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Red-tape is dampening SA's entrepreneurial spirit

11 December 2017

± minute read

    Red-tape is dampening SA's entrepreneurial spirit
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South Africa boasts some of the best-known entrepreneurs. However onerous compliance processes and rigid legislation tend to dampen the entrepreneurial spirit needed to get people employed and the economy growing. Dr Jopie de Beer, CEO of the JvR Africa Group, says some societies are considered naturally entrepreneurial. The jury is however out on how many South Africans are entrepreneurs by nature or by choice. “As South Africans, we have a reputation for being innovative, problem-solving oriented and able to fend for ourselves. These attributes can sit well with entrepreneurship. I think it could be in our makeup to be entrepreneurs, but the environment needs to allow for that.” She refers to statistics which show that between 70% and 80% of all entrepreneurial businesses fail in the first five years.

Why so many fail

Dr de Beer says there may be many reasons why entrepreneurial businesses fail. It could be related to the very flat economy, difficulties to obtain funding-, mentoring and support, excessive red tape, turbulence in the exchange rate and/or slow payments from government and the private sector for products/services provided. It may also be that assumptions about entrepreneurs are “off the mark”. Some believe that having a good idea and adequate funding will guarantee entrepreneurial success. This assumption does not reflect in reality. Entrepreneurial businesses require knowledge and understanding of finances, business plans, marketing and networking initiatives, good products, innovative ideas, client management processes, technological savvy, compliance with legal requirements and more. Much of this, in the early stages of entrepreneurship, is guided and managed by the entrepreneur. The hardwiring of the entrepreneur and the people he/she surround them with is critically important in the growth- or demise of the business. “Entrepreneurship is probably the most stressful career option one could choose. Many people, if they have a choice between a stable, seemingly secure income, or the extreme hard work and risk that comes with establishing an entrepreneurial business, will go for the secure job,” Dr de Beer points out.

Why we need more entrepreneurs

The unemployment rate, especially under South Africa’s youth, is alarmingly high. One would think that entrepreneurship should be the answer to address this, and that more opportunities for more people are created to start a business. Establishing entrepreneurial businesses however require that the business environment is supportive and that the entrepreneur as a person has the knowledge, competence and resilience to make it work. “I can only hope that the massive issue of growing unemployment and the social evils associated with that, the personal issues in terms of self-regard and self-pride and the enormous negative implications of not being able to earn an income will bring insight and willingness to make South Africa an entrepreneur-friendly country,” Dr de Beer says.

The making of an entrepreneur

There are entrepreneurs by choice (the passionate and the serial entrepreneurs) and then there are those who have been pushed into it because there was no other choice (the survivalist). “It is essential to regard the entrepreneur as the golden thread in the business,” Dr de Beer notes. It is the entrepreneur that initially takes the decision to start a business, to identify/construct/innovate a product, to believe in it to such an extent that they work 24/7 to ensure its uptake in the market. The entrepreneur is also a leader, shows good/bad judgment in selecting products and partners, makes business decisions on spending, cash flow and expansion, employs staff and has to keep them engaged and motivated. Psychometric assessments are valuable tools to identify, support and develop entrepreneurs. The purpose of these assessments includes providing the entrepreneur with the required self-insight to constructively manage his/her role in the business. In addition, Dr de Beer says it is helpful to take a “helicopter view” of yourself. “Think about how you feel when you have to perform certain tasks. When do you procrastinate, on what do you spend a lot of time, and what do you enjoy doing”.

Role of government

Dr de Beer urges that government has to be more flexible on issues of governance and red tape for entrepreneurial businesses to survive those initial five years. Entrepreneurs need an environment where there is economic growth, political stability and the necessary infrastructure (such as affordable internet access) to thrive. It is essential for governments to nurture entrepreneurial activity as this is a source of employment and of generating income through taxes.

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