalisation and more. Engaging with white-owned SME owners has made it quite clear that many have not realised the world in which they have to compete is now a new world in many ways, and that they have to change – which they cannot or have not done.

I am afraid chaps, the easy days are now a part of history, and it is a true “only the fittest survive” scenario in play. Low margins are a reality for many businesses. Ever-growing sales revenues are needed to stay afloat. The Internet and its siblings such as social media, are all forcing their ways into our lives. Is it yellow pages or Google words? I thought it was Pieter Dirk Uys who said ”Adapt or die”, but the irony is that it was PW Botha when he was Minister of Labour. It has never been more applicable to white-owned SMEs than now. We must change to survive.

I have seen some of our better and best SME owners operate and I know we are more than capable. The problem is we need more converts.

Tuesday, December 4, 2012

SMEs - lack of growth part of a bigger problem?

I recently viewed a video that was being circulated on email. It showed Gareth Cliff asking questions of a music talent show hopeful. He asked the fellow what he did, and the hopeful essentially described himself as running a small spaza store. Gareth then said "Oh, so you are a vendor" to which the hopeful replied "No, I am a Zulu". While the video was being circulated as a source of amusement, I believe it underlines the serious divisions within our country.

How often do you hear people say I am a South African. Almost never. We are black, white, coloured Indian, Jew, Greek, English, Afrikaans, Zulu, Xhosa, Muslim, Hindu, whatever, but never South African.

In the USA they are Americans even when it is clear from their accents that they have only been there a short while. In Australia the same, In fact almost everywhere it is the same. But not here in South Africa.  When last did you hear a Zimbabwean say they are Shona. 

A Zimbabwean student once said to me, "Before I came to South Africa I was just a human being. Now I am a black person who is subjected to the worst racial treatment possible, from South African black people. You South Africans are not nice people." What an indictment of our society from a 21 year girl .

Until we see ourselves as a single nation we will continue to expend  energy on stupid and unnecessary divisions which add no value to our country whatsoever. Instead of learning and working together, and building strong country bonds between countrymen, we instead focus on dividing and ruling, encouraged by a government that claims to be a non-racial government.

It is time we put paid to this political manipulation, as it only benefits a small minority, and not our country. Then maybe we would have greater efficiency in businesses, less worker hostility to capitalism, and great growth in our country, which means our SMEs would be able to grow too.

Sunday, September 16, 2012

SMEs - marking time!

I attended the conference in Bloemfontein. What a waste of time and effort. The losers - all the black SME owners that attended.

As usual the organisers were more interested in reducing the speaking time of the white speakers and increasing the number of black speakers. Content and the quality thereof was irrelevant!!

In a country where it is an acknowledged fact that the Nationalist government actively conspired to provide inferior education to black people, that the ANC government continue to try and exclude whites from the process of sharing knowledge and skills is just not understandable. The whites in this country are not all racists, and there are many (the bulk) who want to make a difference because they want to and have the skills and expertise to do so. They also understand that we all have a shared destiny, and that they therefore need to make a contribution..

I have no illusion that all white "experts" are great, nor that all black "experts" are not, but the racism was just so blatant.

Many of the speakers were government lackeys who simply trotted out the same old lies, myths and promises. This was not my opinion, but that of some of the more experienced black entrepreneurs at the conference.

It is time that black SME owners started demanding quality speakers with tangible offerings irrespective of race, as opposed to this consistently poor bunch of uneducated, non-expert, government lackey, lying, promising, never delivering bunch they get now.A free lunch and a t-shirt will maybe buy votes, but are unlikely to help the SME owner progress.

SME owners need good and useful information and they need it from the best, not from racially profiled non-experts. Start to demand the best or remain nowhere in the greater economic scheme of things. Nowhere in the world have government lackeys made a useful and significant contribution to SME development.


Sunday, July 22, 2012

SMEs - South Africa marking time?

SMEs are once again in the background. Very little new is going on which is new. There is a SME conference in Bloemfontein 26 and 27 July. Contact the Bloemfontein Chamber of Commerce for details.

The conference appears to be different to the run of the mill, so here's hoping it is.

Another finance related conference will take place in November with the KZN Treasury the possible sponsor. This too should be an unusual conference. I will provide more info as time progresses.

New info will be advised as it becomes available.

Sunday, July 1, 2012

SMEs - what SMEs need to do

SMEs are desperately in need of help and protection - from themselves. While it is easy to sit back and criticise government, especially when they make it so easy to do so, but surely we have responsibilities as well.

