Feedback Form

SMEs - the problem with development capital in South Africa

SMEs - the problem with development capital in South Africa

While I do not advocate that development capital should be handed out on an ad hoc basis, the current practice is also not working. Without exception, whenever the South African government makes development capital available for SME development, the caretakers of these funds generally fail in two ways.

Firstly they are slow to respond, with 6 months being the average waiting period to access the funding. As any entrepreneur will advise, too often the opportunity is long gone 6 months later. Entrepreneurship is about responding to market demand when it exists. Very few entrepreneurs are that far ahead of their competitors that time is not if consequence.

Secondly they insist on using traditional banking credit scoring methods to allocate funds. Most of these people will fail any traditional banking scoring system. Unfortunately bankers and accountants are in greater supply than people able to assess business plans, hence the focus on credit scoring.

In my humble opinion, the focus should be on the people and the business plan. Are they matched? Are they suitable for the intended business? Is the business in an appropriate sector? Is it in a growing sector? IS it within the government favoured sectors for future development and growth? Do they display a certain percentage of the indicators of an entrepreneur? Predicting entrepreneurial success is far from an exact science, but is that not the point of development capital? To develop entrepreneurs? To develop assessment skills?

We need to move away from the current stereotypes and find a new way forward, so that many more successful and growing businesses can be developed.

Rob Smorfitt





SMEs the problem with development capital in South Africa - To learn more about this author, visit Dr. Rob Smorfitt's Website.

Like this article? Share it with your friends

Related Forum Posts Article Feedback
Article Feedback No article feedback found.
Leave Your Feedback

Related Articles Related Articles
Restricted Access to Finance
  Africa’s SMEs have little access to finance, which thus hampers their emergence and eventual growth. Their main sources of capital are their retained earnings and informal savings and loan associations (tontines)...
SMEs - opportunities in Africa
  An overview of opportunities in Africa for SMEs
SMEs - my PhD topic and African context
  A brief overview of my PhD topic and its relevance to this blog.
Helping SMEs meet the requirements of formal financing - Increasing SME Access to Finance: A Four Pronged Approach
  Apart from the need to boost SME capacities, some financial instruments can help provide missing information or reduce the risk stemming from some SMEs’ lack of transparency.
Expanding the supply of finance through the non-financial private sector - Increasing SME Access to Finance: A Four Pronged Approach
  Financial institutions are not the only source of money for SMEs. Apart from remittances by nationals working abroad, which are a key boost to private-sector growth, the interdependence between SMEs, large firms ...

Related Forum Posts Related Forum Posts
Re: In-House or Outsource? Re: In-House or Outsource?
Re: Join an inventor's group Re: Join an inventor's group
Re: How will an african make money truely on the net? Re: How will an african make money truely on the net?
Re: Hello from South Africa Re: Hello from South Africa
Re: Hello from South Africa Re: Hello from South Africa
Re: How will an african make money truely on the net? Re: How will an african make money truely on the net?
Re: How many nationalities are on the forum? Re: How many nationalities are on the forum?
Re: Hello from South Africa Re: Hello from South Africa

Related Forum Posts Related Businesses - Evan Elite Authors
Dave Kurlan
Dave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website

John Power
John Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website

Linda Richardson
Linda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website


To learn more about the Evan Elite Author Program please contact us.

About the Author


Dr. Rob Smorfitt
(Visit Dr. Rob's Website)
Have an MBA and a PhD in entrepreneurship. Three key areas of ongoing research are entrepreneurship and innovation in large businesses, the impact of legislation on SMEs and SME finance. Run my own SME blog at s me-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at innov eur.blogspot.com I have been self-employed since 1982. I have started or purchased in excess of 40 businesses since then. Most were sold again and a few were shut down because of a lack of profitability. Many were run by staff or family while I worked in full time employment in my bigger businesses. 6 books written in Entrepreneurship and Project Management educational field. Written articles for various magazines, newspapers and websites. Married with 3 children (22, 21 and 14).
Have A Suggestion?

View Author's Blog
SME, SMB, SMME, all the debate and info
SME, SMB, SMME, all the debate and info - A resource on SME, SMB and SMME.
Become An Author

View Author's Video
Become An Author

Free Downloads


Dr. Rob Smorfitt's

Complete
List Of
African-Accounts
Articles

First Name
Last Name
Email
10 + 5 =
 
If you enjoyed this article, get Dr. Rob Smorfitt's Complete List of African-Accounts Articles For FREE!

More Dr. Rob Smorfitt
SMEs working in the dark
SMEs supply chain and ethics
SMEs should despots and dictators be given a free pass
SMEs why tendering is bad for business
SMEs are some Africans more entrepreneurial than others
SMEs government purchasing opportunities
SMEs why is franchising not more popular in Africa
SMEs left wing politics in the new South African government
SMEs surviving the recession in Africa
SMEs the impact of government interventions
Become An Author


 
 
 



Have A Suggestion?
Toronto Salsa Classes / Toronto Salsa Lessons Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
Have A Suggestion?

Featured Ebook


ebook Famous Entrepreneurs - Modern Empire Builders


Featured Ebook

More Evan Carmichael
More popular articles
- Generation Y and Social Media
Have A Suggestion?


Sales Lessons From Starbucks And Dell