Experts on business development liken business growth to that of a person. Depending on which expert it is, the life of a business is divided into a number of phases representing infancy, adolescence, adulthood and maturity. To a very large extent the behaviour of a business reflects these human growth phases and it is very important for the entrepreneur to acknowledge this and not expect his or her business to perform beyond its ‘age’. An infant business, for example, is one without any strength of its own. It has to be nursed and nurtured and what it is likely to yield to its owner is hardly more attractive than the bodily emissions of a baby. At the other end of the growth scale, a business in maturity may already have passed its zenith. It may even be in some decline as energy and enthusiasm have waned. It may be a dangerous phrase, too, for it is possible that complacency has set in and the demands of the modern market may find it wanting.

An ‘adult’ business is in its prime. This is when the value of the enterprise should reach its highest point, for decisions are reasoned even though they may be adventurous. Growth is carefully planned with all the risks accounted for. There is a good market share and the company is stable and reliable.

The problem phase is the one of adolescence. In many cases, those that are younger try hard to get there quicker, in the same way that a nine-year old cannot wait to be a teenager. It is the phase of irrationality and unacceptable risk during which many businesses which have survived the foundation period, go under. But it is the phase of independence and self-sustainability when the business should be looking to expand. In the case of many black businesses it is often the time when the real challenges emerge. It is the time, perhaps, when an enterprise, having started within the second economy, should enter the first. But, in the same way that the transition from childhood into adolescence is fraught with difficulty, this is the time when the business road reaches a river and there is no bridge.

For government and the many agents of business support, this is a critical stage which is often disregarded. It, rather than the infant stage, is the one where finance is required. In many cases it is not expensive to start a business, except where one wishes to enter the manufacturing sector. A bucket, a cloth, some detergent and a second-hand vacuum cleaner are sufficient to start a domestic cleaning business. Some people have proved the truth of this. Unfortunately, there are many who do not realize this and they want significant sums of money to set themselves up, often in ways which are far too elaborate and inappropriate for the infant stage.

People who work hard to help entrepreneurs start their businesses will confirm that there is a very high hurdle to be negotiated at the stage of expansion and growth, when the micro business will become small and begin to employ. It is this phase which will determine whether the SMME sector will contribute towards the growth of the country’s economy in the way that it should, and in the way that it has done in many other countries.

Andrew Layman: PCB CEO

This article appeared in the Edendale Eyethu on the 31 July 2008