According to the Global Entrepreneurship Monitor, only 31% of South Africans believe they have the knowledge and skills to start a business. How important is education in driving entrepreneurship?
It’s critical. I believe a three-pronged approach is needed: re-educating current entrepreneurs who have owned their own businesses for two to three years and need to move to the next level by doing things like creating a marketing department, sorting out operations and putting more sophisticated budgeting processes in place; reaching the youth in general, and unemployed black graduates in particular; and fostering entrepreneurship within the universities in departments such as engineering, architecture and law to make students aware of the possibilities open to them – it’s an initiative that has worked really well at institutions like Stanford and Massachusetts Institute of Technology (MIT).
What are the biggest shortcomings in secondary and tertiary education in this country when it comes to preparing people to run their own businesses?
We need to bear in mind that it’s never too early to start educating entrepreneurs. In countries such as Malaysia, it starts at primary school. We have some private schools which incorporate entrepreneurial education into the curriculum at grade 7 level with simple assignments that teach children how to think about business at a really practical level and we need more of these to be put in place.
At tertiary level, the biggest problem is gaining access to support. At MIT, entrepreneurship is encouraged through education and research, business and technology partnerships, and a community spirit that brings together academia, government, business leaders and the entrepreneurial community. This creates an entrepreneurial ecosystem, which is something that is missing in South Africa. We need to create one-stop shops where entrepreneurs can access training, mentors, research, funding and investors. Overseas, these types of ecosystems are often built around universities.
Do organisations that provide funding to develop entrepreneurial businesses really offer enough training, mentorship and support?
There is definitely room for improvement. Again, there is no support network in place. These types of organisations need to focus on creating entrepreneurial ecosystems for their specific target markets – if you need a million to start your business, you’ll go to the IDC, whereas the newly formed National Youth Development Agency (NYDA) provides funding on a much smaller scale.
How do we develop an entrepreneurial ecosystem?
Business is already required to become involved in entrepreneurial development as part of the BEE Codes. The Anglo Zimele programme is a great example of what business can do to promote entrepreneurship. It’s an investment fund which provides loan and equity finance to support start-up or expansion businesses and it looks for investment opportunities at operating divisions.
South African Breweries is another; the company makes beer but it has recognised that it does not need to own the trucks that transport it, nor the taverns that sell it. As a result SAB has enabled the development of a number of small enterprises that take care of this side of the business.
Truck drivers and tavern owners in turn support entire families. This is how ecosystems are created – by empowering suppliers. Mid-size businesses may not have the same opportunities open to them, but they need to look at outsourcing models that empower their suppliers.
How important is financial knowledge for entrepreneurs?
There is a link between financial know-how and business success, but at start-up level passion, motivation, hard work and self-reliance are equally important – it’s a lonely journey. That said, growing a business requires you to constantly refine your business model – and what is a business model if it’s not about finance?
That’s why companies with a four- to ten-year history are generally headed by people who have sound financial know-ledge and have undergone some level of training.
Banks interrogate business owners and you have to show that you are knowledgeable about money. And while newer entrepreneurs are involved in every aspect of the business, more established ones need to remain so too. You can delegate functions to accountants and bookkeepers, but you must always remain part of the financial control mechanism.
What are some of the key fundamentals of a good budgeting process?
Understand who your customers are and stay close to them. Understand your financiers and love your banker. Understand your competitors and know where your business is positioned in relation to them.
In a downturn, what’s most important is to stay afloat.
Create a budget that will enable you to survive the slump by controlling your costs and defending your revenues.
I also believe that businesses need to be careful about cutting to the bone as far as employees are concerned because you will need to be ready for the rebound, which is not that far away. Now, companies are cutting back on things like marketing, advertising and training. It’s appropriate to retrench when you are trimming costs, but remember that it’s often difficult to re-capacitate a business that has been drastically downsized. Is it not better to look at options like the three-day week?
That way, you don’t lose valuable people who you need to bring back into the business. I would advise companies to beware of jumping on the retrenching bandwagon. It can, however, provide a great opportunity to clean out the closet and get rid of underperformers.
How regularly should budgets be re-visited and what are the key indicators to focus on?
In the current circumstances, it’s best to look at the budget quarterly – check and benchmark the business’s actual performance versus the budget. Identify your biggest revenue drivers. Are your biggest cost drivers salaries, travel or entertainment? Where can you cut back?
Check your cash flow. Are you liquid? If not, stay close to your bank. What is your acid test ratio? Do you have enough short-term assets to cover your immediate liabilities without selling inventory?
The acid test ratio is a tough test that basically looks at what you can pay tomorrow, given what you have today. This is a critical consideration.
What are some of the best ways to align budgeting, sales and operations?
You have to take an integrated approach that unites vision with strategy. Once the budget is in place, look at what operations you need to achieve that budget, and then look at your marketing. It’s never easy;
vision can often run ahead of operations, or operations can become an impediment to appropriate market response.
