BUSINESS

SA SMEs not for sissies

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Starting an SME will take commitment, hard work and a healthy dose of good, old-fashioned guts. That’s the view of Gerrie van Biljon, executive director of Business Partners Limited.

Van Biljon says challenges such as strikes, load shedding and e-tolls reinforce the statement that starting and running a business is not for the faint-hearted. But, he says, it is more helpful to think of it as “not for the unprepared”.

He says the difference in opinion reveals the other side of the risk coin: opportunity. “For the entrepreneur who is prepared for the intense risks of the industry, South Africa is teeming with business opportunities to gain market share and fill unoccupied niches.”

“There are always business opportunities to capitalise on. Good entrepreneurs will identify these opportunities. A good entrepreneur can transform an idea into a business concept and with hard work, passion and dedication, will run a successful business”.

In a risky environment, a simple back-up plan gives a business a competitive advantage. “Dealing with the risks upfront involves identifying them and possessing a willingness to prepare for these risks. This applies to both the risks that a business owner has some control over and macro environmental risks, which are out of owner's control.”

He says it is prudent for each business owner to understand what can possibly go wrong in the business, and somehow be prepared for it. This may involve thinking about the risk, the possibility of it happening and what you would do in such an event, and in many cases a backup plan is simple and easy to implement. “The secret is that you, as the entrepreneur, considered it and that you are prepared,” says Van Biljon.

He says load-shedding is one such macro risk. “Business owners can and must be prepared for it. Back-up power generation is the most obvious safeguard, but an entrepreneur’s planning must include scenarios where suppliers or clients are incapacitated by power cuts. Anything from stockpiling to alternative sources of supply can be important parts of a business’s defence.”

In a developing country where a young constitution is transforming long-established laws, new legislation, such as the Consumer Protection Act, is high up on the list of macro environmental risks.

“Although business owners should not give up on their right to lobby for more business-friendly laws, legislation is largely beyond their control. The first line of defence is awareness, knowledge and preparation. A business owner who attends a seminar on the Consumer Protection Act, has an edge over those who are oblivious of the new regime.”

Labour unrest, with its ability to paralyse entire industries, is beyond the control of any owner-managed business. “A business unprepared for labour volatility is vulnerable. Joining industry bodies and employer associations can form an important part of managing the risk,” says Van Biljon.

Labour unrest, he says, destabilises the economy and has a major effect on those considering investing in a business. The effect of labour unrest on a business could be devastating and may not only result in lower income, but may result in the closing down of the business.

“Entrepreneurs should build a sound relationship with their staff. In many cases, labour is an integral part of business success, and having a good relationship with the staff can benefit the business. To offer a safe working environment, treating them with respect and being reasonable in your approach, can assist the relationship.”

Apart from these macro risks, business owners also face a range of micro risks – those dangers inside a business over which the entrepreneur has control.

Van Biljon says labour is one of the biggest micro risks for local businesses. “Although businesses have little control over the union decisions, the entrepreneur recruits, trains and shapes his or her team. Huge risks and opportunities face the business owner in his interaction with his staff, ranging from the risk of losing key personnel or ill health, to grievances that can spin out of control.”

He says that other micro risks are those inherent in the operations of a business. “There is a whole range of risks that require the constant focus of the business owner. A continuous process of investigating and evaluating the overheads of the business should be done to manage these risks.”

He recommends that entrepreneurs analyse their business every six months and sort all the risks facing the business into various categories such as market risks or operational risks.

“With a plan in place, South Africa becomes an exciting and fertile place in which to build a business. South Africa offers the environment to accommodate entrepreneurship and growth. It is a developing economy, which in itself means business opportunities.

Bianca Carls

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