Will SA Entrepreneurship Ever Go Beyond the Dream?

Posted on December 2nd, 2018
Entrepreneurs Thought Leaders

By: Rick Ed

Delegates and government officials at the 2018 Southern Africa Business Incubation Conference (SABIC) quibbled over whether our incubators and their skills transfer processes positively impacted our ecosystem sufficiently well enough to get them out of the starting blocks.

By contrast, in advanced economies like Sweden’s, where there are over 120 incubators, their startup businesses are investing heavily in marketing. Their entrepreneurs place a significant emphasis on customer discovery and customer development, whereas, in South Africa, too many wannapreneurs, and especially techpreneurs, are stuck at the ideation stage, married to their precious concepts, afraid to collaborate in case someone steals their ‘IP’.

More than two decades ago, at an Apple Conference, Steve Jobs argued that “…you’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to try to sell it … we have tried to come up with a strategy and a vision for Apple, it started with ‘What incredible benefits can we give to the customer? Where can we take the customer?’ Not starting with ‘Let’s sit down with the engineers and figure out what awesome technology we have and then how are we going to market that?’ And I think that’s the right path to take.”

Co-working spaces are shut over the weekends; indeed, there is so little uptake that some are closing

Beyond the dream

In South Africa, our entrepreneurs are still tinkering with their dreams. Most startup businesspeople don’t truly put their shoulder to the wheel. Co-working spaces are shut over the weekends; indeed, there is so little uptake that some are closing. We don’t have all the business skills needed to run a business, yet we don’t make the effort to read books on the subject or connect with one another to better understand the market; we aren’t networking and building long-term relationships. We need to make the time that is needed to nurture connections that can lead to sales.

And then of course, the folks at the very successful Timbali Technology Incubator in Mpumalanga don’t ask ‘what is your USP?’ but ‘who is the unique buyer crowd?’ They form small-holder collaboratives that combine their crops to sell them into export markets.

Many local small and growing businesses see other businesses not as opportunities for collaboration, but as competition. They don’t see the advantages of clustering where each business contributes its specific strengths so that the ‘whole is greater than the sum of its parts’.

The truth about entrepreneurship

Many South African small business owners have a misdirected financial focus: we should be getting our funds from our customers not from funding agencies. Customers don’t need us to complete application forms, they keep giving us money and they don’t ask us to pay it back. As one young man observed: “The first place that we go when we get our first paycheque, is the motor-car dealership.” We are too focused on the bling; we want to work less and earn more. That is not how true entrepreneurship succeeds.

Being an entrepreneur is not a glamorous choice. A recent survey conducted by SME South Africa, SME Landscape Report An Assessment of South Africa’s SME Landscape: Challenges, Opportunities, Risks & Next Steps’ 2018/2019, revealed that this sector is actually very small: More than 1 in 3 SMMEs are one-man businesses, and this is their first venture for 70% of owners. Way more than half of the ventures are not yet 2 years old and more than 70% of them earn less than R 200k annually. If we haven’t realised how hot it is in the kitchen when we want to start a small business, then we are sure to get burned.

This certainly isn’t an ideal career choice for people in necessity-driven conditions because 85 out of every 100 said that they have difficulty getting ‘access to market’ Nearly 9 in 10 South Africans start a business by registering a company, getting a business plan drawn up and then looking for finance, but only 6% actually get funded by a government agency. Most SME owners who have been refused funding don’t even understand what is needed for them to apply.

And yet, the survey shows that for over half the business-owners, they opted for this lifestyle because it was a necessity for them to generate or earn a living to survive.

When some startups find that it’s taking them longer to become successful than they expected, they start incubator jumping; hopping from one ESD programme to the next in the hope of stumbling upon the magic contract. Ultimately, some BEE ‘entrepreneurs’ become perpetual incubatees. Many Incubators are using the wrong psychometrics when recruiting participants and unintentionally attract life-long incubatees.

Both our government and we entrepreneurs are guilty of living in a fantasy-world where we see entrepreneurship as the panacea to the countries’ and our own woes without understanding that it takes more than wishful thinking; it takes guts to succeed.

 About the author: Rick Ed at age 60 sold his business to a younger and more energetic management team. He now educates entrepreneurs on strategic decision making and sales. Rick is a business advisor at DoBetter.Business. He is also co-founder of Creative Mzansi and one of the partners bringing Creative Business Cup to Johannesburg.