What lies ahead for our economy?
South Africa has done very well in not being directly impacted by the global recession, but we have been affected nonetheless. I do believe, however, that we are seeing the bottom of the recession and all leading indicators are beginning to turn. The economy itself has not yet shifted, but we can expect full recovery by 2012. I would have said 2011, but the oil price remains worrying and will delay the upturn.
Where do the opportunities lie?
There are many opportunities for business in this country. Entrepreneurship represents our future beyond BEE. Where BEE was and is necessary to shock and propel our society in a specific direction, we need to start looking at what’s next. The momentum has been created and many sustainable black-owned businesses have been developed. We now need to take what we have learnt and get people to move into sectors that do not require a lot of capital, such as retail and catering, for example.
Fortunately, South Africans are entrepreneurial by nature. It goes back to where our society comes from, which is a culture of self-reliance. That’s why South Africans succeed abroad – we have grit.
We Need To Unite For A Better Entrepreneurial Future!
Here are my key entrepreneurial tips from The Passport Showcase.
In our modern world, where nationalists walk the street and xenophobic beliefs are on the rise, as a Zimbabwean serial entrepreneur and motivational speaker, I’ve identified that we need to bridge this division and unite us all through celebrating our diversity.
We need to come together not because it’s the right thing to do, but because united, we can work towards a profitable future. However, before this can happen, we need to change the global mindset. That’s why I transformed my book The Passport into a showcase in which performers from across the continent took part and showed off their talents.
While preparing for the show I noted some important lessons that I learnt along the way. Here are my key entrepreneurial tips from The Passport Showcase.
Success can’t happen in a vacuum!
Setting up The Passport Showcase took a lot of collaboration. As an entrepreneur and a believer in a united Africa, I’ve learned you can’t operate a successful business if you’re not willing to work and deliver services to everyone. It’s for this reason I invited fashion designers, artists, and dancers, to come together and educate us about the dangers of xenophobic beliefs through their art forms.
We need to be able to blend skills and overcome our preconceived notions, in business and the arts, so that we can achieve great things.
Education is the key to every problem
It’s a part of starting any business; educating the public about your company and quickly converting them into consumers. Arguably the same was true of the showcase, creating a truly unique experience to inform the public about celebrating diversity.
Helping individuals understand that acceptance is key for a better future is critical for business expansion. If any of us want to expand our businesses, we need to be able to engage with different markets – who won’t chase away the unknown.
Identifying a new opportunity is one of the fundamental building blocks for a new business. Finding unique solutions is a truth that echoes across corporate industries and the arts. But change can cause concern and adverse reactions.
On our continent, ideas that disrupt the norm are needed to catapult our brothers and sisters to a brighter future. But this can only be achieved when we celebrate our diversities and collaborate.
9 Ways To Elevate Your Small Business To The Next Level
The South African economy is strongly supported by the nation’s entrepreneurial spirit, which encourages a culture of growth and development in communities.
With the unemployment rate currently at 27.71%, people of all ages and backgrounds are looking for an opportunity to work.
Although many entrepreneurs have enjoyed great success on their small business journeys, choosing to start your own business comes with many risks. One of these risks is the financial burden it can bring. While there are various challenges faced by small businesses, it is possible to overcome these and jumpstart your business with these useful tips from FedEx Express, the world’s largest express transportation company.
1. Connect with customers
As a small business owner, it is important to know who your customers are, where they spend their time, what they are looking for and how your business can meet their needs. Times have changed and waiting for customers to come to you is no longer a feasible business strategy. In today’s evolving business environment, entrepreneurs need to be approaching their customers and building strong relationships with them to form a lasting impression. If your small business cannot grow its customer base, it cannot grow profits.
Attending networking events will allow you to find professionals and other small business owners who offer services your business may require. Many small business owners get this critical aspect of starting a new business wrong by networking purely to gain customers, not realising that networking with other business can assist you in acquiring the services you need to continue the growth of your business. Small businesses have a lot to gain through networking at the right time and at relevant events.
3. Use social media
There are a number of social media networks and social networking platforms that can drastically grow your business, however, it is important to understand your customers and identify the channels they prefer to communicate on. By implementing a comprehensive social media strategy, you can ensure social media works as a driver of new business that positively promotes your service offerings.
4. Build customer loyalty
Building customer loyalty begins with great customer service. Great customer service starts with a positive customer experience and first impressions are vital in this regard. If a customer has an enjoyable experience when using your services, it is likely they will return and use your services on an ongoing basis. By ensuring your business has a user friendly website and informative brand collateral, new business prospects will increase and those who have experienced quality customer service from your business are likely to refer you to friends and colleagues.
