A lot has been said and written about small business failure especially black owned small businesses.
Small business experts, academics, and professionals have all analysed the causes of small business failure in the black community. Absa small business unit says that the failure rates are as high as 63 % in the first two years of trading.
Factors like the lack of financial managements skills, business management skills,marketing skills and general business planning have been identified as major factors that contribute to small business failure.
However I have noticed that there is one factor that is being downplayed and generally not taken as significant in contributing to small business failure, that is the human factor in the form of families and communities.
I would like to highlight the fact that black families and communities in general play a major role in small business failure.
We come from a culture of where working for a company or the government is more respected and trusted than working for yourself. In most black communities working for yourself or starting a business is generally met with scepticism and a lack of support. Black families tend to push their children to become workers rather than entrepreneurs and if the children insist on becoming entrepreuners they are discouraged from doing this and are told that entrepreneurship is risky and that they are bound to fail. This then contributes to the low rate of entrepreneurship we see in country.
When young budding black entrepreneurs manage to start their small businesses (after convincing a lot of people that starting a business is good thing), they are not given the necessary support, like mentoring,financial and emotional support.
I believe that emotional support is the most important form of support that a young black entrepreuner can be given.
The entrepreneurship road can be a long, hard and lonely one that is filled with many frustrations, and emotional support from one's family, friends and community is imperative and without it one is bound to give in. Unfortunately many budding black entrepreneurs are not given the necessary emotional support and end up as emotional wrecks because of the hardships of entrepreneurship.
Another factor is that black families and communities do not give the budding black entrepreneurs the space and time to grow their small businesses,for instance when a budding black entrepreneur manages to have his business up and running his family,friends and community start demanding money as they believe that the entrepreneur is now rich. Families are worse, they literally produce lists of their demands, from new furniture and fittings to house renovations and so on. Also young black entrepreneurs are expected to provide and take care of their siblings and this is a responsibility they cannot escape.
The black entrepreneur's friends will demand booze and a good time and members of the community will want their share as well. Old lost relatives suddenly re-appear and they also demand their share of the entrepreneur's new found "wealth" and all of these things contribute to the downfall of an otherwise promising business.
Families also get entrepreneurs into unmanageable debt and push them over the edge into substance and alcohol abuse because the entrepreneurs are under pressure trying to please their families whilst on the other hand the business is drowning in debt.
I think that black families and communities need to be more understanding and supportive and give the budding entrepreneurs space and time to grow.
Budding black entrepreneurs themselves are also guilty of living beyond their means by immediately buying expensive cars and renting expensive offices with expensive furniture whilst the business is in the start up phase and needs more cashflow.
This trend amongst young black entrepreneurs can be attributed to a lack of mentoring and also expectations from their families,friends and communities who expect the entrepreneurs to live by a certain standard since they are now businessmen.
In countries like the USA which has a high rate of entrepreneurship, being an entrepreneur is a higher calling than working for a company or government. Youngsters are encouraged to become entrepreneurs and are given the necessary emotional and financial support as well as mentoring. Generally in America, families,friends and communities become the first customers of a budding entrepreneur's business, which is not the case in South Africa. In the USA budding entrepreneurs are given space and time to grow their businesses, basically this time and space can be anything from the business start date and up to 5 years or even more. In the USA small business failure is treated as part of the learning process and not the end of the road for a potential entrepreneur. In South Africa we need to take lessons from countries like America and give budding entrepreneurs the necessary support so that they can to grow into successful and global respected business people.
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