Shaun Harris
TAKING STOCK
The shift towards small business is an international trend. Changing economic and social conditions are leading an increasing number of people into this growing business sector, from the self-employed individual to the person who starts a small business enterprise employing staff.
The importance of this trend and the reason why governments in countries such as Canada and Argentina are throwing their weight behind it is that it creates new businesses and new jobs.
South Africa is following the trend, and the pace has accelerated over the past few years as both the private and public sectors restructure and retrench.
There are a lot of people out there with valuable skills and experience, often with the backing of a retrenchment package. Small business is an obvious route for this group – it also appeals to youngsters not wanting to be tied to a corporation’s apron strings.
“The reason for governments getting more and more behind small business in countries like Argentina is that it is an area where jobs can be created, and quickly,” says Andrew Patricio, a small business trainer and mentor who appropriately runs his own business, the KZN Business Training Centre.
Yet while small business is growing in size and stature in both developing and developed countries, there are two vital ingredients left wanting in South Africa – a change in mindset and more constructive government involvement.
“An unemployed person will spend considerable time and effort every day trying to find a job, instead of directing that energy towards the possibility of starting up their own business,” Patricio says. He is also critical of the often negative attitude towards small business coming from the corporate sector.
Statistics are often bandied about suggesting that around 80% of small business ventures will fail within the first year. Patricio has done his own research into the registration and liquidation of close corporations. His figures don’t support the apparent high failure rate.
“At the moment the success rate might not be high, but the rest are surviving. And there have been spectacular successes – I’ve seen people come through my course and within two years build up a very profitable business.”
The other problem identified by Patricio is the lack of government support in South Africa for small business. The government seems well aware that one of the few ways to create jobs quickly is through the small business sector – the problem is it doesn’t seem to know what to do about it.
“I’ve met with government officials about this. There are a lot of good intentions, but they are not co-ordinated properly. I understand that R300-million has been allocated for small business development but … the government doesn’t know where to direct it.”
Patricio recently returned from the annual International Small Business Congress in Toronto, Canada, where he says he found a high level of government support.
“There are small business centres set up to help with all facets of small business development. Computers are available to register a company over the Internet, they have advisors, specialised equipment and services that can be rented out by the hour, bookshops with small business literature – everything is aimed at the small business person,” he says.
Some centres have been established in South Africa, but Patricio questions their effectiveness.
“It doesn’t make sense for government employees to be running these centres, the business cultures are just too different. You have a bureaucrat who draws a state salary telling a potential entrepreneur how to go out there and take a risk – it’s not credible.”
He suggests using retired people who have successfully run their own businesses in these centres to offer more practical advice.
Patricio says teaching the basic knowledge necessary to set up a small business – how to secure finance, administration, tax, labour relations – is the easy part and can be done by any educator. “After that you need someone with small business experience – the system I use is a mentoring programme, where a collection of people in small business meet once a month to identify, discuss and solve problems they are having in their respective businesses.”
These small business entrepreneurs effectively act as business consultants to each other. And they help overcome one of the problems of working for yourself – what Patricio calls the “loneliness of the self- employed”.
He is now working on a website where small business people can meet online to discuss problems, exchange ideas and support each other.
He believes the option of small business should be presented early in the education process. “Too many youngsters are going into university asking who will pay them the most money, then making a career choice accordingly. Instead they should start on the premise that they intend to work for themselves, then decide which area of business offers the most opportunity.”