Eastern Cape needs to train small business owners to become successful entrepreneurs

Small businesses are acknowledged to be a catalyst for economic growth in countries such as Togo, Uganda, Ghana, Cote d’Ivoire, Nigeria, Egypt, Kenya and Malawi. This demonstrates the importance of small business in developing economies, and their role in creating employment and creating prosperity.

The important role that the small businesses sector plays in the South African economy in dealing with sustainable development has been widely acknowledged.

In the Eastern Cape, the problem is that many small businesses fail and that leads to more unemployment, poverty and by extension crime. There has been growing interest in researching the relationship between management skills and business failure in Eastern Cape small businesses.

The Global Entrepreneurship Monitor report indicates that, even though there is growing interest in entrepreneurship, there is a scarcity of skilled business managers. Enhancing the managerial skills of small business owners and managers is therefore pivotal, as small enterprises are recognised as the solution for the Eastern Cape’s growing unemployment levels and struggling economy.

The small business sector managers must be multi-skilled if the sector is to contribute meaningfully to  economic growth and development. However, the province is grappling with developing multi-skilled managers due to the poor levels of education. The quality of SA’s education is rated among the poorest on the continent, resulting in the country struggling to address management competence.

The development of managerial skills should be directed at those abilities that result from knowledge, experience, data, practice, and aptitude. Improving the skills of managers may enhance the operations, and therefore, assist with creation of much needed jobs in the Eastern Cape.

The province should endeavour to build the management capacity of small business managers to ensure that state-owned entities such as Eastern Cape Development Corporation get a return on investment from the money they plough into small businesses.

My observation is that there is an over-dependency on the single ownership or manager of many small firms, with an unwillingness to depart from this on the part of owner/manager. This causes poor human resources practices where no new qualified staff are employed, or limited power and responsibility given to other employees.

The role of entrepreneurship and small business development cannot be over emphasised as the local community benefits from the creation of jobs. Entrepreneurship is identified as the engine of growth for the Brics (Brazil, Russia, India, China and SA) economies. However without management skills many viable companies, with good product offers, often do not reach their potential.

The lack of support in providing business skills to entrepreneurs can impede SMMEs’ initiatives to enhance their skills to manage a business. The consulting firms are in most instances not well prepared with relevant cost-effective management solutions for this sector. Entrepreneurs struggle to pay the high cost of training and advisory services while others do not recognise the necessity of upgrading their skills due to complacency.

Research by the Centre for Innovation and Entrepreneurship, at the University of Cape Town’s Graduate School of Business, indicates that entrepreneurs with high levels of education stand a better chance of creating more employment opportunities. SA’s education system seems to be struggling to successfully produce people with the necessary skills or the self-belief required to be successful entrepreneurs.

The manager/owner of a small enterprise finds himself or herself with many job descriptions, encompassing management, financial management, human resources, and marketing management.

Managers/owners of small businesses start out with a hands-on approach and, as the enterprise evolves in terms of the number of employees, there is a change from being hands-on to managing junior employees and managers.

Owner-managers of small businesses are often faced with time and financial constraints. Therefore, the establishment of skills development hub for entrepreneurs in the Eastern Cape to hone their skills could be an answer to the challenge of the managerial skills challenge.

Dr Siyabonga Mxunyelwa is a director of Lunika.