Celebrating enterprises and entrepreneurial people this Global Entrepreneurship Month

November is Global Entrepreneurship Month. This year’s theme for Global Entrepreneurship Week which was 8th to 14th of November 2021 was a ‘celebration of enterprise and entrepreneurial people. In a country where the unemployment rate was 34.5% in the second quarter of 2021, making it one of the highest in the world, entrepreneurship is more a necessity than a passion and calling.

An entrepreneur is a person who assumes the risk of starting a new business venture to produce goods or services for profit. South Africa tends to over-emphasise the job creation element because of the pressures of unemployment. The focus is on entrepreneurs that have a certain number of full-time employees and undermine the self -employed, even if they could be generating higher income and are a large source of revenue for government. In the 2017/18 fiscal year, personal income tax contributed over a third of the R1, 22trillion in taxes. This is nothing to sniff at when R195 516 billion is allocated to social grant payments in the 2021/22 financial year. Covid-19 and the technological advances of the 21st century are surely challenging such antiquated ideas about entrepreneurship. The deciding factor is whether you have paying customers. Having thousands of employees with no revenue and thus not being able to pay salaries does not make for a viable business, does it?

In celebrating enterprises and entrepreneurial people, I would like to share lessons that I have learnt in the last twelve years as an entrepreneur that may be more beneficial for the start-up businesses. However, in this VUCA world, it does not hurt for established companies to remember the basics as they reinvent themselves to be resilient through the Covid-19 pandemic.

Lesson Number One:

Have a personal vision for your life, not just work on the company’s vision. This will be important as you spend time in the business. When times are hard, you will be tested. If you do not know where you want to go as a human being and what you stand for, you will be swayed by anything and everything. You need to be able to live with yourself when the lights are off and when you are the only one that can hear your inner voice and thoughts. Do not do things that you will regret. Life is too short for regrets.

When things are tough, that is when your true character and values come out. Make sure you like the person you are and have become when you draw your last breath. That is why the personal vision is important. It helps you filter your choices and decisions along the way to the real end game.

Most importantly, share your personal vision with your spouse or partner and children as well. Starting a business venture is more than just income for your family. It can become like your baby – demanding your attention, time, energy, and resources. Having your loved ones understand what drives you and your motivations, not only helps you to not travel this challenging journey on your own. It gives your loved ones an opportunity to buy into your vision and to support you through it.

We spend so much of our energies as entrepreneurs getting strangers, our employees, our clients, and our suppliers to understand our companies’ visions. Yet we do not do the same for the people who share our lives. To give them the privilege of helping us achieve our personal visions.

Lesson Number Two:

Cash is Queen. It is the life blood of a business. Cash is the money you receive when a client pays you and when you pay for expenses. It is not the number of clients and customers you have – who have not paid yet. Businesses have gone under due to non-paying clients. It is rare that one gets revenue that exceeds one’s cost in the first year. It is not to say that it is not possible.

Cash flow is not a theory, it is a reality. (Cash flow is the movement of money into and out of your business; it is the cycle of cash inflows and cash outflows that determine your business’ solvency).

During a recession, you do not only consider long sales cycles and seasonality, but you must consider your target markets ones as well. Then look for gaps that you may not have seen. Each potential client who enters your business pipeline has a tremendous potential value to you, but until the money is in your bank account, they represent a cost. As a start-up, it is not always possible to have cash in flows that exceed cash outflows. A critical skill an entrepreneur needs to have, is cash management. You can in-source or outsource the bookkeeping or accounting services, but as cash is the primary asset to pay your obligations on a regular basis, it is best to have a control of the function.

Remember to prioritise the tax. It is an offence, in law, to not fulfil the tax obligations. It is compulsory for any business in South Africa to register for VAT if the income earned in any consecutive twelve-month period exceeded or is likely to exceed R1 million. The mistake entrepreneurs can make, is to use the VAT charged by their businesses as part of their cash flows. That money does not belong to the business. It is money you are collecting on behalf of SARS.

Lesson Number Three:

If you do not want to travel the entrepreneurship journey on your own, choosing the right partner or partners is 95% of the work. This quote by Guy Kawasaki captures this sentiment perfectly. “Successful companies are started and made successful, by at least two and usually more soul mates.”

It is particularly important that you share similar values and definitions of those values, work ethic, have complementary management styles and believe in conflict resolution which is crucial without believing that conflict is the end of the relationship. Constructive conflict is positive and creative. Always focus on the issue and not try to play the person. Aim to protect relationships rather than to always be right.

If you prefer not to have partners in the business, you can collaborate with other firms as associates. The age of islands is fast disappearing. During the boom times there is usually money flowing everywhere. During these lean times, we need to be smart in working with and through alliances. Ethics are crucial. Break the golden rule. It will catch with you, if not now, somewhere down the line. It is not a sustainable strategy to build a business. Small companies need to work together and to sell and promote each other’s businesses. Work out referral fees. Fencing yourself off and hoping to make it solely on your own will not get you far. Even big corporates have entered the Age of Co-opetition where you find areas of synergies with your competitors and work together to ensure their survival and growth.

Entrepreneurship is not for sissies. There is no debate that entrepreneurs play a vital role in economic development when favourable opportunity conditions exist. The Covid pandemic has deepened South Africa’s economic challenges further threatening the survival of small businesses in an environment that already had one of the highest failure rates in the world. I contend that many entrepreneurs in South Africa are in the survivalist category, including those we call ‘informal businesses’ not generating adequate income to provide employment. Instead of always focusing on promoting the starting of new businesses, survivalist businesses should be strategically targeted. Many have been operating for years. They need support to move up on the value curve so that they are competitive, not just in the South African market, but comparatively against firms from other emerging economies.

This Entrepreneurship Month we require patriotism to infuse all South Africans; individuals, companies, and government entities; to consciously seek out and buy South African products and services first. To assure all our safety and security. To lessen the possibility of riots such as what we experienced in July never finding fertile ground again, we all need to make enlightened self-interest choices and decisions that celebrate South African enterprises and expand entrepreneurial people so that we boost economic growth and create globally competitive jobs.

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