Getting The Basics Right Is The Battle
Worryingly, much of South Africa’s SME activity is locked into a subsistence paradigm, where the business supports only the financial needs of its owner, and fails to contribute to economic growth meaningfully. Less can be said about its ability to create jobs.
According to SME South Africa: Only 13% of SMEs Employ More Than 5 People.
One of the primary issues within the country’s SME sector is a simple lack of experience.
Government policy makers, government SME development agencies and local large corporations have little on-the-ground experience of the daily reality of life as a South African SME entrepreneur.
As a result, SME development programmes are often hopelessly out of context, and hinder, rather than help support the development of SME’s.
A ‘Catalyst 4 Growth’ study states that: High-cost BDS (Business Development Support) had the worst performing SMEs. This indicates that the high cost of a BDS programme does not necessarily translate to high-quality performance outcomes.Also, the most frequent reason for business discontinuance was the entrepreneurs finding other employment for themselves.
It is therefore not surprising why most entrepreneurs fail; because they start businesses due to a lack of employment. I believe much reflection and conversations needs to be had to properly unpack the SME development environment, before we can confidently provide solutions.
What are your thoughts on the above?
KK Diaz