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.