A lack of skills, not funding, was the reason why many small, medium-sized and micro enterprises (SMMEs) failed, said University of Pretoria professor Jurie van Vuuren on Friday.
Speaking at a Small Enterprise Finance Agency (Sefa) roundtable dialogue at the Industrial Development Corporation, he said many new small business owners required motivational, entrepreneurial and business skills.
He also noted that keeping small businesses “alive” with tenders was unsustainable and a contributing factor in business failures.
A tender should be used as a springboard, with SMME owners expanding and attracting other customers to prevent business closure or the need for another tender once the initial tender was complete.
Companies undertaking tender work tended to skip the start-up, early growth, rapid growth steps and move straight into the maturity stage.
Van Vuuren said the development of a start-up was an essential experience that added the skills and knowledge required to move the business forward.
A successful landscape of sustainable businesses could not be built without the business working through the life cycle of the venture, he stressed.
Skills were also required for the management of finance, he said, as many SMMEs did not know how to handle the funds, leading to awaste of funds that could have been distributed elsewhere.
Sefa aimed to approve R815-million for 15 129 SMMEs for the 2013/14 financial year, up from the R560-million approved last year.
The firm believed this would aid in the creation of 18 311 jobs.
The amount approved would then increase from more than R1-billion in the 2014/15 financial year, distributed to 18 832 SMMEs, to R1.3-billion spread to 22 792 SMMEs in 2015/16. This was expected to create 22 489 and 27 508 jobs respectively.
By 2016/17, Sefa would approve R1.5-billion, which would increase to R1.76-billion a year later. About 28 428 and 34 156 SMMEs respectively would benefit, while 33 204 and 38 909 jobs would be created, respectively, in each year.
Van Vuuren commented that it was not “necessarily true” that creating SMMEs would create jobs, explaining that not everybody was entrepreneurial and able to push the business to the next growth phase, which is what created jobs.
“South Africa is not an entrepreneurial nation,” he said, noting that South Africans preferred “real” jobs.
South Africa’s early-stage entrepreneurial activity rate was currently 9.2% – a significantly lower average than Brazil, which reported an early-stage entrepreneurial activity rate of 40%.