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.

PLEASE FIGHT FOR QUALITY PRESENTERS THAT WILL REALLY HELP YOUR BUSINESS.

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.

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.

SMEs - why so many start-ups fail

I never stop being surprised at the overall low level of quality of start-up business ideas/concepts in South Africa. Way too many people are being pushed and pulled into the world of entrepreneurship, and yet they would not even survive in a protected franchise environment as a business owner as opposed to an entrepreneur. Research has shown that a clear harvest plan and business model are the two key starting criteria for a successful business. Anecdotal evidence I have accumulated over the years points to the validity of this research. 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. Development capital is handed out by accountants and bankers without any view to the entrepreneurial metrics, and a major emphasis on credit and financial metrics. I believe that the identification of the correct opportunity is half the battle won. A business essentially requires the following activities to occur in order to exist: 1. Sales management 2. Technical skills management 3. Admin management 4. Financial management 5. Marketing management Marketing, financial and admin management can all be outsourced. Marketing consultants and accountants are a dime a dollar. 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!!! This is why so many markets are so heavily over-traded. Sign writing, taxis, hair salons, funeral parlours, loan outlets spaza shops, garden services, pool services, etc. That is why so many fail. I do defer here to a number of private sector organisations who do this well such as Business Partners and GroFin. However, they are the exception rather than the rule. There are others that I have not named, so please do not abuse me. We need to change our focus in order to create more success and fewer failures. We will consider the harvest plan in the next article.

SME - types of entrepreneur

Research indicates a number of different types of entrepreneur. These include survivalist entrepreneur; salary replacement entrepreneur; lifestyle entrepreneur, small business manager, franchisee, copycat entrepreneur, franchisor, inventrepreneurs, serial entrepreneur, portfolio entrepreneur, angel funder and venture capitalist.

However these can be grouped into three (3) groups of people who act in a similar manner.

The first is the survivalist. The survivalist is often associated with informal sector survivalist businesses, but could also include the formal sector person forced through circumstances into self employment. This could be someone who has been retrenched.

The second group is the lifestyle entrepreneur. They vary in a number of ways, but generally are the same “animal”. For some the “lifestyle” is about working the hours they want, or the type of business (maybe a hobby) or about maintaining a lifestyle which includes holidays, and toys such as motorbikes, cars, caravans, boats etc. All of them have clearly defined “rules” on how they run their business. These rules are written in stone most of the time. Do not ask these entrepreneurs to work late or weekends.

The third group are the high growth entrepreneurs. These are the entrepreneurs who generate large profits quickly, normally create the bulk of new jobs in an economy, and are able to retire young. Notice I said “able to”; many do not and start the next business soon after they harvest from their business.

Where do you fit in?

The South African government has not recognised this current research, and consequently are not fine tuning their SME development strategies accordingly. This is a pity, as the job creation we so desperately need in South Africa is not being achieved as a result. It is time governments all over the world start consulting with SME specialists in order to understand the research findings in this area of expertise. This will assist in creating better SME development interventions.