SMME environment and success factors

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What is wrong with business plans?

The problem with business plans is that the figures are usually wildly optimistic and the projections padded. Cassar (2006:8) researched the rationality of nascent entrepreneurs during start-up and found that nascent entrepreneurs “overestimate the probability of their nascent activity in an operating venture” and “overestimate the future one-year sales and employment of the venture, suggesting that nascent entrepreneurs are both optimistic in regard to their success of nascent venturing and the actual performance of their operating ventures”. Further evidence from this longitudinal study suggests that “nascent entrepreneurs who actively investigated market opportunities, by talking with potential customers or getting information about competitors, exhibit lower optimism in regard the probability of achieving an operating venture”.

PRESENTATION SKILLS

Entrepreneurial SMMEs who apply to take part in the SAB KickStart Programme are expected to present themselves and their business plans to panels of adjudicators during the different phases of the programme, as illustrated in figure 3.1: firstly (at regional level), to be selected for the programme; secondly (at regional level), to qualify for a grant; thirdly (at regional level), to be selected as a regional finalist; and finally (at national level), to win prize money. A question to examine is whether, during the selection process, selection is based on hard evidence or possibly on subjective factors, such as personality or presentation skills.

Criteria used by venture capitalists to evaluate venture proposals

Although SAB is not a venture capitalist, there are some commonalities: both make financing available to entrepreneurs and have an interest in the companies they support. Venture capitalists, however, have a vested interest. It may be of some relevance to investigate what criteria venture capitalists use when evaluating venture proposals. MacMillan, Siegel and SubbaNarasimba (1985, 1986, in Landström 2005:313) researched this question and found that the quality of the entrepreneur – his or her experience and personality – determines whether or not the venture capitalists will invest. MacMillan et al found that business plans have a “credibility window” of values that venture capitalists find acceptable.

Value-added by the suppliers of capital

Apart from capital, what other critical knowledge and experience do the suppliers of capital impart to the entrepreneur? “Classic” venture capitalists providing seed, start-up and early growth finance often deal with talented but inexperienced teams (Bygrave & Timmons 1992; Reynolds et al 2002 in Maula, Autio & Murray 2005:103). Being able to impart critical knowledge and experience in addition to finance, may be instrumental in the survival and success of the portfolio firm (Gorman & Sahlman 1989; Hellman & Puri 2002; MacMillan et al 1989; Sapienza 1992; Sapienza et al 1994; and Sapienza et al 1996, in Maula et al 2005:103).

MENTORING OF ENTREPRENEURIAL SMEs

Hisrich and Peters (2002:74), entrepreneurship authors, are of the opinion that “a mentorprotégé relationship is an excellent avenue of securing needed professional advice, as well as providing an additional source of moral support”. Corroborating this statement is research which established the importance of the trainer-motivator whose qualifications and experience were found to be vital to the success of the Indian Entrepreneurial Development Program (Awasthi & Sebastian 1996:153, in Watson 2004:5).

TABLE OF CONTENTS :

• Declaration
• Acknowledgements
• Summary
• Chapter
• 1 Background to the study
  • 1.1 Introduction
  • 1.2 Rationale for the research
    • 1.2.1 Defining the concept of entrepreneurship and classifying enterprises by size
    • 1.2.2 The importance of small businesses to South Africa
    • 1.2.3 The level of entrepreneurial activity in South Africa
    • 1.2.4 The environment of entrepreneurial SMMEs
    • 1.2.5 Failure rates of small businesses
    • 1.2.6 Factors that contribute to small business survival
  • 1.3 The South African Breweries KickStart Programme
    • 1.3.1 Reasons for selecting the SAB KickStart Programme
    • 1.3.2 The nature of the SAB KickStart Programme
    • 1.3.3 Different phases of the SAB KickStart Programme
  • 1.4 The statement of the problem
  • 1.4.1 Identification of the secondary problems
  • 1.5 Objectives
• 2 SMME environment and success factors
  • 2.1 Introduction
  • 2.2 Distinction between entrepreneurship and small business
    • 2.2.1 Defining entrepreneurship
    • 2.2.2 Small businesses versus entrepreneurial ventures
  • 2.3 Contribution of SMMEs to economic growth
    • 2.3.1 Statistics on SMME contribution to economic growth
    • 2.3.2 The entrepreneur as prime mover of economic development
    • 2.3.3 Economic growth rate and entrepreneurial activity
    • 2.3.4 Entrepreneurial activity in South Africa
    • 2.3.5 Poverty reduction correlated with entrepreneurial activity
    • 2.3.6 Entrepreneurship and employment generation
    • 2.3.7 Communities in which entrepreneurship flourishes
    • 2.3.8 A job creation model
  • 2.4 The environment of the South African SMMEs
• 3 Interventions to accelerate SMME growth
  • 3.1 Introduction
  • 3.2 Entrepreneurial venture assessment
  • 3.3 Assessing entrepreneurs
    • 3.3.1 The personality approach: characteristics and traits
    • 3.3.2 Personality seen from different schools of psychological thinking
    • 3.3.3 Entrepreneurial behaviour and the social development perspective
    • 3.3.4 Entrepreneurial motivation
  • 3.4 Assessment tests for selecting entrepreneurs
    • 3.4.1 The General Enterprising Tendency (GET) test
    • 3.4.2 The Thematic Apperception Test (TAT)
    • 3.4.3 The Cesarec-Markes Personal Scheme (CMPS)
• 4 SAB KickStart Programme and corporate social investment
  • 4.1 Introduction
  • 4.2 Why SAB?
    • 4.2.1 SAB investment in entrepreneurial programmes
  • 4.3 The SAB KickStart Programme
• 5 Research methodology
• 6 Analysis and interpretation of survey data
• 7 Conclusions, limitations and recommendations

GET THE COMPLETE PROJECT
THE EFFECT OF THE INTERVENTIONS OF THE SOUTH AFRICAN BREWERIES’ KICKSTART YOUTH ENTREPRENEURSHIP PROGRAMME ON ENTREPRENEURIAL AND SMALL BUSINESS PERFORMANCE IN SOUTH AFRICA