5. Ask for help
All small businesses face challenges, particularly in the early operational stage. This is why asking for help from your peers/mentor who may be more experienced than you is critical. Tapping into the mind of someone with more experience and a broader knowledge base will ensure you learn and acquire the skills needed to make a success of your business. The FedEx Small Business portal offers business owners useful advice that will assist you on your small business journey. Visit www.smallbusiness.fedex.com for tips and success stories that will inspire and help you to grow your small business.
6. Hire the right people
Each person that forms part of your business needs to share the same vision with you that will drive growth. Your workforce will be responsible for the success of your business therefore, ensuring your staff remains motivated is important. When hiring a new employee, implement a check list that includes traits that you feel are imperative to the culture of your business.
Asking out-of-the-box questions in the interview will also assist you in determining if the potential employee is a suitable candidate to fill the open position.
7. Manage cash flow well
Many small businesses close due to cash flow problems. Managing money spent versus money earned is critical as it provides you with a clear indication of whether your business is running at a loss or whether you are excelling. If your small business is losing money, you can implement a strategy to iron out the issues that are contributing to this and identify ways that will ensure your business generates profits.
8. Work to build success
Work to make a success out of your business with your employees by being involved in the everyday activities that are critical to your businesses success. Being involved will ensure employee morale remains high while allowing you to identify areas that need improvement.
9. Find inspiration
There will always be someone who has been in your current position, even if it is a different business to yours. Learning how they made a success of their business during hard times will provide you with the knowledge you need to succeed as a business owner. Starting your own business is a learning experience made easier by speaking to others who inspire you.
A business can safeguard its success if it continues to innovate. For example, e-commerce has changed the way the world conducts business, and the rise in technology has made it easier to interact with customers quickly and across borders. With economies becoming more interconnected, companies large and small are now able to access markets that were previously unattainable. E-commerce will assist small businesses in establishing their territory in the market and as a result, guarantee growth and longevity,” concludes Higley.
How Algorithmic Forecasting Can Improve Business Efficiency In Challenging Economic Times
Harnessing the power of predictive analytics, in-memory computing, and artificial intelligence to forecast risks will help entrepreneurs stay ahead.
The ability for businesses to accurately predict risk and develop insights has traditionally involved manual drudgery, spreadsheets, and been confined mainly to the finance department.
With the advent of new technologies such as predictive analytics, in-memory computing, and artificial intelligence (AI), smart Chief Finance Officers (CFOs) are harnessing their power to automate the process, free up human capacity, and get deeper, more accurate insights.
The success of any business, from small start-up to large enterprise, depends on how accurately they can predict future performance, as well as recognise and respond to warning signals.
Deloitte recently launched a report titled Forecasting in a digital world, the sixth in its Crunch Time series for CFOs, which delves into the advantages of algorithmic forecasting and why it will change and challenge the way businesses look at and consume data.
There is a shift away from having people gather, compile and manipulate data, to handing over the menial work to the machines – which employ data-fuelled, predictive algorithms to sift through historical data and use statistical models to describe what is likely to happen in the future.
It is a process that relies on warehouses of historical company and market data, statistical algorithms chosen by experienced data scientists, and modern computing capabilities that make collecting, storing, and analysing data fast and affordable.
Algorithmic forecasting is a well-oiled machine, with more than 80 percent of the work happening automatically. Every piece of financial data a decision maker could want is available on their device and all they need to do is ask—literally.
How it change the workforce
While it seems like the machines are taking over, humans are not left entirely out of the process. The success of algorithmic forecasting depends on collaboration with the machines and among people from different teams, including finance, data analytics, and business.
The business finance talent model should evolve to keep up with changes in how work gets done and that will likely require a different mix of people than what organisations have in place today.
However, once they hit their stride, these teams can move across the range of forecasting needs, embedding capabilities in the business and driving integration. These teams are integral to establishing an algorithmic solution that can work for the business, bring insights to life within the organisation, and support continued business ownership of the outcomes.
How it changes the workplace
The new teams required for algorithmic forecasting to succeed and the pulling of human resources from other departments will need the workplace to evolve into a more collaborative space, banishing outdated silos.
Forecasting is not limited to finance but all functions, from marketing to supply chain to human resources – basically all functions that need to predict the future to drive important decisions.
While CFOs may not lead function-specific forecasting, they should help shape these forecasting initiatives since finance will inevitably use the outputs they generate.
A shared forecasting infrastructure — even a physical Centre of Excellence (CoE)—can help improve collaboration and coordination while providing efficiencies in data storage, tool configuration, and knowledge sharing.
The beauty of algorithmic forecasting is that once the work is done to solve one specific problem, the same process and capability can be extended and applied in other areas.
Algorithmic forecasting doesn’t create anything out of thin air and it doesn’t deliver 100% precision. However, it is an effective way for getting more value from planning, budgeting, and forecasting efforts.
A commitment to algorithmic forecasting is both cultural and statistical. Making it happen involves people working with technology – neither is enough on its own. Every company will make its own unique journey from its current approach to planning and forecasting to an improved approach.
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