Have you ever stopped to consider how challenging it is to be ‘the Boss’? In truth, only a relative handful of citizens in the world are business owners, and in South Africa, the number is a tiny fraction of our population. It takes a special kind of person to start and run their own business successfully, and while we all like to moan about the Boss sometimes, in truth our country needs far more people to step up and take on the challenge of starting a business if our economy is to flourish.
Here are ten reasons why we should all try to understand what it means to be a business owner, and why people with ‘Capitalist tendencies’ are so crucial to our collective future success.
The SME sector, which currently employs more than 9-million people, is the only part of the economy that can create job growth at anywhere near the scale our country needs. Big business only employs around 1.3-million people and is struggling to grow. The government employs 2.7-million people, which is probably far more than it should from an economic sustainability perspective.
Our high unemployment rate and resultant limited taxpayer pool mean that every one person employed by a private business effectively supports one person in Government or one person on social support.
Money doesn’t grow on trees, but a good business run by a skilled owner or manager stimulates the economy by using resources (machines, raw materials, labour) in an effective way to produce products and services, which they sell for a profit.
This business profit is taxed (at around 28%) by SARS and used to pay Government salaries, welfare grants, and to ‘run the country’ in general, including upkeep of roads, railways, hospitals and the like. Without the tax revenue generated through capitalist activities, our economy and our country would collapse.
Business owners need to be specialists in every field, especially when starting out – from business strategy, sales, marketing and product development, to labour law, negotiations and Human resource management. This can be a lonely and challenging role for anybody to fulfil, so cut the Boss some slack now and again…
Business owners frequently commit their every cent to the businesses and often pay the ultimate price for this passionate commitment by losing their personal assets and home if the business fails. Many business owners also pay their workers first, before paying themselves – sacrificing their own well-being to ensure that staff are looked after and that the business survives.
Small businesses ‘sweat their assets’ at a six times higher rate than large businesses. This means they use much more people in generating their income relative to the capital invested in the business. The average Small business Return on Asset ratio (ROA) is .26 compared to only 0.04 in a large business!
In the past twenty years, studies have shown that 90% of all new jobs have been created in the SME sector. Small businesses are flexible and adaptable, meaning that they adjust and mould their recruitment policy to meet current needs. This is especially good for new entrants into the job market, including interns and apprentices, who have a much greater chance of being absorbed as long-term workers in a small business than in a large corporation.
While we always assume that giant corporates in sectors like mining and telecommunications keep our economy afloat, a staggering 40% of our Gross Domestic Product (GDP) is generated by Small, Medium and Micro Enterprises (SMMEs), and in some areas, such as Cape Town this reaches 68% and more.
Few businesses can survive without employees, but no country can survive without businesses that are growing and creating opportunities.
So, the next time you are feeling frustrated at the perceived failings of ‘The Business Sector’, angry that you aren’t appreciated more or irritated that your boss drives a Merc while you have to get around in a Tazz, remember that this small minority community is holding up your future, and that of South Africa. They deserve some props (and rewards) for the risks and sacrifices many of them confront on a daily basis.
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About the Author
Catherine Wijnberg is the Founder and CEO of Fetola. Catherine has a long history as an entrepreneur, having owned and operated businesses in five different sectors. Anton Ressel is a Senior Consultant at Fetola and has over 15 years experience as an entrepreneur, trainer, business developer and mentor in the emerging business sector.
To access some great free resources and tools for small business, or to learn more about what it really means to be a business owner, visit Fetola or Email us.
