Support for small enterprises should be more than lip service

The truth of the matter is that we are in for an economic roller coaster. Yes, we may record GDP growth, but it will come off a lower base, so it is more restoration than actual expansion. And if restoration is what we are going to experience, it means the small enterprise is the one that will suffer the most. 

To survive within an era of uncertainty and economic stagnation, it is imperative for one to be adequately resourced. Being adequately resourced is a preserve for the elite when it comes to small and even medium-sized entities. This is said on the premise that small to medium-sized enterprises have limited access to the necessary resources that can keep them afloat. 

Securing a bank loan is near impossible based on the turnover required for such businesses to acquire them. In addition, financing items such as business insurance could be aspects that are too far-fetched as a result of cash flow limitations. Last, 30-day payment terms could be another factor that impacts cash flow and prevents smaller enterprises from being able to protect themselves from the uncertainty that has befallen them through the Covid-19 pandemic and associated economic lockdowns. For instance, how can a local liquor distributor survive in these trying times, given the recent alcoholic beverage sales bans, the limited operating hours and the in-shop customer quotas?

Maybe it is time for small businesses to realise that there is a lot of lip service going around. Is the government lying to us that it is pro small business? If it says that it is for small businesses, what policies has it put in place to make it easy for entities to secure the funding they require to grow, expand and thrive? Not a lot, because a lot of these firms have had to resort to borrowing from private sector entities that lend at exorbitant rates that either cripple these small enterprises or erode their finances to a point of extinction. I mean how do you survive when you borrow at rates that range between 20% to 30%? 

We are well aware that government-driven funds exist to support small enterprise development but the paperwork that needs to be filled in for one to secure these funds requires the small firm’s leaders to have PhDs in administration. There is paperwork and then paperwork for the paperwork. Let us not forget the bureaucracy. As a private customer, when I visit a bank for a loan, I am guaranteed an outcome within no more than three days. If the process can be expedited for mostly consumption purposes, why then does it take months and in isolated cases even years for these funds to be secured?

Can’t a better evaluation process be developed that helps to get things done and is less about going through checklists. Agreed, the government is taking more of a cautious approach because some of the entrepreneurs they have tried to assist have been sneaky and duped them, having secured the funds and used them for reasons other than progressing their businesses. Sadly, this has happened and resulted in the government adopting a “fool me twice” approach to the budding entrepreneur looking for a helping hand. We get this but must we condemn a whole basket of apples because we found one bad one? 

We all agree that small enterprises and the innovation they bring to the table could present answers to address our economy’s growth and progression challenges, so is this the most prudent way of dealing with such matters? I think not.  Perhaps one of the suggested solutions would be for more engagement to take place between small businesses and the powers that be to find some common ground. Balances and checks can be put in place to assure the lenders that they will get their money back along with guarantees that the financed businesses will use the money for the right purposes.

In addition to engagement, why the government keeps on giving advertised opportunities to larger and more established enterprises does not make sense. I am obviously biased because I work for and with small enterprises but hear me out here. The government and its associated agencies are the best clients a company can have on its books. Unlike private entities which have extraordinarily little patience to hold a supplier or service provider’s hands, I proffer that a government agency is expected to be more patient; enabling the small enterprise the opportunity to make a mistake or two under the premise of training and development. Yes, the mistakes must not be too costly, but government entities are supposed to afford the patience that enables the smaller firm to learn from its mistakes and convert those mistakes into accumulated experience and expertise gains. 

Private sector firms do not have that luxury because shareholders are demanding above expectation returns (always) and if they are not getting that they take their money elsewhere. I could be wrong but if innovation is the drive and push, a lot of the smaller entities could have the solutions needed to push our country’s economic revolution. So, chances must be afforded to these smaller enterprises as a priority, even through strategic partnerships if the projects or engagements are too big to fail.

What Covid-19 is teaching us is that not enough engagements are being made with stakeholders before decisions are made. Either there are not enough seats at the table or the wrong people are sitting around the table. In other cases, some are not represented at these tables. My objective is not to ruffle feathers or cause so much of a stir that I find myself standing in front of the firing line. My cause is to bring what is happening at the coal face to the public’s attention. Small businesses are bleeding, but not because of mismanagement or a lack of enthusiasm, skills or expertise. That really is not the problem. The problem is opportunity. They are not being granted opportunities on an issue of trust. But how can this trust be established? The answer is through guarantees. 

Policymakers and top-tier entities should come up with frameworks that give opportunities but that have accountability clauses to ensure what was requested is delivered. In addition, a deepened level of understanding needs to be invested in when it comes to the small- to medium-sized enterprise agenda. For instance, how do 30-day payment terms affect or impact these small enterprises’ cashflow? In addition, how do we support these entities to pay less interest, or no interest at all, because let us face it, not much value comes from paying interest save for the lender who now has more money to re-lend the enterprise. 

If ever there was time for smaller enterprises to be properly supported based on adjusting operating models which include social distancing and working remotely, I would say the time is now.

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James Maposa
Guest Author

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