AN UNSUNG STORY

Mentorship can unlock SMMEs

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Six years ago, Peterson Khumalo waved goodbye to the comfort of a regular office job, for a less certain future as an entrepreneur. Today, his accounting and auditing firm is investing much of its resources into mentoring SMMEs. He shares his motivation for going the entrepreneurial route.

Asked to share a top tip for small businesses to succeed, chartered accountant [CA(SA)] Peterson Khumalo replies without missing a beat, “SMMEs must forfeit sleep to have any hope of success.” The managing director of Khumalo and Mabuya Chartered Accountants (KnM) speaks from experience.

In the space of six years, KnM has gone from a handful of clients to a company that has four functional divisions, including; SMME, audit, taxation and advisory , and business development. Today, the firm employs 35 permanent employees, 15 of them qualified CAs(SA).

Remarkable growth: by anyone’s standards.

Asked about the moment when he opened the doors of his business; Khumalo responds with the assurance of a self-made man.

“The truth is I was already thinking ahead; sitting in the next boat. Don’t get me wrong, I appreciated that we had a base to start from. But I wanted us to get to the point where the whole office block was ours.”

While Khumalo prefers the bold moves of entrepreneurship, he respects that CAs(SA) are making a huge contribution in many spheres. “A CA(SA) has many career choices; working for a small, medium sized or listed company or government, and across many industries.”

Khumalo spotted a huge gap in the market in the small business space that few other Small Medium Practices (SMPs) are providing.

Making SMMEs sustainable

“First world countries consider SMMEs the backbone of the economy,” says Khumalo. He doesn’t see enough evidence of this in South Africa. This bothered him, so he has been working towards changing it.

“When I started this business, I had a long term vision; beyond my existence. This is my thinking; when one of the big four audit firms started consulting to Coca-Cola, production at the cold drink producer stood at 10 bottles a week. Fifty years later, Coca-Cola is producing throughout the world.”

“The idea is if you invest in the small guys, you’re the one they will call in the future. That is because you’ve been with them since day one.”

The higher the risks, the higher the rewards,” says Khumalo. “I would like to see everyone—banks, government and the entire private sector—playing their part in helping SMMEs become sustainable.

The market tends to think helping SMMEs is about funding and grants. But that’s not really the case. They need mentorship the most. In turn, many SMMEs need to rid themselves of an attitude of entitlement.”

SMMEs need for mentorship is borne out by findings of the annual SMME Insight Report conducted by the South African Institute of Chartered Accountants (SAICA) in 2016. SMMEs were asked whether they would be interested in taking part in an industry led enterprise development programme. The SMMEs almost unreservedly said, “Yes”.

“Cash flow management is also one of the biggest pitfalls facing SMMEs. How they view that money,” says Khumalo.

SAICA’s 2016 SMME Insight Report concludes that as far as SMMEs are concerned, cash flow related problems stem from an inability to manage cash flow and debtors as well as an inability to manage administrative and business processes.

“And SMME directors don’t like paying themselves salaries,” adds Khumalo. “They reckon they started a business to move away from salaried employment, but that’s faulty reasoning. They need to see themselves as a commodity in the business.”

KnM aims to become the biggest professional service provider to SMMEs in the country. The firm’s latest milestone is indicative of growing recognition in the market for the good work they are doing.

Newly qualified CAs(SA) gain work experience while mentoring SMMEs

To help SMMEs overcome some of these pitfalls, earlier this year KnM joined the SAICA’s J.P. Morgan flagship programme to assist SMMEs.

“The 18 month programme focuses on two challenges in South Africa; providing relevant work experience and skills to newly qualified and unemployed accounting graduates and addressing the high failure rate of SMMEs, by providing them with mentorship regarding internal controls, risks management and reporting,” explains says Mandisi Nombembe, project manager for SAICA nation building. At the end of the programme the graduates assigned to them, SMMEs will be equipped with the skills to do financial modelling, internal controls and risk governance,” Nombembe continues.

“The SAICA. J.P. Morgan opportunity came along by virtue of the relationship that we are developing with SMMEs,” says Khumalo. “We raised our hands to say, ‘Hold on, we’ve been investing in SMMEs. Go through us to understand what these guys really want. And that is day-to-day support’. Our phone rings 24/7.”

KnM signs off accounts for the acounting graduates who are working with the SMMEs and who gain valuable work experience into the bargain.

“I have personally invested in divisional capacity in SMMEs over five years, and KnM has invested over three years. When the stars decided to line up we were in alignment with the SAICA J.P. flagship project. SMMEs are the future,” says Khumalo.

Samantha Barnes

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