During my relatively short working life, I have had the opportunity to work in a handful of black-owned or black-run businesses. As a result I have discerned some patterns in terms of their particular dynamics and I have thus been able to formulate a premature thesis on these organizations.
The thesis is premature because the sample size has been limited to small and medium black organizations and there are also the inherent limitations of sampling itself. I have identified three main areas or pillars that I believe will be instrumental in whether black business succeeds or fails. These are:
I will discuss these in turn before arriving at my conclusion.
This has long been an issue within the public discourse. Economists and business leaders have long lamented the fact that government and its policies are obstructing rather than encouraging entrepreneurialism. We discussed in a previous missive how new business owners are often thwarted by onerous administrative requirements.
We talked about how the current labour law regime is throttling entrenched businesses. We concluded that all this is completely unnecessary in the context of a ‘new business’ failure rate of approximately 95% in the first 5 years of operation. I’ve recently become aware of another constraint.
If one fails in business one often ends up getting a bad credit record which effectively excludes him from trying again.
b. Incoherent strategy
Government has at last tabled a National Development Plan that ultimately seeks to grow the economy and absorb more people into the work place. I have not read the document in detail, but the obvious contradictions that leap out at me are that fact that little will be done to address the ‘red-tape’ issues that were discussed above. While the overall strategy remains relatively consistent from presidential term to presidential term, the same cannot be said for strategy at provincial and municipal level.
Tenders have been the mainstay of black business since the dawn of democracy. While this system has been abused, it has its benefits and countless families have been empowered and uplifted as a result. That said the subversion of due process in the issuing of tenders destabilizes the process and excludes many worthy entrepreneurs from empowerment.
What irks me even more is a situation where bidders have won a tender and then the Municipal Manager or MEC is subsequently replaced. Instead of honouring the process, the new office bearers tend to nullify it and they start the process from scratch. Why? My view is that they want to massage things in a manner that ultimately benefits them or it’s a pride thing and they want to stamp their authority. Needless to say, that the ramifications for entrepreneurs, who have spent vast sums during the bidding process, are often disastrous.
c. Late payment
The lucky few who have endured the tedium of ‘red-tape’ and the rigours of the tender bidding process, now have to face the last and most pivotal hurdle, payment. Government, for all its endless bungling and vacillating, actually has systems and policies in place.
The PFMA and the MFMA regulate how transactions are conducted with internal and external parties. However, application and implementation of such is quite poor. Entrepreneurs are often paid late i.e. within 60 days or 90 days when the target should be 30 days. Government often engages in ‘scope creep’ with contracted parties. Additional services are requested from providers within the confines of the same contract amount.
When service providers justifiably claim for reimbursement, it becomes an endless process that could last for months. Entrepreneurs are often caught between suppliers who demand payment within 30 days and a tardy government. The result is that businesses are starved for cash and they die. Cash flow is the lifeblood of any business and government has failed to come to the party in this regard.
This will be a contentious issue. We can discuss at length how apartheid denied black business people their right to education and as a result they are at a disadvantage when compared to their white counterparts. In the work place, this is probably true, but in business I don’t think that this argument holds true. Many a successful black enterprise was started and grown by black people in townships and homelands by people who, by accepted standards, were uneducated or illiterate.
That said, sophisticated businesses do indeed require educated people, yes, but they also need systems and processes i.e. a way of doing things. I’ve often argued that if the systems and processes of an organization are strong then you can plug in any idiot to perform a particular job or function. I stole that from Jack Welch, former General Electric CEO. I digress.
It is not so much education, but in systems and processes that black business people are now at a disadvantage to their white counterparts. It’s in the application of knowledge in the pursuit of profit that we are laggards. This is due to a number of reasons.
Maybe we don’t have that elusive business intuition that has been handed down from generation to generation of white business owners. We perhaps don’t have the salubrious networks that Jewish, Afrikaans, Indian and Anglo-Saxon people have. Maybe we don’t have the discipline to stick to systems and processes religiously so that we can ultimately derive true benefit from them.
My experience in small black businesses is that colleagues are tardy in communication. Emails are often not responded to or acknowledged. Meetings drag on beyond the intended time limit and ‘well meaning’ colleagues go off topic and tell one more than one needs to know.
Reward or incentive systems are defined, but are often not adhered to and the goalpost, invariably, is always moving. This personally sucked the life out of me and left me listless and demotivated. What this highlights, as in the case with government, is that systems and processes cannot function in a vacuum. They need people.
People. Black people. Our psychology is different. The evolution of our cultures through the ages and the recent infusion of oppression through apartheid have led us to a very confusing place. This is by no means a discussion about race, but race is pertinent to this discussion.
The truth is that white people have fashioned the world of business and it is therefore imbued with their beliefs and their cultures. Black people have had to adapt to this world and the transition has not been seamless and it will never be complete. I’ll tell you why.
a. Greed and hunger
We have been deprived for so long. So at the first sign of success and empowerment it is natural that we lose our heads and we gorge ourselves on luxuries that we never had. I’m ok with that, but were I ‘lose the thread’ is when black people gorge themselves to the detriment of their business or to the detriment of their fellow blacks.
We’ve all heard hilarious anecdotes about tenderpreneurs and their Range Rover Sports and sinister tales of deception on the BEE front. These are hardly recipes for building strong black businesses.
Once again, we have been deprived for so long. As a result, we are insecure. This manifests itself in ‘dictatorial bosses’, in unwieldy discussion forums as we can’t challenge each other because people get offended. It leads to paralysed succession planning and transitions because the next office bearers or cohort wants to stamp their authority and to do things their way even though it’s sometimes unnecessary.
What happens is that we end up treating each other like shit. Respect is lost and the goal is deferred.
As I alluded to before, maybe we are not disciplined? We often don’t adhere to systems and processes. We often don’t deliver service of the highest quality. How often has one gone through great pains to find and hire a black painter or plumber or electrician and found that they do shoddy work? We often hear of tenderpreneurs who don’t deliver on their mandates.
I don’t think that it’s a skills issue. It’s likely a matter of a lack of diligence. It’s a matter of being inclined towards an easy victory and of balking at the challenge of delivering the best?
Businesses in general face many challenges. That’s a natural part of doing business. New businesses are always in peril because they have to carve out a niche, establish a customer base and ultimately generate cash flow. That I understand. Black business, however, has additional and perhaps unnecessary burdens. Government needs to step up its game for all businesses, black or white.
This is possible. Systems and processes need to be implemented and then adhered to. This can be done. I just don’t know what can be done about our psychology. This is our biggest challenge and it is the unacknowledged obstacle to thriving black business.
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