SAGE INTERNATIONAL’S IVAN EPSTEIN
‘How SMEs can boost big business’
Over the past two centuries, entrepreneurs have been responsible for innovations that have changed the way people live their lives and conduct their business. Ivan Epstein, CEO of Sage International, firmly believes that entrepreneurship is vital to the economy: “From electricity and the telephone, to the internet and social media. Good ideas, innovation and entrepreneurship are what truly fuel the economy.”
Epstein co-founded Softline – the company that developed homegrown accounting software products such as Pastel and VIP Payroll – in 1988. Softline was acquired by multinational enterprise software company The Sage Group plc (Sage) in 2003.
Sage is the world’s third-largest supplier of enterprise resource planning software (behind Oracle and SAP) and the largest supplier to small businesses. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index, with a current market capitalisation of about £5.4bn (R114.7bn).
Epstein’s entrepreneurial dream of enabling SMEs to grow took flight when Softline was acquired by Sage and became part of the group’s long and broad experience in the realm of SME development.
In addition to its range of software solutions, Sage provides user training to SMEs through its national training academy, and offers training in general business skills, such as tax year-end compliance, basic bookkeeping and financial literacy as well as HR management.
When Sage acquired Softline, Epstein was appointed CEO and today he heads up Sage’s businesses across Africa, Australia, the Middle East and Asia – all regions that include some of the world’s fastest-growing markets for business solutions.
Before this massive success, Epstein experienced the trials and tribulations of running his own business with Softline.
Though most believe the combination of a contracting GDP, the volatile rand, rising inflation and rising interest rates make it incredibly tough to run a small business, Epstein believes these tough economic times should not deter entrepreneurs.
Global Entrepreneurship Monitor research shows that small businesses are significant contributors to 50%job creation, creating of all employment opportunities in South Africa.
“Often great things are done in times of hardship. Recessionary times, for me, are often the best times to start a business, because of all the opportunities that open up. When things go well in an economy and profits rise, it can often be tougher to get started. I remember building my business [Softline] during the recession of the 1990s and the tough times did not stop us. We found ways to keep our business afloat. This sometimes meant that I had to work full-time to support my start-up, but when the economic tide turned we were established and reaped the benefits of our perseverance.”
Even today Epstein believes in running large multinational Sage as he did his small business.
“I always say, despite how big we get or how much money we make, we should always operate a large business with the heart of a small one; with the same drive, ambition, tenacity, urgency and hunger to achieve and innovate.” Epstein also believes company culture is important: “If you can take employees with you on your journey, and you engage the right people, your business will take care of the customers’ needs.”
Epstein’s own experience as an entrepreneur has enabled him to hire people with the same passion that strive to make customers’ lives easier, allowing them to focus on growing their businesses.
Global Entrepreneurship Monitor research shows that small businesses are significant contributors to job creation, creating 50% of all employment opportunities in South Africa. Currently, the SME sector accounts for more than 45% of the country’s gross GDP.
“So if we consider these numbers and increase the quantity of SMEs in any given country, the needle of economic growth will move in a positive direction,” insists Epstein.
Even government admits that without the growth of small businesses, the goals set by the National Development Plan (NDP) will not be reached. The NDP envisages that 90% of the 11m jobs targeted by 2030 will come from the SME sector. Deputy minister of small business development, Elizabeth Thabethe, recently said that it “is critical that both the private and public sector avail opportunities for small to medium enterprises so as to arm them to tackle the high unemployment we are facing as a country, and help create the jobs that our people need”. Epstein says it’s important for businesses – especially ones like Sage that have vast amounts of data on how SMEs function, as well as the knowledge of what they need to grow – to work with government to create a thriving SME sector.
“Large businesses have a huge amount to gain through a more aggressive focus on the development of the SME segment,” adds Epstein. “A stronger SME sector gives big business access to more customers, suppliers, dealers and outsourcing long-term partners. From the public perspective, an increase in healthy SMEs means more employment, a wider tax base and general prosperity i.e. a more stable social environment and a healthier economy. This is the ideal context for large businesses to operate in,” explains Epstein.
According to him, a helping hand from large business and/ or government can make the difference between eventual success and failure for SMEs, especially in their early years. “These are the times when cash flow is tight, and when the business is vulnerable, regardless of its longterm potential,” he says.
“Big businesses and government agencies can be incredible customers and partners for SMEs, if the relationship pays attention to their real needs and challenges. Our experience at Sage is that active support allows the SME to grow. The opposite, sadly, is also true. SMEs that don’t receive active support often just wither and cease to exist.”
Epstein believes a lot more can be done in terms of boosting the SME sector, from something as simple as paying an SME timeously, rather than at 60 days, to investing in mentoring and education and research programmes. He is passionate about this and believes business mentoring can make all the difference, “since most SMEs don’t have the HR, legal, marketing and taxation skills and resources that larger companies do”.
A recent survey by PwC found that access to markets, funding and revenue generation were seen as the three most significant commercial challenges faced by SMEs in the past 12 months. Epstein says that entrepreneurs should persevere when times are tough because often they give up without realising how close they are to success.
That said, recognising the importance of SMEs, and offering “the right kind of support from government and business could spark a significant change in the trajectory of the local economy as a whole”, concludes Epstein.
“The right kind of support from government and business could spark a significant change in the trajectory of the local economy as a whole.”
Ivan Epstein CEO of Sage International