Small businesses have a tide to catch
In a scene from William Shakespeare’s Julius Caesar, Brutus and Cassius are discussing the final phase of their civil war. Cassius has been urging that they group their forces and take advantage of a secure location to catch their breath. Brutus, however, advocates heading off the enemy before it can recruit more men.
“There is a tide in the affairs of men, which taken at the flood leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat and we must take the current when it serves or lose our ventures,” says Brutus.
According to eNotes.com, what Brutus is saying is that power is a force that ebbs and flows in time, and one must “go with the flow”. Waiting around only allows your power to pass its crest and begin to ebb. If the opportunity is missed you’ll find yourself stranded in miserable shallows.
President Cyril Ramaphosa referenced this masterpiece scene in his keynote address at this year’s Black Umbrellas National Enterprise Development Awards as he highlighted the need for entrepreneurs to seize the moment to further propel their businesses to greater heights and not miss the tide they now find themselves on.
The enterprise development incubator backed by the president from his time as a businessman continues to support more than 200 black-owned businesses across the country through incubators in every province. Every year, they gather and recognise the top businesses in all of these incubators. It was inspiring to see so many of our people who started with nothing share their stories of building businesses from a couple of hundreds of thousands in revenue to hundreds of millions.
One company in particular caught my attention. Debar Ceramics started just five years ago in Lephalale, Limpopo, in the non-ferrous wear-resistant materials market, more specifically in sales, installation and maintenance.
Debar won the Most Jobs Created award, which in my opinion was the most important award of the night. The company’s CEO spoke passionately about the teamwork that had been created over the years and how, as a result of it “catching the tide”, Debar created 169 jobs in 2017 alone. As Emmanuel Mdhluli, chief operating officer of Black Umbrellas, pointed out, this small business from rural Limpopo supports more than 1 000 South Africans.
As a country we have our own tide to catch. That is the opportunity presented by government policy to drive enterprise and supplier development, which gives opportunity to small businesses, especially those owned and managed by black people. If only the gatekeepers saw the “flood of opportunity” that could so easily “lead to fortune” for all South Africans.
The development of Germany’s small and medium business sector, known as the Mittelstand, following World War 2 offers educational insights into the impact of this sector. These small businesses contribute more than 52% to the total economic output of Europe’s largest economy.
The Mittelstand is responsible for about 60% of all employees in the country that are contributing to social security — higher than countries such as the US, the UK and France. These typically family-owned businesses account for almost 20% of German total exports, and their training programmes and employment opportunities result in low levels of German youth unemployment as they employ more than 80% of graduates.
Eight years ago there were 3.7 million registered companies in Germany overall — 99% of these were classified as belonging to the Mittelstand. From this it can be seen that small business is an effective mechanism to drive economic growth, and in our context, employment and inclusivity in the world’s most unequal society.
A key challenge in South Africa is the relatively poorly supported and somewhat fragmented ecosystem in the small business sector, where there are 100 incubators and everyone does their own thing with limited success. The opportunity that beckons is better co-ordination and greater leadership by the government in driving more incubation across the country and, as Ramaphosa stressed, especially in the townships.
In the German example, it is the small business sector that supports the larger business sector domestically, and, indeed, in export markets, thus leading to a healthy relationship between the two sectors. In our country, large business dominates the economy and suffocates the small business sector and its ability to make a meaningful impact.
There are inadequate support mechanisms in South Africa to allow for a thriving small business sector.
The good news is it’s not too late.
Flood of opportunity could lead to fortune for all South Africans