Build your own support network
The business support landscape in South Africa for young entrepreneurs is like the business world itself: it is teeming with opportunities, but you will have to seek them out yourself and build your own support network. Nobody is going to hand it to you on a silver platter.
For decades, various spheres of government, corporates and development organisations have been setting up “one-stop shops”, “help desks” and “local business service centres” – places where an entrepreneur can get affordable help with anything ranging from compiling business plans to finding finance and setting up administration systems.
The idea is good, says Byron Jeacocks, regional general manager for Business Partners, but so far none of these projects has managed to sustain and grow a consistently good service. He points, for example, to parts of the Umsobomvu Youth Fund which had been successful in helping a number of young entrepreneurs set up in franchising, but it ended when the fund was collapsed into the National Youth Development Agency.
Support opportunities may well be found in the many similar institutions established at municipalities, provincial governments, and national agencies such as the Small Enterprise Development Agency and the new Small Enterprise Finance Agency.
The advantage is that services are often subsidised and are therefore affordable. Finance may even be available in the form of grants. But the disadvantage is that the quality of service may vary considerably, and young entrepreneurs should scout around widely for good alternatives if the subsidised ones fail to live up to their promises.
In fact, it is entirely possible for young business owners to build an excellent support network for their business without any state-sector support.
It starts, says Jeacocks, with the acknowledgement by the young entrepreneur that business support is much wider than access to business finance. “If you don’t have to borrow money, don’t. You don’t need a million rand to start a business.”
More often than not, young entrepreneurs rather need support in setting up and managing systems in their businesses, including people management, VAT returns, sales, bookkeeping and cashflow forecasting. Because many entrepreneurs are unaware of where to find help in building these systems, they simply focus on production (fixing cars, landscaping or whatever the core service of the business is) and neglect the other aspects of running a successful business.
Once they acknowledge that they need help and that there is no single state institution set up to provide such support, young entrepreneurs must set about building their own support network.
For general business skills training they can reach out to dozens of commercial institutions offering part-time courses in every city and university, and correspondence learning is accessible in even the most far-flung rural town in South Africa. It is hard to pay the kind of rates charged by unsubsidised courses, and it is even harder to commit the time and energy required to finish a course while running a business. But Jeacocks says it is often the single investment with the highest return that business owners make in their career.
A crucial part of any business support network that young entrepreneurs often overlook is other business owners. Jeacocks says he finds that inexperienced entrepreneurs are the only ones that try to keep their operations and plans secret. If they are lucky, they find out sooner rather than later that experienced business owners are remarkably willing to share information, tips, advice and even customers. There is no harm in reaching out to business owners around you.
They are often busy, however, and one of the best ways in which to network with other business owners is through your local business chamber where you can meet them when they are themselves in networking mode. Jeacocks believes that South African business chambers are untapped and unappreciated for their potential to support young entrepreneurs.
Many successful entrepreneurs acknowledge the role of a mentor in their career. This can be a family member, a business teacher or an older or retired business owner. Such mentors are everywhere in South Africa. Sometimes they are formally organised in projects such as Business Partners’ Mentorship programme, but more often they need to be sought out purposefully by young entrepreneurs at business chamber meetings, industry associations and through referrals from other business owners.
Jeacocks draws a distinction between a consultant, who charges by the hour and wants to make a living out of advising businesses, and mentors, who do not need the money and who simply want to give something back to the business community by advising young entrepreneurs.
A key figure in a business owner’s support network is the accountant. In too many businesses, the accountant is seen as a monthly grudge payment made to keep the taxman from the door. Such an attitude is a waste of a potential goldmine of business support.
Good accountants will help you set up your bookkeeping system so that your accounting fees are kept to a minimum. They will help you understand financial statements so that you can use them to manage your business. They will use their insights into other, similar businesses to advise you on whether you are operating according to industry benchmarks. They can help you to prioritise your compliance to laws and regulations. They can use their network to help you set up other members of your support team – a labour expert, lawyer and even service providers such as an IT expert. None of this is free, of course, but a good accountant will make sure that it’s worth the money.
Spend a good bit of time and energy in finding a good accountant, starting with referrals from other business owners. This is one appointment that you should not simply make out of the Yellow Pages.
By its very nature, starting your own business is a do-it-yourself project, and young entrepreneurs must not expect individuals and institutions to fall over themselves to offer support. But an entrepreneur does not have to be lonely, says Jeacock. With the right attitude and willingness to work at it, young business owners can build a substantial network of people around them who really want to see them succeed.