Too many would-be entrepreneurs are the architects of their own business failure, with traditional small grocers a classic example of where some South Africans are going wrong, business experts said at the official opening of the annual Small Business Expo and #BuyaBusiness Expo in Johannesburg today.
But there is hope for local entrepreneurs to grow sustainably – even in tough times.
A panel of small business experts and entrepreneurs speaking at the opening noted that with South Africa facing a slow – or no – growth economy, it was more important than ever for small businesses to change their mindsets and become truly entrepreneurial.
Panellists including marketing guru Sylvester Chauke, respected economist Xhanti Payi and Marang Marekimane, founder of Business In Theory, highlighted traditional small grocers as an example of businesses failing to move with the times and respond to changing market needs. “In tough economic times especially, small businesses have to be flexible and add value. They cannot keep resorting to the old tried and trusted approaches to business,” said Marekimane.
“They need to look to new methods of procurement, collective buying to lower costs, new ways to add value.”
Payi added that these traditional stores faced competition from entrepreneurs who saw market needs – for example for groceries packaged in smaller, cheaper volumes, and addressed that need.
“Business owners have to focus on value. They cannot expect the community to support them if they do not meet the needs of the community.”
Drivers of growth
The need to offer real value and service, meet the needs of the market, and adapt to a changing environment emerged as key drivers for business sustainability and growth. On the other hand, the entrepreneur can be the single biggest factor causing a business to fail, they said.
“It’s not enough to say ‘I want to start a business’,” said Payi.
“Not everyone can or should start a business. You have to start by identifying a market need or problem, determining whether you have the ability to solve the problem, and then preparing adequately to take the leap.”
“We see many would-be entrepreneurs stuck wanting to open their own businesses, but not moving to do so. People have to be observant about their environment so they can identify the market needs and then seek knowledge about how to launch a business that addresses those needs,” said Marekimane.
Chauke noted that the top challengers in the Eskom Business Investment Competition (BIC), staged ahead of the expo, had overwhelmingly shown a services mindset that added value and met market needs. “In the competition this year, the services and trade category was buzzing. It’s an indication that in tough times, successful businesses find ways to add value and make the client’s budget go further.”
Business owners risk undermining their own businesses by over-extending themselves on financing; paying themselves too much, too early, or by failing to be flexible, the speakers advised.
Adding value, through innovative or additional services, and knowing the value of the products and services supplied, is crucial, they noted.
“Business owners have to put a lot of emphasis on the numbers. They need to know when to turn work down if it’s not viable or profitable.”
“And when determining pricing, it’s a mistake for businesses to go into a price war. It’s a hole you won’t get out of, and you’ll just get a reputation for being cheap,” said Marekimane.
Networking and knowledge
Networking, marketing and knowledge are crucial for success, they noted.
“South Africans need to focus more on sharing knowledge and collaborating than competing,” said Marekimane.
“Entrepreneurs need to get out there and ask people for advice and input; they need to brainstorm with other people about how to address a market need and start a business.”