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Backing the right SMME

True entrepreneurs, who are always on the lookout for new opportunities, know that size doesn`t count when it comes to business.
Read time 4min 20sec

It is widely accepted that the development of small, micro and medium enterprises (SMMEs) is key to the economic development of SA and southern Africa. It is believed that this is the highway to job-creation in the country. But is this really true?

We quite easily group the entrepreneur, small business manager and subsistence businessman into the popular SMME mould. They are, however, three totally different categories, with different focuses, outcomes and contributions to our economic development.

Looking first at the subsistence, so-called "businessmen" or vendors on the street corners all over our beautiful country, we find a contradiction. Setting up a fruit stall next to your neighbour provides you with only a limited income. There are only a limited or fixed number of patrons with limited resources passing that corner. Setting up a "business" selling bananas, next to the countless others doing the same, means you are taking business away from the person next to you. Yes, you would have a job, but what contribution does that make to the economy, other than not being dependent on crime or someone else`s goodwill? It most certainly does not develop our economy. So please, when we speak of SMMEs and economic development, do not think of the street vendor.

Moving into a bit more uneven terrain, the owner of the local food franchise would quite easily be classified as an SMME making a vital economic contribution. But is he really? The facts are that the majority of franchisees have a store that sells an overpriced branded product, driven by advertising from the franchiser. There is very seldom any growth marked in these stores. If any it would be negative growth, because the history will tell that the franchise invariably will change hands when some other sucker falls into some money and wants "go it on his own". The franchise seems a relatively safe haven, with little or no risk - or so it is thought. Evaluating the economic contribution, the franchise employs a couple of people, but the main contribution is the investment in the franchiser`s pocket, some of which he spends on marketing.

This holds true for many other small businesses where you have a small business manager running his own little empire. I contend that the SMME which shows no growth, does not, and never will have the resources to expand, generate new business and create more jobs and wealth. Is the investment of support infrastructures for these SMMEs really a recipe for economic stimulation and growth? I think not.

A small enterprise run by a true entrepreneur can and will create a mammoth stimulus for economic growth.

Leon Lourens, CEO, Bodibeng Technology Incubator

The true entrepreneur, on the other hand, is defined as someone that is always on the lookout for new opportunities. Even if he is managing a small business, heck, he might even be a franchisee, but you will find the true entrepreneur always trying new things to create more wealth. The entrepreneur is a modernizer at heart. He might not always be successful but he is always exploring new opportunities. In the process of being innovative and creating new opportunities, he also creates new and sustainable jobs. Initially perhaps not very many new jobs, but beware, once it takes off, the entrepreneurial spirit will soar and with it the enterprise that he drives.

A small enterprise run by a true entrepreneur can and will create a mammoth stimulus for economic growth. True entrepreneurs in the mould of South African icons like Anton Rupert (Rembrandt), Bill Venter (Altron), Herman Mashaba (Black Like Me), and many others, do make a discernible difference in our economy. The focus of the "powers that be" should be to find and nurture these entrepreneurs. That will make a difference, and can be construed to be a viable economic development plan.

I believe the time is ripe for us to change our SMME policies to EIME policies: entrepreneurial, innovative and manufacturing enterprises. It is time for us to bet what little money we have on the one horse that can win the race and not divide our scarce resources by betting a little on all the horses.

I am not saying that the development of small business in SA has no value. We must nurture our small business economy as a cornerstone of economic activity. We must also create an environment for small business to thrive in, but that is a totally different discussion.

* Bodibeng Technology Incubator sponsors ITWeb`s SME industry portal. SMEs have come into their own in SA, with many vendors developing products, services and solutions targeted specifically at this market. This portal investigates the software, hardware, networking and other technology issues in this space.

Leon Lourens
CEO of Bodibeng Technology Incubator

Leon Lourens, CEO of Bodibeng Technology Incubator, is directly responsible for the initiative. He has a BEng (Industrial) degree and studied business administration at Pretoria University. With 20 years of experience in SMME development, he has been a project manager, programme manager and general manager, and was a product and marketing director of a listed IT company. Lourens was also the GM for what could be considered to be the first successful incubation programme in SA, namely Technotron Industrial Developments (previously the Laboratory for Advanced Engineering) at the University of Pretoria.

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