Business skills as vital as product offered or funding, expert says
Although small and medium-sized enterprises (SME) provide more than 70% of South Africa’s jobs, with greater management efficiency the sector could employ another huge chunk of the 30% of people who are jobless.
The country’s SME start-ups have an appallingly high failure rate, according to the Global Entrepreneurship Monitor (GEM).
In its recent job report, GEM ranked South Africa 49th out of 54 countries in the GEM National Entrepreneurship Context Index.
Dr Antje Hargarter, head of STADIO School of Commerce, believes that successful entrepreneurs need more than just a good business idea. They also need business skills to make the idea work. STADIO is linked to Curro and PSG, and has 14 campuses with more than 30,000 students.
While the idea is important, the key to success is being able to turn it into a sustainable and profitable business
“While the idea is important, the key to success is being able to turn it into a sustainable and profitable business. That requires skills ranging from basic business administration and financial management.”
She says successful entrepreneurs must be able to strategise, manage finances, communicate effectively, sell their product or service, and adapt their business as the market changes. They need to develop a business network and draw on real-life lessons from experienced mentor entrepreneurs and other role models.
She said the GEM report identified several challenges facing entrepreneurs, ranging from regulatory bureaucracy to failures in basic education.
Hargarter said finance skills, which included budgeting and creating and reading financial statements, were critical for cash-flow management, which tends to be one of the biggest challenges that entrepreneurs face.
“It is essential for business owners to understand business administration, to meet tax and regulatory obligations, track performance and create projections.”
She said entrepreneurs or would-be entrepreneurs at any stage in their business journey should consider upskilling themselves and investing in the success of their ventures by pursuing foundational business skills, as well as ongoing learning.
While education provides a concrete foundation, without the cash to fund a business even the best entrepreneurs will fail.
Erica Elk of the CDI Capital Growth fund, a non-profit company with 20 years of successfully developing creative people and small businesses, said the company was looking for SMEs that required funding. Businesses experiencing growth or planning to expand would be eligible for assistance, Elk said (see application details below).
With meaningful, socially responsible investment, we can maximise the potential of local entrepreneurs, building a generation of SA innovators and a strong, inclusive economy that will see employment soaring.
“With meaningful, socially responsible investment, we can maximise the potential of local entrepreneurs, building a generation of SA innovators and a strong, inclusive economy that will see employment soaring.”
CDI has already assisted entrepreneurs in 45 businesses, creating 464 jobs and resulting in an average 73% revenue increase.
By March 2023 the current round of funding, supported by the National Treasury’s Jobs Fund, aims to assist 60 businesses and create 600 new jobs. Small businesses that are successful in their CDI application will receive funds ranging from R105,000 to more than R1m. The amount of funding will be determined by jobs the businesses commit to creating before March 31 2023.
The first funding cycle, within the next three months, will provide subsidies to 20 enterprises around the country. To qualify, businesses must be SA-owned and have traded for at least a year. They should have a turnover or assets above R600,000. Even if this (turnover) was pre-pandemic, the business would still be eligible.
Successful companies must match 20% of CSI’s contribution through their own cash contribution, and must commit to creating one job for every R21,000 grant investment, with a minimum of five jobs. The company needs to be tax compliant and supply a valid Tax Compliance Status (TCS).
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