Switching+on+to+needs+of+small+owners,+B+Terblanche,+B+Day



=Switching on to real needs of small business owners=


 * Barrie Terblanche, Business Day, Johannesburg, 1 February 2008**

It is not very pleasant to be a small business development worker right now. It is thankless work at the best of times. Small business owners are generally ungrateful beneficiaries of support and services. They are quick to blame others when things go wrong and take the credit (and profit) when things go right — whether it is their own doing or not.

But even if you look past this inherent drawback, swallow your coffee and go out to help them because SA so desperately needs growing employers and wealth creators, there is always a vague doubt about whether your work is of any use. Success in business seems at times to be a function of deeply inculcated talent and attitude on the part of the business owner on the one hand, and broad macroeconomic issues on the other, both of which are way beyond your control.

If you stop to think about it, the sharpest operators in South African clothing manufacturing, for example, have all probably either left the industry or have become importers of that which they used to make. Even machinists, once abundant in Cape Town, are hard to find nowadays. They’ve all left for more stable industries and the youth won’t be seen dead near a sewing machine. So what are you doing helping this struggling cut-make-and-trim workshop owner who can’t see a business trend even if it dumps a container load of Chinese-made fake Levi’s on his head? Such are the thoughts, from time to time, of those economic development workers who are prone to ruminate.

But even the most cheerful and optimistic small business developer came face to face with his own futility in the stark light of the Eskom blackouts of the past two weeks.

In one fell swoop, the crisis has cost South African business owners more than all the money that government has pumped into small business support over the past decade.

To put it into perspective: the government’s Small Enterprise Development Agency (Seda) has a budget of, say, R200m a year. An ordinary Kwikspar needs a 350-450kVA generator to keep functioning through a blackout. It costs nearly half a million rands to buy, and it sucks diesel worth R2000 in a day-and-a-half.

Therefore, Seda’s annual budget will scarcely help 400 Kwikspar owners to absorb the shock of such forced capital outlay, let alone the thousands of farmers, welders, fish factories, workshops, undertakers, hundreds of thousands of offices and spaza shops. Not to mention the running costs of generators.

A cheap generator to keep an onsite crew going with some angle grinders and drills costs R5000. A generator with a computer-friendly voltage regulator strong enough to keep a small office with a PABX, four computers and a few lights going, cost R25000 a week ago. It’s more now.

Thousands upon thousands of business owners are in agony over how to scrape together the finance. Those who have, face a six-week waiting list for generators. Those who have generators already can’t help but also dread the possibility that Eskom will solve the crisis soon, rendering their expenditure an utter waste.

What can you possibly say to these business owners? That the Umsobomvu Youth Fund will pay a consultant R7000 to write a business plan for them? That they can apply for a Khula guarantee if they struggle to get bank finance for the generator? That Seda opened an information office nearby where they can get government tender information? That one day Eskom will get its act so together that it will not only produce enough electricity, but buy power from business owners who won’t know what else to do with their expensive generators?

Or, if you’re really brave, that they are the victims of their own success, as Public Enterprises Minister Alec Erwin analysed the catastrophe? If only he could argue that the millions spent on Seda, Khula and all the other development agencies had actually boosted business so much that they now need more power than Eskom can provide, but of course it isn’t true. Only a tiny fraction of business owners have ever received any direct help from a government agency.

And this realisation brings you to the core of the South African small business developer’s existential crisis. Small businesses have thrived because the economy grew well. Despite the dreadful smugness of his statement, Erwin was right in the sense that the government kept the macroeconomic conditions such that the South African economy could grow along with the world economy.

Nothing helps small businesses more than a growing economy. They thrive in it, spread the benefits of it and strengthen it. Of course, to then fall victim to such success seems all the more daft to every business owner who had a good thing going.

It is interesting to listen to the speeches of the development agency executives, who always insist that their job is to “create a supportive environment in which small businesses can flourish”. It is a cliche taken from the strongest school of thought internationally. The more the state gets involved in the minutiae of business support — advice, loan schemes, grants, training, information dissemination — the more it wastes money. Either that, or bureaucratic oversight of its support programmes becomes so tight and unbusinesslike that very few businesses want to use them.

It is much better, so the thinking goes, to concentrate on the environment in which small businesses operate — infrastructure, an economy free of cartels and monopolies, security of tenure and intellectual property, peace, an efficient and affordable legal system, minimal red tape and a business-like labour system. Take care of these big issues, and small businesses will take care of themselves.

Yet our small business development agencies focus almost exclusively on micro services, not the broad environment.

It could be argued that Khula’s bank loan guarantee scheme for business owners who don’t have enough collateral for the banks’ liking is an intervention aimed at changing the banking environment. But that’s about as far as it goes.

The small business loans organisations, business plan consulting programmes, business training, tendering information and business advice tend to be subsidised services badly copied from the commercial sector, and subject to abuse or bureaucracy.

Perhaps that is a bit too harsh. There are some worthwhile projects, but their reach is so tiny that they are virtually meaningless, especially against the scale of the electricity fiasco. This must surely be the most important lesson for local economic developers — that small business support means nothing if the basics aren’t right. Or even: small business support equals making sure the basics are right.

Development agencies can help through small business advocacy. Help small businesses to fight cases at the Competition Commission. Help the under-resourced commission investigate cases on behalf of small businesses.

Instead of just lending to small businesses, help expose the cartel-like complacency of the banks. Push for more tax exemptions to help cash flow. Strengthen Parliament’s ability to detect clauses harmful to small businesses in well-meaning legislation. Help ring the warning bells when there are signs of infrastructure collapse.

Small business owners are the ultimate do-it-yourselfers, taking care of themselves when the environment is right.

What they are bad at is advocacy, because they are so focused on their own businesses. It makes more sense for small business developers to help them advocate their cause, rather than giving them advice — especially business planning advice coming from the government.


 * Terblanche is a small-business writer


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A696473**

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