Entrepreneurship: challenges and opportunities abound.


There are numerous challenges facing entrepreneurs in South Africa. But, with proper planning and support, there is indeed light at the end of this challenging tunnel …

Entrepreneurship is the key to the future success of South Africa’s economy: this much we all know. But it’s easier said than done. As Pam Radebe, former head of enterprise development at Mitsubishi Hitachi Power Africa, notes, the challenges faced by entrepreneurs in South Africa are multi-fold.

Some seem somewhat overwhelming. “Despite claims that entrepreneurship is being championed vociferously by both private business and government, it has not taken off as it could have in this country. Fuelling this unfortunate state of affairs is an educational system that is not positioned to cultivate entrepreneurial minds. A radical mindset change in our society is necessary to encourage entrepreneurs to conceptualise and develop solutions, products and services that will elevate and change society for the better rather than to get rich quickly,” she believes.

Mark Frankel, chief executive officer of Shanduka Black Umbrellas, shares his belief that a mindset change is required. “There are some incredible large-scale entrepreneurial success stories in this country such as Bidvest, Discovery, Massmart, Nando’s and the like. But we’re not seeing a culture of entrepreneurship across the population spectrum in South Africa,” he notes.

Various pieces of research – such as the Global Entrepreneurship Monitor – indicate that the level of entrepreneurial activity as a percentage of the population in South Africa is roughly half where it should be when compared to countries with a similar GDP and levels of economic activity. Frankel believes this is due to the fact that South Africans are generally risk averse and intolerant of failure – two critical entrepreneurial characteristics. “In Silicon Valley, venture capitalists generally want to see that you’ve failed before they will consider investing in you. We don’t profile, support and celebrate entrepreneurs to the extent we should. We need to identify those people with entrepreneurial characteristics and abilities and then provide them with all the support they need to make their ventures a success,” he urges.

There are other practical challenges limiting entrepreneurship in South Africa too. “We are faced with a lack of experience, which manifests itself in overpricing. The costs of raw material are high. Entrepreneurs have limited access to finance and access to markets. Then there are the government’s onerous regulatory requirements …” Radebe reveals.

Frankel concurs – but he says that many so-called entrepreneurs fail because they’re actually not cut out to be entrepreneurs in the first place. “I can only really speak from my experience at Shanduka Black Umbrellas. The entrepreneurs we work with are from historically disadvantaged backgrounds. Probably the first challenge is an honest assessment on whether the person has what it takes to be an entrepreneur. Many ‘entrepreneurs’ in South Africa fail because they become entrepreneurs by default, largely because they’re unable to find work. But we’re not all cut out to be entrepreneurs!” he stresses.

Frankel points out that being a successful entrepreneur requires innovation, determination, resilience and an incredible amount of hard work. Naturally, the company’s service and product offering is also vitally important. “The entrepreneur needs to identify a unique product or service. With the level of global competition today, when you start a business anywhere in South Africa, you’re competing with the rest of the world and it is increasingly difficult to differentiate one’s product or service in the market. This is particularly prevalent where the levels of education or business skills are low as the barriers to entry are very low. Many entrepreneurs in South Africa fail because they try and start a business in an overcrowded market without any differentiation from their competitors,” he explains.

The next challenge lies in the area of entrepreneurial or business skills. “It does not help having an incredible product or service if one is unable to take it to market and create a sustainable business out of the opportunity,” Frankel notes.

Radebe agrees. “The only way to overcome these challenges is through enterprise development support systems and in particular, business incubation wherein entrepreneurs are mentored and guided as they navigate their way through concepts that are unfamiliar to them but are critical to business success,” she maintains.

She also believes that entrepreneurial success is dependent on two other important traits: patience a belief in yourself.

“If I had to give one single piece of advice to a potential entrepreneur, I would encourage him or her to be patient and to persevere in the face of possible failure. Rome was not built in one day,” she adds.

Frankel agrees that patience and perseverance are vital. “Potential entrepreneurs need, to be honest and believe in themselves. Your limitations are determined by your perception of what you are capable of! We’ve seen this many times within our own programs, where people join with a very limited view of their potential based on their experience to date. But, once they’ve shed their illusions, understood the core value proposition in their business model and demystified the workings of the business world, they’ve achieved more than they ever dreamed was possible,” he concludes.


Connect with Mark Frankel on LinkedIn.

dsc_3722Mark Frankel is the CEO of Shanduka Black Umbrellas.Shanduka Black Umbrellas is a non-profit company involved in the support of emerging black business through enterprise and supplier development.


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  2. Small business is not represented in the politics of federal government. Big business, big unions, and big politicians do not want true small business to have a seat at the table. In 2009, Australia passed the Fair Trade Act which formally recognized small businesses as having under 15 employees, while the constituency of our SBA is any company with less than 500 employees. This is no different than calling anyone under 7ft, short. But it allows politicians to say they are helping small businesses. We need to dismantle the existing SBA, build a new one, and restore the cabinet level position for a small business advocate, not so we can get bailouts, handouts, and undeserved loans, but to stop all of this going to big businesses masquerading as small.

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