The word ‘entrepreneur’ is usually associated with a single person establishing and running his or her own business. Even in the most developed countries of the world, where educational standards are both higher and more relevant to the societal needs of the time, the failure rate of micro and small businesses set up by individual entrepreneurs is high, probably as much as fifty percent. In South Africa, this percentage reaches seventy percent or more. This is more directly meaningful if it is expressed in another way: only three out of every ten new businesses are likely to survive, let alone grow and become really successful. It is worth considering that if all ten are financed by banks or other financial institutions, there is a good chance that up to seventy percent of the loans will not be repaid and this is bad news for people who trust banks to look after their money.
Business ownership is a very difficult undertaking. The mere existence of a registered close corporation or company does not guarantee success. One is inclined to think that a good business plan which enables access to finance constitutes the main hurdle to be overcome, but those who have succeeded will confirm that the race is a steeplechase with numerous obstacles from start to finish. Just as a steeplechase requires a mix of different athletic skills and abilities, so too does business. The reality is that few people, especially those without some years of experience in a business environment, have the required range of skills. This shortcoming accounts for the failure of many, if not most, fledgling businesses. How many entrepreneurs have discovered to their cost that their particular skills in plumbing, or engineering, or painting have not saved their small enterprises from the problems of cash flow, for example? In addition, while engaged in hands-on work, the next order is difficult to secure.
It is for these reasons that partnership activity among entrepreneurs offers a better chance of success. Two heads are often better than one, and I suggest, therefore, that people considering going into business might do well to find someone, or some other people, to join them in a partnership. This will have particular value if they have complementary skills; one to plumb, one to oversee the finances and administration, for example. Aspirant entrepreneurs may resist this suggestion on the grounds that the profits will have to be shared. This is true, but the first order of business is to make a profit and this is more easily accomplished by the application of more skills that are generally possessed by one individual.
It is for this reason that the government’s thrust in favour of co-operatives is so welcome. This, by its very name, involves a number of people working together in such a way that their combined skills and efforts increase the chances of success. That they also fail sometimes is more a reflection on human frailty than on the business model. Working together in equal fashion does not sit comfortably with all and collectives of this nature have been destroyed at times by one or too overly ambitious people who wish to strike out on their own. I’m very pleased to say that it is common knowledge that women are better suited to equitable collective and co-operative activity than men.
Zinhle Sokhela: PCB President
This article appeared in the dendale Eyethu on the 12 June 2006
