By Boitumelo MofikoeLarge global organisations that have been born from Africa include Shoprite, MTN, PSG, to name a few. It is almost impossible to comprehend that all these highly successful companies were once small businesses started by entrepreneurs with drive and purpose.
So why then are today’s entrepreneurs caught up in being seen to be wealthy, as opposed to building real wealth – sustainable wealth – wealth that is a legacy for generations to come? The kind of legacies that are written about in economic text books and magazines.
Looking beyond the here and now
Owners of small and medium-sized businesses get stuck in a cycle of paying for the luxury home, German automobiles and branded clothing. We want to be seen and start talking about the fourth industrial revolution, without understanding that we are living through the third industrial revolution.
The rate of change in the economy has become so rapid that businesses with the best products, well-executed marketing strategies and ample funding, are fast becoming irrelevant if they cannot find agility and innovation in their sector.
Key factors to grow a small or medium-sized business are simple
Firstly, it starts with identifying a need and fulfilling that need in a specific market. The trick is to scale the business model to a point where the owner is no longer the person solely responsible for all the functions of the business.
Secondly, the owner then needs to make the transition from being an entrepreneur to a business leader. The difference being, as a business leader you are no longer relying on an entrepreneurial spirit and creativity to build a business. You are now managing systems, processes and people in order to build a high-performing, sustainable enterprise. Very few entrepreneurs make the switch from being an entrepreneur to a business leader and the majority who fail to make the switch, then hire competent CEOs or managing directors to help formalise the business and put the necessary structures in place.
A good example of an entrepreneur that made the switch from being an entrepreneur to a business leader is Bill Gates, the founder of Microsoft. He then progressed to be the CEO of the large multinational business. An example of an entrepreneur who is infamous for not transitioning into a business leader, focusing on a single business is Richard Branson. More often than not, he starts different businesses and hires competent management teams to take the businesses to the next level.
Dodge the smug bug
Most businesses fall into the trap of becoming too comfortable, complacent even. At this point, they either stagnate or shrink and ultimately fail, or they innovate and grow. The potential risk of staying small is that your business is likely to be taken over by the bigger companies through consolidation.
The other possibility is that you simply won’t have enough financial muscle to compete with the bigger players. As a result it becomes almost impossible to service large orders and scale the business. Finally, businesses have to let go of the notion that there is a finish line or final destination. The perfect business motto is “imitate, iterate, innovate”. Once you have completed this cycle there are only two options – stagnate and die or start the entire process over again.They must be agile. The only businesses that stand the test of time and are able to take on global players are those who are constantly changing and updating themselves.
Focus on growth
With our low to zero growth economy, larger companies are often seeing a decline as opposed to growth. Responsibility for stimulating growth in the economy and providing employment has fallen squarely on the shoulders of SMEs. Some have gone so far as to say that by 2030, 90% of new jobs will be created by SMEs.
In a disruptive world where markets are continually changing, businesses that are not constantly evolving, innovating and reinventing themselves run the risk of being disrupted and completely taken out of the market.