SA needs a full-scale entrepreneurial revolution

It’s a good sign that the word "entrepreneurialism" appears for the first time in the National Planning Commission’s National Development Plan. Heaven knows, we need a master plan. There are many who will make the case for huge infrastructure and private investment and macro-industrial policy reform. But I want to make the case for a full-scale entrepreneurial revolution. And I mean a real revolution, not a tinkering around with the current institutions, platitudes and paltry support for small business and entrepreneurs.

The government doesn’t really understand entrepreneurs or entrepreneurship. There is no one at the top level of the government who really understands entrepreneurship or sees what entrepreneurs can bring to advancing our national development goals. Entrepreneurs create wealth, competition, employment, innovation and social cohesion.

They create wealth through new venture and equity creation and the building of value chains. Competition through being alert to faster, better and more efficient ways of meeting a market need. Employment through creating new jobs - often entry-level ones that teach on-the-job skills. Innovation through improving, improvising and innovating. Social cohesion through giving suppliers, staff and others a stake in the business outcome.

The current small business and entrepreneurship support system - with the Small Enterprise Development Agency and Khula at the core - is really only a slightly revamped and bigger version of the 1980s’ Small Business Development Corporation and the manufacturing advisory councils. It is not enough. We need a comprehensive entrepreneurship and small-business development strategy.

Here’s what needs to happen.

Make entrepreneurship a core subject at schools. Too many school-leavers think only in terms of finding a job. That mind-set has to change because the jobs aren’t there. Young people need to be equipped at an early age to think of themselves not as employees in training but as entrepreneurs in training.

Appoint a small business minister and legislate to promote small business. Someone needs to make sure small businesses get tax breaks, manufacturing incentives and real support, and that all other ministries support small business through their procurement. The US has introduced a Startup Act to promote the creation and growth of new businesses.

"Research makes it clear that there is a need for a major legislative jump-start of our nation’s entrepreneurial engine," says Carl Schramm, president of the respected Kauffman Foundation. "With virtually all net job creation coming from companies less than five years old, entrepreneurs are a critical force for economic growth."

The act takes a five-prong approach: reducing regulatory burdens; attracting business investment; accelerating the commercialisation of university research; attracting and retaining entrepreneurial talent; and encouraging pro-growth policies.

Encourage startups. We need more programmes to encourage startups and ensure they succeed. The Seda Small Business Stars competition, which enables people to write a do-it-yourself business plan, with more than R4m in business support prizes, is a great idea. Startup Weekend is a great initiative that should be run in every town.

Create 500 new incubators. Most small businesses fail in their first three years, often because they don’t have sufficient working capital to fully operationalise and because they have to contend with punitive overheads and big-business competition. Incubators help protect nascent businesses and keep their costs low while they refine their product, operations and market-access capability.

Dedicate at least R1bn a year to microfinance. Many small businesses need only R5000-R25000 to start, yet the South African Microfinance Apex Fund is grossly undercapitalised and works only through intermediaries, who often underperform and are difficult to manage. A new microfinance agency needs to be created, using existing government agency offices, to give startups working capital.

Connect the dots once and for all. There are too many different local, provincial and national small-business development agencies and funding institutions. We need one organisation that provides financial and nonfinancial support to entrepreneurs and small businesses throughout SA efficiently, effectively and energetically.

Build a voluntary mentorship network. On one side we have thousands of technical and business people with many years of valuable experience behind them. On the other we have thousands of people struggling to start and run their businesses. We need a mentorship network to link the two.

Very few entrepreneurial businesses are mould-breaking innovators. Most are simple enterprises such as creches, security companies, hair salons and construction firms. Few will ever make the headlines. However, they have potential to lift people out of poverty. But that won’t happen by itself. We need to create the right conditions for entrepreneurial talent to flourish and for more people to see entrepreneurship as a real option. We need to seed an entrepreneurial revolution.

Source:Martin Feinstein, www.leader.co.za