Too many rules bad for would-be entrepreneurs
SOUTH Africa has punched above its weight when it comes to building world-beating conglomerates, but too many new rules threaten to stifle this achievement.
This was the message from top entrepreneurs this week, speaking at an event hosted by healthcare giant Discovery.
Bidvest founder Brian Joffe, who reinforced his reputation as an accomplished deal maker in the past few weeks by gaining control of struggling pharmaceutical giant Adcock Ingram, didn’t beat about the bush: what destroys entrepreneurship is too much governance and regulation.
He said that to keep the spirit of entrepreneurship thriving at Bidvest, the company gave its 3 500 decentralised business units the power to make their own decisions. Each unit, he said, was aware of its own contribution.
Of course, Joffe’s discussion wouldn’t have been complete had he not shared his secrets for spotting a good deal.
Bidvest, he said, tried to buy companies that were overstructured and centralised, with too many management layers. Adcock Ingram, once controlled with an iron fist by Tiger Brands, was a clear example.
Joffe said the best way to become an entrepreneur was not through study, but through learning on the ground.
He was promptly contradicted by JSE chairwoman Nonkululeko Nyembezi-Heita.
Nyembezi-Heita, the outgoing CEO of Arcelor-Mittal SA, said training and education had a vital role to play in stoking entrepreneurship.
Laurie Dippenaar, who founded banking giant FirstRand more than 30 years ago with Paul Harris and GT Ferreira, provided some insights. FirstRand has been the launch pad of some of SA’s most innovative businesses, including OUTsurance and Momentum.
One of the big barriers for entrepreneurs was getting access to funding. Dippenaar said family and friends often provided the seed capital.
“Once you have a bit of a track record then the banks will start coming in,” he said.
Joffe’s response was that provided there was a good idea there would always be money, but the trick was to keep the concept simple. Many people got “noughts panic” when there were too many noughts at the end of a number, and then got lost. “It’s no different to doing your budgeting at home.”
He said the best option for an investor would be not to start the start-up, but to buy the startup. It’s the guy who gets the second pick of the cherry, said Joffe, who made huge wealth by buying businesses from people struggling to unlock value.