Thursday, September 23, 2010

Small Business Support: the Government promises to double their efforts

With the small business sector being such an crucial element of the economy as a whole, it was not surprising that the Government is vouching to do more  for both new and growing businesses. With a large amount of small business support already being provided in areas such as business planning, business finance, general business support, grants and business loans, more money will be provided to entrepreneurs. Small businesses of course benefit the economy hugely. From an employment perspective alone, the sector is the largest employer in the country by far. 
But small business owners often say that they don't see the support being provided. Entrepreneurs around the country will tell you that they often feel isolated in dealing with their day to day challenges and it really here where the support needs to be focussed.
In a recent interview with Engineering news, the Department of Trade and Industry (DTI) director-general Tshediso Matona said at the launch that it was essentially a "no brainer" that small businesses had great potential to grow the country's economy and provide employment in the country.
Matona emphasised that the DTI planned to double its efforts in this sector, through policy strategies and institutional architecture.
"Incorporated in South Africa's new industrial policy initiative, government envisages that the SMME sector could create a further 2,5-million direct and indirect employment opportunities over the next ten years."
The survey indicated that black business owners made up 84% of the small business sector, and that 58% of the owners were female. However, women in general engaged in the lower end of the entrepreneurial field, mainly engaging in product reselling.
TNS research surveys client service director Rob Powell said that the difficult economic climate over the past two years had definitely instigated the start of more small businesses.
The survey indicated that 41% of businesses have started up over the last two-and-a-half years, and that over 40% started up their own businesses because they could not find a job in the formal sector or were unemployed. Further, 35% of respondents, mostly women, said that they would take up employment in the formal sector if they were offered the opportunity.
Powell said that it was evident that the SMME sector was still very uninformed and unaware of support structures available to small business owners.
He said that currently, 41,8% of business owners did not have any engagement in the formal or informal financial sector, and that people were generally credit and even insurance averse.
FinMark Trust CEO Maya Makanjee said that one of the greatest challenges in the SMME sector was to now "take it to the next step" and assist active players in expanding their skills sets and in accordance their business size and the number of employees that they were able to employ.
The survey indicated that out of the six-million small business owners, more than 60%, or around 3,8-million, of them did not employ any other people.
"The main gaps that exist in the SMME sector relate to education and skills, cash flow, record keeping and budget management, the emotional barriers relating to credit use, and leveraging existing access to cellphones and other infrastructural support, providing access to low-level insurance and product unbundling," said Powell.
The FinScope study showed that for 67% of respondents this were their only source of income, while others also received grants and support from government and other family members. FinMark Trust information and research specialist Trevor Kaseke noted that around 500 000 people could be taken off government support, if the relevant role players were able to assist these business owners in growing their businesses.
Matona agreed saying that the everpresent and dire challenge of unemployment in South Africa, could be tackled by targeting and developing entrepreneurship and providing the proper infrastructure for the development of the sector.
Currently, around 73% of small business owners work out of their homes and respondents of the survey had identified a lack of space and a lack of funding as stifling the growth of their businesses.
"The growth and support of the SMME sector remains at the apex of government's economic policies, and we also call on other actors in the economy to play their role in promoting this vital economic sector and fighting unemployment in the country," concluded Matona.

Entrepreneurs and small business owners alike will be hoping that this time round the support reaches their officer, suburbs and stores but it remains to be seen if it has any effect on their day to day business activities, turnovers and ability to be competitive.

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Wednesday, September 15, 2010

Market research will improve your chances of business success

For any new business, market research is a key element of the business plan that will ensure, not only that you understand your market and how your potential product or service fits into that. Some business plan services will include this element in the business planning process and Its crucial that this forms a the foundation of the choices that you will be making as a business owner as it will mean that your decisions are based on facts rather than estimate - or a now more commonly used - guesstimate. This part of the start-up process is conveniently left out to often as the entrepreneurs enthusiasm and impatience to get the business of the ground at all cost gets the better of him/her.

So what is market research and how can you do it to ensure you start of by knowing the facts about your market?

Secondary Research

Secondary research makes use of existing data from whatever sources are available. There are government censuses, Mintel surveys, and many private market research agencies that allow access to their data; some of it for free. It can be hugely advantageous, especially as a place to begin. Secondary research more often than not, proves to be a solid base on which to develop your own primary research. It plays the same role as research in general does to your product launch, and should be seen as just as vital. Also, this is of course far cheaper and generally quicker than creating your own research from scratch. The negatives The other side of that coin is that you have neither picked the panel to suit your exact needs, nor the questions. It is feasible that you can find some research somewhere that corresponds to what you are trying to achieve but it will almost certainly require some tweaking, and will not necessarily be the people you wish to interrogate; the use of qualitative research designed by someone else will almost certainly make the target specialised away from your goals. Another main issue with secondary research is that by the time it reaches you it’s often outdated; markets change so quickly in business that the only way to be truly current is through new research. This is not to rubbish the quality of secondary research.

Primary Research

Primary research is, essentially, the creation of your own research, whether a question that you ask to your friends and family or a survey put together alongside and agency and administered to a wide panel. Primary research will instantly let you feel more in control of your project; and that is the exact position you will find yourself in. You choose the questions and select your panel through qualitative research, allowing you detailed responses from individuals. You decide how, when and where your research is administered. You can ensure that your research is focussed: the number of participants and their backgrounds, the number and nature of the questions, the amount of time that your survey is available. This is the most accurate way to research a market sector that is specific to you and your product.

The down side

It is of course, more expensive, whether financially or on your time. If performing primary research alone it will take a lot of time, refining and will need some experience in producing quality questionnaires. It will also take time for your questionnaire to be completed if you don’t have direct access to a ready panel. Most of this can be avoided by using an agency, but at a cost higher than performing your research alone.

So what’s the best option?

Neither type of research will take you to your goal alone; however, a combination of the two will give you all the information you need. Using primary research alone, without first seeing what has or has not worked for other companies and possibly missing out on important data from research that you couldn’t afford to perform yourself, is likely to lead to irrelevant questions or missed opportunities. At the same time, relying solely on secondary research is likely to leave you with answers that are vague or inappropriate to your specific audience. The two compliment each other well, and when used in conjunction will give you a well rounded and accurate portrayal of the needs and opinions of your market sector.

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