Small and medium enterprises (SMEs) are part of a very competitive universe and if they can’t survive in that universe, they risk withering away, said Wilfred Ngubane, CEO of Ngubane & Co, speaking last week at Finance Indaba Africa 2017, held at the Sandton Convention Centre.
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Wilfred has been running Ngubane & Co, which specialises in auditing and chartered accountancy, for 22 years. He started his business with just one computer, a fax machine, printer and money from his provident fund, though the company has grown to now employ over 230 people, with representation in six provinces.
During his presentation, Wilfred spoke about how difficult it is for small businesses to survive in the first three years of existence and relayed that most have a lifespan not longer than seven years.
“We operate in a very chaotic business environment where we have bigger stars and smaller stars, and these smaller stars can be swallowed easily, so it is important that they are given as much support as is possible from both government and big business.”
Wilfred was lucky when he started his business in the nineties, that the then-minister of public enterprises was very supportive of small businesses, deliberately approaching black accountants and encouraging them to work as one unit to find work. “There was an effort to make sure people grew and to give them work so that they could employ other people,” Wilfred said. “It’s important to be given a chance before you even start. If you are not given a chance, you will never get anywhere.”
He told delegates that most small businesses failed because they do not have access to funding and, as a result, cannot buy cheaper and in bulk like their competitors. Consumers also tended to be loyal to service providers with a reputation and track record, making it very difficult for new players to enter the market. In addition, some small business owners do not have fresh and unique ideas, and do not conduct enough research about the sector they’re entering. “You will find that sometimes people see others running butcheries and consultancies, and they think they can also do it without planning or doing proper research on their side,” he said.
However, he noted that most SMEs failed because of lack of corporate and governmental support. “Government must create the necessary infrastructure and support small businesses to create jobs,” he concluded.
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