The critical imperative to educate South Africans towards successful entrepreneurship

9 October 2017 by Jannie Rossouw

The writing is on the wall. Broad based economic participation can only materialise if new sustainable jobs are created in the SME sector. Significant job creation by the SME sector will require serious education intervention to equip young people and would-be entrepreneurs with the necessarily knowledge and skills.

It is imperative that South Africa starts to spend significant time and resources to address the need for access to quality education aimed at those who want to pursue entrepreneurship and business ownership. We shouldn’t only start teaching these skills at the tertiary level.

One reason why the fall-out rate of new entrants in the SME market is staggeringly high is because our education system ill-equips learners for the labour market - either as employees or as potential business owners.

School level intervention to incubate entrepreneurs for the future and the subjects speaking to business sciences need to be re-evaluated to include elements like business finance, business management, business case development, business innovation (methodologies and tools), marketing and a practical application element which can be brought in through field studies and learnerships. Financial literacy should also be incorporated in the curriculum, as future business owners should understand critical concepts like the time value of money.

These focus areas can also be applied to higher education courses in business sciences and management.

It may be good to remember the adage that business is simple, but not easy. Once someone understands the fundamental building blocks of business, the person is closer to being able to distinguish between a poor, mediocre of great business opportunity or venture.

Furthermore, a greater emphasis on coaching or mentorship is also required and that this is an under-valued area in support of entrepreneurial success.

In South Africa we have a wealth of business experience at our disposal from, for instance, retired people who still can and want to make a contribution and a difference. Many of these individuals are not necessarily in direct need of an immediate income. They can be remunerated as the business grows and as it becomes more sustainable and successful. More can and should be done to mobilise these individuals and formally link them up to start-up businesses which show promise.

Funding a business without mentorship often means setting that business up for failure. Therefore one cannot underestimate the value and the benefits of government funding of mentorship programmes in conjunction with the financing of businesses.

The South African scenario undoubtedly presents an opportunity to vest entrepreneurship and business ownership as an attractive career option to pursue, and our educators need to be pragmatic in finding the right education building blocks which will help vest the skills required by entrepreneurs to have command over the multiple roles and responsibilities they need to fulfil every day – at least until they can afford to delegate (but not abdicate) some of these responsibilities.

A lack of focused entrepreneurial education

The lack of formal education for entrepreneurship is evident in the failure rate of SMEs and in the extent to which South Africans often abandon their entrepreneurial dreams.

Economic and market challenges, competitor forces as well as stringent labour practices present an environment where SMEs struggle to make ends meet and, when they need to appoint staff, they are able to cherry pick candidates as even our graduates are struggling to find work.

The result is that people who are desperate for work might decide to start a business to make ends meet. But, as soon as they find a job, they abandon their entrepreneurial ideals.

More and more people are faced with this reality, as corporate South Africa is shrinking due to financial pressures and international competition, and as an ever-increasing wage bill hampers Government’s ability to continue providing.

I regularly meet business owners who struggle to keep their businesses afloat. While there can be multiple reasons for this, the fact is that business owners take responsibility for many roles in the business. They are often good at what they do as far as their trade or profession is concerned, and this is where they will spend most of their time. It’s their area of comfort. But, it will only take the business so far.

Business owners, critically, are also the ‘rain makers’ or deal flow creators of the business and they need to be able to step up to the plate on this front if they are at all interested in growing their business and in surviving.

For example, many business owners will say that they hate selling, yet they are and need to be good sales people, irrespective of their personal preferences and personality traits. They are also ultimately responsible for overseeing the management of the business, i.e. its finances, people, systems and processes, yet few may have formal business training or even prior experience to equip themselves for these tasks.

While many will wish it was different, the reality is that these tasks can typically only be handed over when the business gets bigger and is able to afford the appointment of skilled resources to assist with some of these responsibilities. Until then, the business owner is the proverbial “chief, cook and bottle washer.

To overcome these realities will, amongst other things, require far more focused entrepreneurial education at school and tertiary level.