Starting and succeeding in small business is a huge gamble, but the risks can be hugely reduced with proper training. That – and not red tape or running interference – is what government should do to fire the booster rockets on our economic crisis.
I boarded the BA jet for Johannesburg and discovered the airline had put Trevor Manuel and I next to each other again. He groaned when he recognised me, but thankfully with a smile on his face.
The conversation over the next two hours ranged from why cabinet didn’t move MPs out of those cream-coloured plywood houses in the burbs into town, to how to grow the economy. I put it to Trevor that we need a vehicle in SA to turn those one-woman spaza “shops” or tomato-and-potato stores into “Greek style” corner cafés. I suggested government should support these mini-entrepreneurs by helping them up to the next level through training and perhaps micro-loans and so on. Each corner café could employ three or four people instead of one and cumulatively, across the country, if you do that with kerbstone hairdressers, backyard mechanics, and so on… it results in a small business revolution which unlocks a portion of our giant unemployment problem.
Trevor disagreed: “The skills needed for a small business are quite different to those employed by hawkers, shebeens and spaza owners.” And therein lies the profound difference in approach to economics and the South African unemployment problem.
Of course Trevor is partially correct. Different skills are needed and going up a level means more than just more stuff. It involves a whole new way of managing. But the real difference between Trevor and I on this issue is the approach. I believe it can be done and that government is essential in creating the environment. He does not… at the moment.
I have run or helped run two small businesses. As a child I always wanted to and my dad was a bit nervous that I could go bankrupt, so I started when I was much older. I wasn’t always successful, but I have realised that I now no longer trust people who have never failed. They don’t know how to deal with those who struggle and you never know what they will do in a crisis. I did learn what the basics of business are all about. I remain quite convinced that the basics of small business can be taught to someone who has taken the first step and started a little something. I am not sure that you can teach the will to try, but you can certainly steer a moving ship in the right direction.
It’s rather like the one-day MBA or the one-volume MBA. You can essentially package the principles of an MBA like that because the basic principles are simple. In the same way you can develop a basic business kit for a one-man business to grow it into something bigger and more stable. South Africa has many great minds and developing such a kit is the easy part. In fact, most business schools already have the makings of such a kit – it’s essentially an MBA students varsity assignment.
Elements are simple: sales, managing cash, managing stock, bulk buying, managing credit, limiting expenses and finding improved premises.
The question is whether government should be involved in all or any of these – and that’s a question of policy. Generally I favour less government interference. The less regulation of small- and micro-business, the better. If we could cut red tape for small businesses, we will make it much easier for tiny spaza shops to become corner café’s without lots of documentation to fill in, taxation laws to abide by and the like. Government should, therefore, cut its involvement at that level. Let micro-enterprises simply comply with occupational health and safety requirements and register as a business – which could be one form and no more. This means no skills levy, no VAT registration at low levels and so on.
The area where I believe government should be more involved is with the education and micro-finance type of support, but in as direct a way as possible. We don’t need another wasteful Seta-style bureaucracy. We do need a quick way to obtain mini-courses on turning your spaza into a corner café or your kerbstone hairdresser into a small salon and quick, simple access to micro-finance to get it going. Perhaps the old style Small Business Development Corporation mini-office or mini-retail space could also be incentivised by the state in township areas.
Walking the streets of Alexandra, in Johannesburg, I see entrepreneurs all over the place. The last time I noticed a trailer with row upon row of wire cages with live chickens for sale. Standing rather like a bank of television sets in a hi-fi and appliance store, one can choose one’s live lunch and make a purchase or have it gutted. Imagine if we could help this type of businessman get a lift to the next level? Of course, many of these store owners currently illegally use electricity, water and so on.
But this is actually a global phenomenon as Stewart Brand says in his article on urban squatters:
“But the outlaw citizens find themselves in a cash economy at last, and it is vibrant. Every lane among the shacks teems with food stalls, cafés, hair salons, clothing racks, temples, health clubs, and mini-shops selling everything. Cell phones abound. Most of the economy is ‘informal’—no deeds, no licenses, no taxes. Everyone works, including the children, many of whom are also getting some education, often from private informal schools. Rupee by rupee, shilling by shilling, peso by peso, real by real, squatter families are working their way up in the world.”
Now, imagine if the government brought them into the small-scale formal economy and provided some basic business training? I am sure we will convert Trevor eventually. Now where do I send that party membership form? DM
Ollis is a DA MP.
Ian Ollis, Joined the DP in 1999 and worked as a volunteer before being elected to political office in 2005. He was elected MP for the Democratic Alliance in 2009 and promoted in 2010 to take the position of Shadow Labour Minister. He has formerly lectured at Wits University, founded a small real estate business and worked as a Christian Minister. He lives in Craighall Park and has no dogs!