SMEs: opportunities abound

Johannesburg - Entrepreneurs are being presented with some brilliant opportunities in the midst of the financial crisis.

This is according to leading South African entrepreneur Allon Raiz of Raizcorp, who said: "You can't take a negative view when there are so many opportunities presenting themselves."

Raizcorp is a "business prosperator" which aims to provide services for promising entrepreneurs to get their businesses up and running.

While economic doom and gloom abounds, Raiz says the entrepreneurs and businesses in the Raizcorp network are still doing well. "Raizcorp is having a record year, as are a number of our entrepreneurs. Seven of our eight partners are actually recruiting at the moment."

He pointed out that the "lean and mean" structures of many small- to medium-sized enterprises (SMEs) means they could become increasingly competitive in tougher environments. He said: "One of the businesses we're involved in has recently signed a contract to manage about R10m of advertising for a client which had previously only worked with larger firms, but is now scaling down a bit."

Natural and unnatural entrants

Raiz believes the real trick is trying to distinguish "natural" entrants into the marketplace from "unnatural" ones.

Natural entrants would be those willingly looking to invest in businesses because of excess capital and a desire to "strike out on their own", while unnatural entrants would be people forced to go into business for themselves because jobs have become increasingly scarce.

Raiz says that natural entrants have decreased while unnatural ones have increased. "You need to remember that many of these are survivalist in their thinking and will migrate to formal employment when the opportunities arise."

Get Depression inspiration

Raiz takes issue with the assertion that financial firms and banks are not doing enough to support small business in South Africa.

He said: "There has been a massive effort from banks to reach into this space," adding that he has dealt with most of the major retail banks in South Africa in the last six months and has seen them lending to entrepreneurs.

Many SMEs complain that they do not receive the financial support to get their businesses off the ground. However, Raiz argues that entrepreneurs need to develop the financial savvy to approach banks and "speak the same language as bankers".

One of the skills he wished he had developed early on in his entrepreneurial career was an ability to understand the finances of a business. He said: "If an entrepreneur can't embrace the numbers and understand what they are telling them, they have a good chance of hitting the ceiling."

For entrepreneurs about to step out into the daunting world of self-employment in the middle of the most phenomenal financial and economic collapse in recent memory, Raiz has a suggestion: "Have a look at how many of the great businesses of today, whose brands have become household names, were founded during and just after the Great Depression."

- Fin24.com