There is constant talk of supporting small business. I agree; it is a good thing to do. However, this needs some thought. Small Business Development Minister Lindiwe Zulu recently introduced Operation Vula to stimulate entrepreneurs.
So, let us ponder some of this. An entrepreneur is somebody who goes out on a limb to start something new. Usually, the person has dreams of doing very well in due course. So, if an entrepreneur does do very well in due course, he or she must not be criticised for it.
At times, I see some entrepreneurs battle for ages, and then the person hits the jackpot and lands a major contract. A number of times, what happens is that people respond by saying that he should not be allowed to hit the jackpot and that this should be stopped or curtailed.
It is true that entrepreneurs and small business, in general, often battle to be paid by larger organisations. Much of the time, this is just red tape or a lack of empathy on the part of the large originations.
If a small business is owed, say, R50 000, often the large organisation thinks nothing of saying “We are breaking for the Christmas holidays; we will pay you at the end of January.”
The other unreasonable thing that happens is a blind application of laws when this is not necessary. Do not misunderstand me – I am not advocating that one break the law. A while ago, I was giving strategic advice to a small startup. An electrical engineer and a mechanical engineer went into business together. They found an old factory building and signed the lease. Then started a saga. The municipal inspectors arrived and failed the electrics for silly things like the electric plugs being at the wrong height. The factory had operated for years with that plug configuration, but the inspectors said that all the plugs were a few centimetres too low. Some electrical connections had been installed by the electrical engineer. I checked them myself, and I know what I am doing in that area. But they were failed for silly reasons like standard plastic tubing not having been used.
Then came other inspectors who failed all sorts of other aspects. I looked at them myself and there were no safety reasons to justify it. All this added to the budget, which had been small, to start with.
We are told that government is setting up procurement dynamics to spend 30% of the procurement Budget on small business. That is positive, but there is a danger. Small business must be genuinely competitive. You cannot have a situation where a large company supplies chairs at, say, R100 each and a small company comes in and offers the same chairs at, say, R150 each and gets the contract. That creates avenues for fraud because it gives too much purchasing latitude to officials, based on their personal emotions.
Related to this point is something that I have found: middle-ranking procurement people in large organisations go into a defensive position by buying from a big company. They say: “If I buy from a large established company, then nobody can blame me if something goes wrong. However, if I buy from the small guy at a cheaper price for better quality and something goes wrong, then I will be in trouble for showing initiative.”
There are quite a few small companies that I know of that are battling to get going for the types of reasons that I have mentioned.
So, somehow, we need to have some purchasing decisions made by people who really understand what they are buying because they have knowledge of the product.
I have come across instances where people have been buying items for years but have never ever seen one and they do not know what it does. They just buy according to a code number.
So, I definitely support the stimulation of small business. That means business which has a new-image product, or one which can demonstrate improved quality or service.
We need to do it, but it is not that easy to implement. So, do not just give the responsibility to a junior clerk.