I often wonder if the government and business sector assert their seriousness about SMME development because it has become a politically correct message or is there a genuine intention to develop this sector of our economy? There is an abundance of empirical evidence that the success of an economy lies in the success of its small and medium sized businesses.
A need arises to internalise the truth that SMMEs are the creators of employment, sustainability, and financial freedom for the economy. This need does not imply a simplistic approach to create funding structures for small business, which create an environment of dependency, and an attitude that starting a business requires a loan or a grant. However, I do not wish to undermine this approach, but rather contend that it forms part, and is often minor, in the bigger scheme of small business development.
Creation of Markets
Developing small business requires a conscious effort to identify and ring-fence markets. Small business is often based on an inherent ability to produce goods and services. There may be instances where this skill can be harnessed, but there is generally a solid foundation to build from. A young plumber or electrician already has knowledge of his trade, similarly with a builder, a painter, a lawyer, or an architect.
The challenge is operating in an environment that does not trust your abilities. A society that believes that if the product comes from you, it does not have the status of imported products or products that come from big business. No amount of funding will solve that unspoken, yet prevalent attitude towards small business.
Business Skills and Systems
This finds expression in two fundamental areas:
Firstly, business studies are still reserved for those who want to pursue careers in finance departments of big business. We have not yet recognised that a medical student could wish to open a private practice. We need to challenge the education sector to structure itself such that the necessary business skills are part of any curriculum.
The second challenge is expecting a startup business to have skills and systems – such as marketing, IT, human resource, and finance skills – to operate effectively. We crucify them for not having their taxes up to date or for not filling in the tender documents properly. Yet what they have been trained to do, and do excellently, is to paint.
We should be investing in creating affordable back-office solutions for small business. These solutions must recognise that new business owners are not meant to be experts in back-office administration. However, they should also be available at a fraction of the cost of those available to big business.
Managing Cash Flows
In my view, it is criminal not to pay small business on time when they have provided a service. Small business creates breadwinners for families and are a cornerstone of survival in our society. The support of this sector must start from ensuring that, at a minimum, their claims are paid as soon as the goods and services are delivered. That is the minimum contribution that big business and government can make in SMME development. Anything below this minimum borders on an intentional act of collapsing the business that one purports to support.
I have engaged with several small businesses that have resorted to loan sharks for the necessary funds required to manufacture or procure goods that are required by big business or government. In the name of SMME support and procurement, big business and the state sit by the wayside with a ‘We will pay once you deliver’ attitude!
In my view SMME development is a partnership between parties that is aimed at harnessing the abilities of the small business, extending the power of big business and government, and realising the goal that, small as they are, they are the backbone of any solid economy.
T: +27 (0)61 422 0167 or +27 (0)83 700 8863 E: thabani@tzulu.co.za