SBF Short Courses will address South Africa’s entrepreneurial shortfall
“Many SMMEs fail within the first five years due to the lack of training, and we need to find solutions to these problems at conferences such as these.”
So said Chris Friedrich, a professor at the University of Applied Sciences in Giessen, Germany and an Extraordinary Professor at the University of the Western Cape, speaking at the 5th University of the Western Cape International Entrepreneurship Conference in September 2017.
“One percent of micro enterprises that have started with less than five employees grow to employ ten or more,” Friedrich added, noting a negative consequence of this fact: these businesses hardly contribute to the tax base of the economy, and are not creating employment.
To help address this, the University of the Western Cape’s School of Business and Finance will launch short courses aimed at helping SMMEs (Small, Medium and Micro Enterprises) succeed.
Prof Friedrich discussed a massive research project he had been involved in over the past 15 years, focusing on the question as to why approximately 70-80 % of small business are failing five years - and why certain entrepreneurs were more successful than others. The research focused on members of formerly disadvantaged communities in South Africa.
So what makes the difference between success and failure for these small firms?
“Summarizing the results of our research,” Prof Friedrich explained, “it is obvious that approximately 40% of the success of small-scale businesses is dependent on one thing: the person of the entrepreneur who owns the business.”
In small businesses - those with one to 50 employees - the owner is typically the source of action in his firm. He is the one making important decisions on products and ways of production, as well as offered services, and guiding the company in (hopefully) the right direction.
“The business owners deal with important customers, suppliers and employees,” he noted. “And up to now there was almost no research in Africa dealing with the person or the entrepreneur - most of the research dealt with the environment and the firm,” he said.
Friedrich said the results of their study shows which variables are important predictors of the success for small enterprises.
The necessary skills are: personal initiative; learning orientation regarding activity setting and implementing goals for one’s business and plan with long-term focus; as well as being innovative, and generating and implementing new ideas.
With this information in hand, Prof Friedrich and his fellow researchers set about creating a new training programme.
“A new three-day training programme was developed, addressing the shortfalls of South African entrepreneurs. The training aims to develop and enhance small-scale business to grow and be more profitable.”
This approach focuses on “concrete actions” of concrete individuals in the market and looks at resources and barriers for these actions, and how to improve them.
“Six months after the training, we compared the business success of the entrepreneurs who participated in the training with a control group, who received no training,” Prof Friedrich said. “The training group improved their turnover (company sales and company service) and profit, and employed more people while the control group stayed the same.”
The training showed - Prof noted - that with the right intervention, which is evidence based, one can not only improve the business success of small scale entrepreneurs, but also create employment.
Professor Chris Friedrich is a professor at the University of Applied Sciences in Giessen, Germany and an Extraordinary Professor at UWC.