ABOUT two years ago I interviewed the business manager for Msunduzi (the former Pietermaritzburg) municipality. He told me something which has stuck with me.
"Local government is one of the most powerful tools when it comes to assisting small businesses get themselves up and establish their track record; the problem is that a handful of people work out how the process works and then find themselves winning all the work."
He expressed a certain level of cynicism at the second part of that sentence. However, he was able to show me many instances where the municipality had been able to provide a genuine starting point for small- to medium-sized enterprises (SMEs), which were then able to move from public sector projects into the private sector.
The fact that they had something of a track record - aided by municipality work - helped facilitate this transfer.
I know this from personal experience; in my own small business, the first real client we had was the Ekurhuleni metro. From there, we were able use it as a reference client for other projects.
Local government does come in for a lot of stick - and in many cases rightly so - for its treatment of SMEs, but it is a powerful part of the system which can be addressed and used for rapid stimulation of the small business sector.
This discussion is important because as corporates continue to slash their workforce, relatively inexperienced SME owners will be seeking work to tide them over. Government contracts may very well be a starting point for them.
SME forum an exciting idea
Admittedly, there are challenges, including the admin and red tape which often leave SME owners fuming and short of cash. But I believe there is an even bigger problem which manifests itself in two forms. Again, these are issues which could be addressed relatively quickly.
By creating a more interactive and innovative forum to promote the tender and contract work available within municipalities, you can begin to build a genuine small business network or hub.
Unless an SME owner knows where to look, it is hard enough to find the opportunities in the first place. If you have ever tried to fill in tender documentation, you will know how intimidating it is to try and get on the shortlist.
By creating a networking point to exchange this knowledge, you can help the sector grow.
Start with baby steps
Yes, I appreciate that bigger tenders need to be vetted and scrutinised more closely, but the only way that smaller participants are going to learn to participate is by actually going through the contracting process.
For instance, if the Ekurhuleni metro held an information session of sorts where they were able to announce 20 construction tenders or requests for quotations for jobs under R100 000 in an evening, new business owners could ask questions about the process.
If the banks or the Industrial Development Corporation (IDC) and their ilk were feeling really innovative, they could even have a representative on hand to discuss assisting with short-term finance and start building up a nice little network of aspirant entrepreneurs.
But maybe that could be too innovative and we must talk baby steps.
The second - and probably more contentious issue - is around empowerment credentials. Can you really justify a small or micro enterprise being measured against a scorecard when its primary focus is on supporting a handful of workers and their families?
Small business is in crisis at the moment and while government doesn't have the capacity to pull it through, it does have the opportunity to show some innovation and engagement to make things a little less dire.
- Fin24.com