|
|
Like this article? PLEASE +1 it! |  |
|
SMEs - the problem with development capital in South Africa
| Guest post by: Dr. Rob Smorfitt |
Article Overview: Development capital is available in South Africa. The problem is getting access to it.
 |
Free Download - SMEs – SMEs struggling in South Africa. Why? By Dr. Rob Smorfitt |
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 - opportunities in Africa
Restricted Access to Finance
SMEs – SMEs struggling in South Africa. Why?
SMEs - my PhD topic and African context
Helping SMEs meet the requirements of formal financing - Increasing SME Access to Finance: A Four Pronged Approach
|
About the Author: Dr. Rob Smorfitt RSS for Dr. Rob's articles - 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 business strategy, the impact of legislation on SME development and SME finance. Run my own SME blog at http://sme-smb-smme.blogspot.com as well as an entrepreneurship and innovation for large businesses blog at http://innoveur.blogspot.com I have been self-employed since 1982. I have started or purchased in excess of 50 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 full time in my bigger businesses. Author of 6 books. Written articles for various magazines, newspapers and websites. Experienced in research within developing countries.
Click here to visit Dr. Rob's website  
 SMEs government strategies SMEs are youths cut out for entrepreneurship SMEs working in the dark SMEs collectivism yes or no SMEs why compliance models work in Africa |
Related Forum Posts
Re: In-House or Outsource?
- Unfortunately, in the South African context, very few SMEs see outsourcing as an option. They believe it is too expensive, and they are paranoid that someone will "steal their ideas".
I believe that the three main functions that cannot be outsourced are marketing, sales and strategy. These must be done in house I believe. If you do not have the marketing skills then get them. Hire a consultant or attend a course, but get the skills. Even if you use a consultant, you need to understand what marketing is about, as no one knows your market like you do. Marketing is made to seem difficult and complex, but everyone who really understands their markets, can easily learn to do their own marketing.
In South Africa, labour legislation is extremely inflexibile, and consequently labour broking is a large industry. This is an ideal starting point for SMEs in South Africa, as it is a legally complex area, whih comes with severe penalties.
I say do it!
Rob Smorfitt
Re: need advice
- Africa is a pretty big place I think it is a question of where in Africa you would like to open a call centre. South Africa for example actually has plenty of call centres already operating, so it would very much depend on what part of Africa you are considering.
MichelleJ
Re: Fold-up Car of the Future unveiled
- I will definitely need one here in Pretoria South Africa. We have problem of parking especially in CBD.
What is the asking price? So I will be able to work and save toward it
Re: Join an inventor's group
- [quote="ideasuniversity":1cd2fidx]Thanks for this list, will check out if we have this kind of Group in South Africa. I will be glad to be part of them since I am passionate about creating ideas and implementing them.[/quote:1cd2fidx]
I would also be very interested in knowing if there was such a group in South Africa, because I am
sure that some of the laws etc. surrounding patents might be a bit different here.
MichelleJ
Re: Newbie from Africa
- Hello Biiyke
Welcome to the forum. Which part of Africa are you from it is quite a big continent? I live in South Africa.
MichelleJ
Share this article with your friends. Fund someone's dream.
Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.
by: 
4 Building Blocks of an Effective Talent Management System
Simon Fuller Quotes
Lesson #3: “Tell ‘em quick and tell ‘em often”
Searching for the Stars: How Yang and Filo Took Their Business to New Heights
Salesperson Wimp-Out: I Need Help 
Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Starting a Business with Bad Personal Credit
Induction – your first management job
Ten Reasons to take Notes during Sales Meetings
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.