Opportunity awaits

Article by Regional manager Business Partners (ltd). Business Partners is a major player in the financing of SMEs


Supporting SMEs means supporting the economy

Xolani Meva, Regional Manager, Business Partners Ltd



I was watching the news on TV recently when I saw that the economic down turn, which was recently experienced in SA and globally, had cost the country 171 000 jobs in the first quarter of this year.



We think entrepreneurs - especially those who often have to overcome insurmountable obstacles to establish and attain successes in their business are the true heroes of our economy. The fruits of their business activities are used to feed themselves and their families as well as their employees and their families. In his/her own way, every entrepreneur makes a huge contribution to the economic well-being of the community in which they operate. The joint efforts, energy and drive of all SA entrepreneurs constitute the backbone of our country's economy.



The importance of SMEs are captured by numbers. SME Entrepreneurs, entrepreneurial businesses and family-owned businesses are indeed the fulcrum and the life blood of any country's economy:

•Contributing 30 - 50% to SA's GDP

•Employing more than 60% of the country's labour force

•Accounting for more than 65% of new jobs created

With many economists and various experts believing things are getting better, especially if you compare the first four calendar months of year 2010 to same months in year 2009, there is reason to be hopeful. Government is also doing its part in trying to further boost the already noticeable economic upswing in various industries. The minister of trade and industry has recently announced government's intention of getting more foreign direct investment into the country running in excess of a hundred billion rand over the next three years.



These investments could be made in many forms, including manufacturing companies. Manufacturing conglomerates often need various components to be supplied locally - presenting substantial opportunities for SMEs; not forgetting the many established local manufacturers who also need such components.



The SMEs therefore should continue to do their part in contributing to the economic growth and employment creation. There is an even bigger need for new enterprises (start-ups) opening up, as without these we cannot grow the number of SMEs operating in our economy. To start these businesses the entrepreneurs will often need funding from various financing institutions.



Amongst various requirements of the financing institutions, they need to be satisfied that the people starting a new venture have the right skills for the business they want to start. Often two sets of skills are looked at: business skills and technical skills (doing skills).



The business skills are skills that relate to the ability of an entrepreneur(s) to apply correctly sound business principles in their day to day decision making about the business they are running. Business skills range from formulating and applying strategy, setting goals, financial acumen, ability to sell the product/service, ability to manage people etc.



On the other hand technical skills relate to competencies of the entrepreneur(s) specifically in relation to the business in question. The experience of the entrepreneur will often determine whether or not these skills are in place come the day of starting the business. Some finance providers like Business Partners use mentors to assist entrepreneurs in developing the necessary skills. The need for specific skills will vary, depending on the nature of the business.