By Annie McWalter, CEO of The Hope Factory
The recent creation by government of the Ministry of Small Business Development has been welcomed by the private sector as an opportunity to grow SMMEs, expand the economy and create much needed jobs in these challenging times.
We welcome Minister Lindiwe Zulu’s invitation for small business development institutions such as ours to send them feedback on the challenges that SMMEs are currently facing.
Our Enterprise Development organisation, The Hope Factory, has many years’ experience in this area as we have been mentoring all types of 51% black owned businesses below the R10 million annual turnover mark since Broad Based Black Economic Empowerment came into being.
We recently asked our entrepreneurs about the challenges they face and any suggestions they have for the new SMME ministry. They all said that easier access to finance for small business expansion is critical and the current criteria for finance is often too difficult to meet and ideally should be simplified.
In addition our polled entrepreneurs said there is too much red tape for small businesses and the excessive load of administrative and legislative requirements to conduct business takes too many hours away from core functions.
Other challenges include the very strict and inflexible labour legislation in South Africa and lack of resources for SMEs to get up to speed with complicated labour law. Each year the Council for Conciliation, Mediation and Arbitration (CCMA) hears more than 100 000 labour cases. This makes staff management challenging and can be an obstacle to maintaining consistent productivity.
Legal aid is often expensive and it can be very difficult to remove an underperforming employee in favour of a productive one. Entrepreneurs on the ground desire a more fluid regulatory environment, more conducive to a market environment requiring productivity and change.
Some suggestions that have come from The Hope Factory entrepreneurs for the SMME ministry to implement to assist and boost the small business sector include developing a centralised database or network of small businesses in the country to create linkages.
A reduction in the administrative burden for registration and company documentation and a reduction of the bureaucracy and red tape for small businesses would also be helpful. Free training and support for up skilling SMMEs on labour registration would also be invaluable according to entrepreneurs. Potentially reducing minimum wage for SMMEs to be able to provide more job opportunities was also identified as a sector expanding opportunity.
Entrepreneurs also want government to make tenders far more accessible for SMMEs and institute quicker payment cycles for small businesses of around 15 days. In conclusion, small businesses also want government to address access to funding difficulties and encourage more emphasis on entrepreneurship in schools across the nation.
We welcome this type of ministry as it is crucial to grow our levels of entrepreneurship in the country and reduce failure rates of small businesses. We look forward to the ministry listening to and acting to positively assist the small business sector while also creating employment and prosperity for our fellow South Africans.
Annie McWalter is CEO of The Hope Factory, an established Enterprise Development Not-for-Profit organisation effectively governed by the South African Institute of Chartered Accountants (SAICA). Driven to develop black business owners, The Hope Factory offers a strategic mentorship programme to help entrepreneurs achieve their goals, vision and purpose to grow their business, and to ultimately give back to their community.
The Hope Factory provides an easy, hassle-free way to earn Enterprise Development and Socio Economic Development points. Through continued investment with us, South African organisations can secure assistance with Supplier and Skills Development, as part of the amended B-BBEE Codes.
We exist to grow people, to develop businesses, to impact communities, through our unique mentorship model while adding value to our investors.