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A FEW days back I had lunch with Clive Pintusewitz, who heads up part of Standard Bank's small business offering. We had quite an interesting discussion on the state of small business in South Africa.
One of the intriguing topics that came up was the concept of mentoring and incubation, and how successful it has been in South Africa.
I've written quite a bit in this column about how mentoring is an essential part of developing small business. However, Clive raises two points I think all stakeholders need to consider.
The simple idea is that if small firms have a mentor to help them get their systems in place and a person who can share some experiences with them, they have a greater chance of success.
Firstly, it is too easy for somebody who runs one of these mentoring or incubation offerings to transfer any real risk to other people. In many cases, it just becomes a matter of offering to do mentoring and then bashing off an invoice to a body like the Small Enterprise Development Agency (Seda), the Indutrial Development Corporation or whichever banking group is bankrolling your offering.
This poses little or no risk to mentors, so how are they tied into the fortunes of the small business? If it sinks, they still send through an invoice for services rendered - and point to the high level of failures in the sector as proof that they are fighting a tough battle.
There is no black and white answer to that one, but for example at one point there was a 90% failure rate for Seda-backed small businesses with mentors.
Those involved in mentoring are not delivering the goods.
The second issue Clive raised was around the inability to measure the performance or "value add" of business mentors. At the moment a mentor marries up a lender with a small business, and argues that the firm is a lower lending risk because there is a mentor in place to highlight the pitfalls it faces.
A beady eye on their slice of the pie
That's great - but can mentors genuinely show what value is being added by their presence?
"Advice" or "guidance" is not quantifiable; I can say to my seven-year-old that it is advisable for him to tidy his room before he gets a hiding but if he refuses to do that, do I still get parenting points?
Are sales and financial systems in place? Are you setting up meetings and providing the entrepreneur with genuine leads? Have the sales and credit cycles improved? Is the entrepreneur developing genuine administrative systems and a client base that adds to the real value of the business in creating a transferable asset?
These are two important factors to consider. In the next few years, billions of rands are going to be thrown at small business offerings including incubators, consultants, accelerators and entrepreneur development and support initiatives.
There will be enterprise development and social responsibility funds tripping over themselves to pour money into the small business sustainability problem. Invariably, that is going to spawn a whole host of mentors all looking for their slice of the pie.
Those who want to make a success out of it may do well to heed this advice and begin quantifying what they do and how they are really adding value.
- Fin24.com
One of the intriguing topics that came up was the concept of mentoring and incubation, and how successful it has been in South Africa.
I've written quite a bit in this column about how mentoring is an essential part of developing small business. However, Clive raises two points I think all stakeholders need to consider.
The simple idea is that if small firms have a mentor to help them get their systems in place and a person who can share some experiences with them, they have a greater chance of success.
Firstly, it is too easy for somebody who runs one of these mentoring or incubation offerings to transfer any real risk to other people. In many cases, it just becomes a matter of offering to do mentoring and then bashing off an invoice to a body like the Small Enterprise Development Agency (Seda), the Indutrial Development Corporation or whichever banking group is bankrolling your offering.
This poses little or no risk to mentors, so how are they tied into the fortunes of the small business? If it sinks, they still send through an invoice for services rendered - and point to the high level of failures in the sector as proof that they are fighting a tough battle.
There is no black and white answer to that one, but for example at one point there was a 90% failure rate for Seda-backed small businesses with mentors.
Those involved in mentoring are not delivering the goods.
The second issue Clive raised was around the inability to measure the performance or "value add" of business mentors. At the moment a mentor marries up a lender with a small business, and argues that the firm is a lower lending risk because there is a mentor in place to highlight the pitfalls it faces.
A beady eye on their slice of the pie
That's great - but can mentors genuinely show what value is being added by their presence?
"Advice" or "guidance" is not quantifiable; I can say to my seven-year-old that it is advisable for him to tidy his room before he gets a hiding but if he refuses to do that, do I still get parenting points?
Are sales and financial systems in place? Are you setting up meetings and providing the entrepreneur with genuine leads? Have the sales and credit cycles improved? Is the entrepreneur developing genuine administrative systems and a client base that adds to the real value of the business in creating a transferable asset?
These are two important factors to consider. In the next few years, billions of rands are going to be thrown at small business offerings including incubators, consultants, accelerators and entrepreneur development and support initiatives.
There will be enterprise development and social responsibility funds tripping over themselves to pour money into the small business sustainability problem. Invariably, that is going to spawn a whole host of mentors all looking for their slice of the pie.
Those who want to make a success out of it may do well to heed this advice and begin quantifying what they do and how they are really adding value.
- Fin24.com
