When asked about recognizable companies, many of us would naturally be drawn to massive global brands like Apple and Microsoft or brands that have become popular through movies and TV like Walmart, Tiffany’s and Harrods. Locally, brands like Anglo American and African Rainbow Minerals come to mind. Not only are these brands important in that they receive a lot of media attention, but they are also important because they are major economic drivers of the countries in which they are located. Mining has been the lifeblood of South Africa’s economy since the 1800s and the tech boom in the United States has seen the rise of Apple and Microsoft, which are now major employers.
While these businesses are significant and attract the attention of a global audience, it is the role of small and medium-sized enterprises (called small, medium and micro-enterprises in South Africa) that often goes unnoticed. The World Bank estimates that small and medium enterprises contribute up to 60% to some economies and can employ up to 50% of the working population in these countries. Entrepreneurship plays a much bigger role as an economic driver than big business.
Yet the statistics on entrepreneurship in South Africa are frightening. Research shows that very few South African SMEs survive longer than three and a half years. “This is an important issue that needs to be addressed if we are to change the South African narrative and address the economic challenges facing the country,” says Dr Marlini Moodley, academic, business adviser and author at the department marketing. in Mancose. She adds that meeting these challenges will be difficult.
Risk landscape assessment
Entrepreneurship is currently seen as the panacea to social ills and is promoted in government policies and strategies around the world. This is done to stimulate economic activity, increase employment rates and promote international competitiveness.
Yet access to it often overwhelms many South Africans. Entrepreneurs cannot simply start a business without any form of formal education. And while there are many higher education institutions that offer courses in entrepreneurship, access to these institutions is concentrated in urban centers. What happens to the best rural entrepreneurs? Moodley asks.
The next challenge is access to capital. Starting a business is expensive and entrepreneurs need a significant cushion to finance themselves as the business finds its feet. Many entrepreneurs need start-up financing. There are initiatives in urban centers where this is possible. But you need to provide those funds with a well-thought-out perspective that many budding entrepreneurs struggle to put together without any formal education or the help of a business mentor. Again, these funds are mostly based in urban centers, so rural entrepreneurs find it difficult to access these funds,” says Moodley.
As South Africa is rapidly becoming a highly digitized and connected economy, the majority of South African businesses cannot be digitized and require an office or store to operate. “In urban centers such as Johannesburg, Cape Town and Durban, renting office or commercial space is very expensive and beyond the financial means of many new entrepreneurs. There are business hubs emerging where entrepreneurs can rent space by the hour or for a day or half day. But they need more than that,” says Moodley.
Finally, lack of marketing skills is another major challenge faced by many businesses. “While many entrepreneurs have a great business idea, many entrepreneurs struggle to market themselves or their products. Marketing is often seen as an afterthought in many businesses that only allocate budget marketing efforts. Marketing is an exact science; if done correctly, it can add significant benefits to a business. However, if done incorrectly, the business will stagnate and struggle to grow. beyond its initial stages,” says Dr. Moodley.
Meeting these challenges
While these challenges are significant, it is important that we make an effort to address them if we are to achieve the goals set by the National Development Plan.
The best way to remedy this is to move towards the creation of entrepreneurial universities.
“The frameworks, missions, strategies and resources of universities focused on entrepreneurship should be emphasized by the Department of Higher Education and Training (DHET),” says Moodley, “All higher education institutions should strive to become university entrepreneurship ecosystems with internal and external processes interdependent elements of the university working together to create an environment conducive to the development of students as well as staff entrepreneurs DHET should merge with private and public higher education institutions to provide support, policies and strategies.
Moodley adds that extra-curricular activities supporting entrepreneurship need to be part of the education system. “We need to monitor activities that take place outside of the formal curriculum of an entrepreneurship-focused university. This way, students can gain hands-on experience of running a business.”
The role of universities will be important
If we want to meet the country’s entrepreneurial challenges, universities will have to step up and play an important role.
University venture capital funding can be made available by government and commercial entities as part of their corporate social responsibility (CSR) initiatives. This will provide start-up and start-up funding to companies to support technology transfer and commercialization of academic and public research results.
“Higher education institutions should consider preparing students for the competitive South African job market and making them globally employable through intrapreneurship where budding entrepreneurs can build on their big ideas and are allowed to market their concept within a company,” says Moodley.
She adds that support is essential: “Workshops, incubators, business seminars, seed funding, competitions and many other initiatives must be launched to support students. Finally, free access to short courses in entrepreneurship for students whose course programs do not include business or entrepreneurship courses should be made available.
0 Comments