SME's - whose responsibility is finance for SMEs?

Another blog laid the blame for SME failure at the door of finance, stating that a lack of finance was a cause of business failure.

I believe that as entrepreneurs we must accept that a lack of finance is a failure on the part of the entrepreneur.

The first point is that most SME's I see, believe that government has a duty to finance their businesses. They believe it is their right to be funded. I cannot disagree with this attitude more than I do. Entrepreneurs usually start small and grow quickly into something big. These people believe that government should fund a large business from day one. Everyone wants to start as the owner of a large business with lots of staff so that the owner can sit and do nothing. I have seen people offered excellent businesses that are on the market, netting 150 000 per month, and they are not interested. The banks would finance this without blinking, but these people still want government to fund something bigger. And these are people with no business experience at all. This is never going to work. As an example, government released information about a project that they did to create new businesses. The number that were still in existence after 1 year, out of 1700+ was ZERO. Yes, ZERO. The model of government seeking wannabe entrepreneurs and just giving them money will never work. It will instead become a hotbed for conmen seeking easy money.

The second point refers to a common error I see in South Africa is the process of planning. Everyone does the costs first, and then juggle sales to exceed costs and show a profit. Everyone is going to make massive profits from day one. Not likely. It is simply a lack of foresight.

Entrepreneurs in South Africa need to accept that financial failure in business is their own fault, and they need to check and see what they have done wrong!

Rob Smorfitt To learn more about this author, visit Rob Smorfitt's Website.

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