Back small busi­ness and we will get on track

South Africa’s ex­port growth fore­cast could be con­strained by world growth, which the World Bank is ex­pect­ing to slow to 2.9% this year and 2.8% in 2020.

This an­tic­i­pated slow­down will af­fect South Africa’s for­tunes ad­versely if the trad­ing fo­cus con­tin­ues to be with our tra­di­tional mar­kets, such as China, Ger­many and the US.

The head­lines for the past decade have been “Africa Ris­ing” and be­ing “open for busi­ness”. The fastest grow­ing economies in the world are in Africa – Kenya, Uganda, Rwanda, Ghana and Ethiopia.

Thus the ur­gency of grow­ing our in­traAfrica trade should be on the strate­gic radar of every South African leader and com­pany, in­clud­ing small busi­nesses.

Small busi­nesses are not go­ing to be the en­gines of eco­nomic growth and job cre­ation if the think­ing is that they need to be strong and get most of their sales and in­come from the home coun­try be­fore ven­tur­ing beyond.

As Teddy Daka, CEO of Etion, a dig­i­tal tech­nol­ogy so­lu­tions provider, said in a Wis­dom Per­son­i­fied Con­ver­sa­tions with me last month: “We are not get­ting the level of sup­port we need to get lo­cally. It is al­most that you have to make it out­side for you to make it in­ter­nally.

“[In] our cy­ber­se­cu­rity busi­ness, just as an ex­am­ple, 95% of our in­come is from in­ter­na­tional not lo­cal. Maybe it is Afro-pho­bia.”

It is wel­come that the bud­get speech al­lo­cated R481.6 mil­lion to the Small En­ter­prise Devel­op­ment Agency to ex­pand the small busi­ness in­cu­ba­tion pro­gramme.

How­ever, it is crit­i­cal to not ap­ply one-siz­e­fits-all in pro­vid­ing sup­port to small busi­nesses.

It is al­ways said the ma­jor bar­rier and need for small busi­nesses is fund­ing.

This year my com­pany Busara Lead­er­ship Part­ners is 10 years in busi­ness.

Get­ting fund­ing has not been my big­gest chal­lenge or need as a strate­gic ad­vi­sory firm.

The three ma­jor chal­lenges which I have heard other small busi­ness own­ers men­tion: Hav­ing a strong pipe­line of busi­ness to en­sure a healthy and sta­ble cash flow; get­ting paid timeously, if at all; and hav­ing the re­quired ca­pa­bil­ity (track record) and ca­pac­ity (size) to scale the busi­ness beyond the sur­vival stage.

The South African mar­ket of­fers di­verse and com­plex chal­lenges to small busi­nesses which will pre­vent the achieve­ment of the Na­tional Devel­op­ment Plan’s goal of cre­at­ing 90% of the jobs by 2030.

A day be­fore the bud­get speech last month, I was ex­posed to a glimpse of hope for some small busi­nesses and a truly cus­tomised in­cu­ba­tion pro­gramme run by Pick n Pay, headed by Suzanne Ack­er­man-Ber­man, the direc­tor of Trans­for­ma­tion.

What makes small busi­ness suc­cess­ful is not just the fund­ing. Every sec­tor has its own nu­ances. Sup­pli­ers are the lifeblood of a re­tail busi­ness. It is a com­plex and com­pet­i­tive en­vi­ron­ment that re­quires high qual­ity and re­li­able sup­ply chains that meet the rel­e­vant reg­u­la­tory stan­dards.

What makes small busi­ness suc­cess­ful is not just the fund­ing. Every sec­tor has its own nu­ances. Sup­pli­ers are the lifeblood of a re­tail busi­ness. It is a com­plex and com­pet­i­tive en­vi­ron­ment that re­quires high qual­ity and re­li­able sup­ply chains that meet the rel­e­vant reg­u­la­tory stan­dards.

To be suc­cess­ful at be­ing a sup­plier, there is a lot of hand-hold­ing that is nec­es­sary to get you to the level of hav­ing your prod­uct on their shelves.

I met Peter Ny­athi, from Trop­i­cal Mush­rooms, one of the small busi­ness own­ers at the Health In­no­va­tion work­shop that was be­ing held, who now sup­plies Pick n Pay.

I asked Ack­er­man-Ber­man whether it still holds true that, what we were told in ne­go­ti­a­tion and ac­count­ing classes at busi­ness school, Pick n Pay is a tough ne­go­tia­tor with its sup­pli­ers and pays in 60 to 65 days.

“When it comes to our small busi­nesses, we have var­i­ous ar­range­ments, which range from seven to 14 days be­cause we un­der­stand the pres­sures they op­er­ate un­der and the im­por­tance of cash flow.”

To­day Pick n Pay has a turnover of R81.6 bil­lion, 85 000 em­ploy­ees, op­er­ates in Namibia, Botswana, Zam­bia, Swazi­land, Le­sotho and has a 49% share in TM Su­per­mar­kets in Zim­babwe.

“Dare we for­get that it started as four stores in 1967. The min­is­ter said we are at a cross­road. We could go ei­ther to heaven, or the other way.”

Not de­creas­ing un­em­ploy­ment from 27.5% is def­i­nitely go­ing the other way. South Africa needs to do right by small busi­ness for the coun­try to re­gain its eco­nomic com­pet­i­tive­ness in the world, let alone on the con­ti­nent.

First published in City Press, Sunday, 3 March 2019, Business Section, page 2

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