How many SMEs take advantage of government efforts to assist business?  How many SMEs complain in writing to government about what is wrong? How many SMEs have identified their weaknesses? Do you know what your weaknesses are?

The fact is that every business has these components:
1. Administration
2. Finance
3. Marketing (excluding sales)
4. Sales
5. Technical skills

The first three can all be outsourced to an external party such as an accountant or a consultant. However, the process of selling and technical skills are the two components you cannot outsource. These the owner of the business has to do themselves or employ people to do it. However, especially in a smaller business, this increases the risk of failure if staff resign. Furthermore early stage businesses can sometimes not afford these employees, so the owner has to do them.

But the admin, finance and marketing are also critically important, and outsourcing should be seen as a temporary status. It is imperative that business owners gain at least an understanding of these areas of expertise, such that they can interpret and make decisions upon the information provided by the accountant or consultant. Would you like to drive a car at speed with a blindfold on, and some one telling you when to turn and when to brake. Unlikely that you will enjoy the experience!

So the contribution SMEs can make is to improve their skills, as well as those of their staff. I am always reminded of the story and the CEO who was big on staff training. At a meeting with fellow CEOs in his industry, one of his peers mentioned the fact that they loved the fact that he trained people so well as they helped the industry to find good people. They then asked him why trained when he knew they might leave. His response was that if he did not train them, they might stay. Think about it!!

So in conclusion, the best thing SME owners can do is to realise their limitations and then ensure they reduce these by gaining sufficient knowledge to at least understand things, even if they are unable to do them.

Monday, June 4, 2012

SMEs - a South African SME wish list

SMEs in South Africa are expected to deliver a lot by government. This blog looks at what SMEs would like, and in the next blog I will look at what SMEs need to do to make it work. SMEs would like to see a simple national licencing system. There would be no fees. There would simply be a national database of businesses. You can link into a licencing website and register yourself and print out your licence. Total time 5 minutes. If you have no Internet access, you can go to any government office any where and they will register you and print out a licence. Why? Well then we can find out how many other signwriters there in in the area. It would help with planning by government. It would help entrepreneurs to identify opportunities. It would stop over-trading within certain sectors. There would be a single registration at SARS or CIPRO which would get your business registered for everything related to government. Total time 5 minutes and print our all your own registrations, including SARS, SDL, UIF, PAYE, VAT, Exporter, Importer and anything else we need to register for. Make the statistics on imports available on a website that a normal human being can operate. It would allow for a reduction in the trade deficit as entrepreneurs identified manufacturing opportunities by being able to see the products being imported and at what price. You can do this in the USA, by port and airport. Training and mentorship coupons should be available on registering of a business. You print them out and take them to a service provider OF YOUR CHOICE to redeem them. Yes there will be people who abuse the system. But you only ever get one set of coupons linked to your ID, so it does not matter how many businesses you establish. A whole lot more people will take advantage than abuse the system. It will also get rid of institutions that add little to no value now, and that simply consume money without any value add such as the NYDA, to name but one of many more. It will be a whole lot cheaper and will have a greater efficacy. I get so many black entrepreneurs who refuse to go to government offices because of the poor quality of service and the poor customer service ethic. With time, by analysing the trainers and mentors who are redeeming their vouchers, government will quickly be able to identify the good ones and dicey ones. Let SARS do the redemption and ensure payment is done within 7 days, so that they have no reason to cheat government. A national SME chamber. Government needs to see this SME chamber established. They must fund it for 5 years to get if off the ground. BUSA, SACCI, AHI and all the others have no real SME focus. No matter what they claim. Get a few people together and thrash out a starting point, then let it happen. It is important. Make it clear that this is the last chance for SMEs to do their own thing. Kick start the SME Council which was established in law to advise the President. For once leave out the politics and the politically aligned academics. Bring on board strong SME owners, strong SME academics, outspoken people on the SME topic. Get rid of political yes men who add no value, and get this committee up and running properly for once and for all. There is a reason we are making no progress in matters entrepreneurial. A key component of this committee must be advising the President on matters relating to entrepreneurial education, where the country is so bad that it is scary. I know just the man to run this successfully, and no it is not me, nor is it any of the other people currently involved in chambers of any kind. Finally, take every law, and do a complete impact assessment on it, purely in the context of the impact on SMEs. Unintentional consequences of many South African laws have to be sorted out as a matter of urgency. A long list of these issues is already available.