Small business is acknowledged as the key to the economic development of SA and yet many small businesses are struggling to survive, let alone grow and create employment. A Frank Dialogue on Small Business Leadership, in partnership with Business Day Dialogues and Unisa SBL, asked a team of panellists what the impediments to small business leadership and entrepreneurship in SA are, and how these could be overcome.
The main obstacles to the success of small and medium sized businesses are access to markets, the necessary financial support and government red tape, said minister of Small Business Development, Stella Ndabeni-Abrahams. She revealed that the legal framework is being reviewed to enable improvements to be made to the municipal by-laws that exclude SMEs, to streamline licensing requirements, and to identify certain sectors reserved for SA citizens. Although government funding is available, it has been under-utilised due to government’s stringent regulations. She added that space must be given to innovative rural enterprises.
SA must free up the small business economy, agreed John Dludlu, CEO of the Small Business Institute. Legislation on its own, however, is not enough and government must commit to action. The National Development Plan predicts that by 2030, 90% of all jobs will be created by small businesses. These are the rockstars of the economy, said Dludlu and they need to be freed up to “start and run and grow” their businesses, instead of not being paid on time and strangled with red tape.
In addition, he continued, dedicated efforts are needed to create an effective venture capital industry in SA to prevent the departure of local entrepreneurs to countries with better opportunities.
“The one thing that every business hopes for is a growing economy,” said Andile Khumalo, chairman of I Am An Entrepreneur. Small businesses locally face not only a sluggish economy but also loadshedding, red tape and lack of access to finance. Entrepreneurs are those who have the “sheer will” to build their businesses, who see the benefit of skills development and who create jobs as a result. They need mentoring and support, said Khumalo.
Saki Zamxala, CEO of the Gauteng Enterprise Propeller criticized the government for tying up funds available for small business in unrealistic regulations. “Do away with rules,” he said, adding that government needs an entrepreneurial approach. Municipalities need to be able to make allowances for what works for small businesses, despite the structural and legislative framework.
Entrepreneurship is risky, he went on; only 3/10 small businesses succeed. Development finance institutions (DFi’s) involved in this precarious market often concentrate on the failure of a business rather than examining the whole portfolio. Government needs to support DFi’s to have a more entrepreneurial spirit and go where banks won’t. “Take risks,” he urged.
Government needs to walk the talk they’ve been having since 2003, agreed Dr Colene Hind, lecturer in entrepreneurship at the UNISA Graduate School of Business Leadership. Start-ups in SA continue to grow but are missing the resources to scale up amid unreasonable government regulations.
“Entrepreneurship starts with a mindset,” she said. This mindset should be developed at school level, so that at tertiary level it can be evolved further and aligned to the business world. Business schools should be focusing on teaching practical technological skills and solutions, Hind said, rather than on producing leaders.
Image source: Pexels/Clem Onojeghuo