The car you drive, the food you eat, the house you live in, the cloths you wear and most important the job you have, were all made possible by entrepreneurship activities. Humans, from a physical perspective, are extremely ill equipped to survive on this planet.  In other words, if there were no entrepreneurs in this world, we would not only have been easy pray for carnivores, we would still live in caves, die from extreme temperatures, and many other horrible things would have happen to us on a daily basis.

The standard of living a community is experiencing is simply the result of, the number of entrepreneurial activities happening in their local economy. Wealthy economies therefore have more people who are practicing entrepreneurship in comparison to poor economies.

Entrepreneurship and not money is driving economies towards higher standards of living. Money is simply the measure of the economic activity happening in an economy and is provided by the reserve bank. More money than the economic activities require in the economy, leads to inflation and too little money will cause a depression. The difference between rich and poor nations can therefore only be explained by the number of entrepreneurial activities happening in the various economies and definitely not by the resources thy have. There are too many poor economies with vast mineral and other natural resources and plenty very rich economies with limited natural resources .Poor countries will never overcome poverty if they do not start to create and cherish entrepreneurial cultures in their economies. This can be done by creating an entrepreneurial friendly business environment and to invest heavily in entrepreneurial education.

Politicians must realize that it is impossible for entrepreneurship to flourish in a highly regulated environment. Optimum entrepreneurial activity, do not require economic legislation preventing the creation of new or better solutions and/or restrain competition. Governments can however enhance entrepreneurship by investing in entrepreneurial education and by providing assistance in raising stat–up capital if required. It is time to face the fact that poverty will never be eased by financial assistance or other similar actions. The only solution to overcome poverty is to unleash the entrepreneur in every human on this planet.

Entrepreneurship is indeed making the world go around  

Article by Ayanda Mdluli – Business Report Thursday, February 3 2011.

Although the legacy of apartheid has hindered the chances of many South Africans to become entrepreneurs, Africans still have the potential to achieve by establishing businesses that can be drivers of economic growth on the continent, according to Sir Richard Branson, the renowned entrepreneur and billionaire founder of the Virgin Group.

In an interview with Business Report yesterday, Branson stressed the importance of small and medium enterprises (SMEs) as engines that power economies, create jobs, fuel growth and ultimately transform communities.

Branson is in the country to attend an exhibition hosted by the Branson Centre of Entrepreneurship at the Fashion Kapitol in Johannesburg.

The main feature of the exhibition was an outdoor fashion show, which featured Lesego Malatsi’s 2011 winter collection. Malatsi is an entrepreneur at the Branson centre and managing director of Mzansi Design Emporium.

Branson said the potential in Africa was one of the reasons the Branson centre was established.

It is located in the Johannesburg central business district and was launched by Branson and the non-profit foundation Virgin Unite in 2006. The centre aims to provide a launch pad for bold and enterprising South Africans to create successful businesses.

The centre supports aspiring entrepreneurs by teaching practical business skills and providing access to coaches. Mentors are available to share their experiences and their networks. Students are also introduces to financing opportunities which enable their businesses to grow.

He stressed that the key to ensuring success of the SME sector was to develop aspiring entrepreneurs with practical business skills and to support entrepreneurs to grow their businesses and provide advice from successful entrepreneurs on how to gain market access and funding.

Branson’s business interests in Africa would not be deterred by the current revolts in Egypt and Tunisia. In fact, he said he supported the revolts, arguing that it was time Africa stopped dictatorships in their tracks.

“I support what’s going on in Egypt and Tunisia because people do not need dictators, people need freedom.

“This is the most exciting thing to happen.”

However, the business mogul pointed out that the crises in Ivory Coast and Zimbabwe were disturbing.

He reiterated that he would not do business with countries that had leaders who disregarded the rule of law and the will of their people.

According to Branson, both political will and economic freedom are critical factors to ensuring sound business practices in a country. He stressed that Africa should not tolerate dictatorships.

Judi Sandrock, the chief executive of the centre, said the biggest challenge with aspiring entrepreneurs in South Africa was that they did not believe in themselves because society and their families had often instilled a stereotype that one should get a job and forget about starting a business.

She said the centre aimed to break down and overcome those psychological barriers and provide security.

“A lot of people are discouraged by their families from starting a business, at least here at the centre they are surrounded and mentored by likeminded people and other successful entrepreneurs.”

She noted that another important asset at the centre was the provision of strong mentors in the process of polishing entrepreneurs to become successful business owners.

Besides listening and understanding where they could best add value, mentors could also provide access to their networks, which was key in successful business practice.

Another issue which affected South African entrepreneurs was the limited access to funding from the large commercial banks.

Branson said banks across the world had a tougher stance towards entrepreneurs and he said a pro-entrepreneurship attitude and banking sector in South Africa was key to ensure faster growth.

“I started with less than a thousand rand, but managed to make it in the long run.

“Banks may lose money nine times out 10, but that one successful entrepreneur could make a significant difference and a valuable contribution to the growth of the economy,” Branson said.

According to new research by the Global Entrepreneur Monitor South African women will play an even greater role in unlocking economic growth in the country. Softline CEO, Ivan Epstein says that South Africa has many excellent examples of woman entrepreneurs and it is gaining momentum. “I believe that in an emerging market environment such as South Africa entrepreneurship will continue to benefit as more successful woman entrepreneurs enter the economy.” Epstein says that women entrepreneurs are needed to help diversify the economy and create jobs.

He says that Government and the private sector have started to recognise that entrepreneurship is a catalyst for economic growth with the private sector to some degree being driven by entrepreneurial thinking. But Epstein says more needs to be done to develop and foster entrepreneurship in South Africa. “In any democratic economic environment it is important to foster entrepreneurship. The ground is far more fertile in an emerging market such as South Africa where we are seeing even greater initiatives of entrepreneurship transpiring.”

According to research barely 5 percent of the South African population is involved in entrepreneurship compared to a norm of about 15 percent in other emerging economies such as China and Indonesia. Epstein says that the dynamics are different in South Africa as opposed to other countries. “Inflation, South Africa’s GDP, and levels of unemployment are all factors to take into consideration. We have to look at where we have come from over the past 15 years. It is not just a matter of looking at statistics across the globe. South Africans are an extremely driven, entrepreneurial and a self-sufficient motivated nation.”

But support for entrepreneurial thinking has to also come from venture capital firms. By contrast to the number of venture capital firms in South Africa, in the United States there are approximately 1,200 venture capital firms all searching for the next big idea. Epstein says it is difficult to compare the dynamics of South Africa to that of the United States. “They have vast access to capital that most other countries in the world don’t have. Venture capital firms flourish in the United States due to the easy access of capital; as well as millions of ideas and start-ups that surface each year, which in turn are sourced from many other countries across the globe.

He says that local banks also operate differently in South Africa and that risk appetite is different. But the failure rate for entrepreneurship is not necessarily always due to a lack of funding. “The reality is that many banks and private equity players are under pressure to make their money work and many entrepreneurs struggle to produce a viable business plan.
Epstein says that the best way to learn is to attend the ‘University of Life.’ He says that not everyone is born an entrepreneur. “Education definitely plays a major role in formulating formal plans and thinking, but there are many other options available to potential entrepreneurs wanting to put a formal plan in place “.

He says that the good thing about an entrepreneur or a great entrepreneurial idea is that too much planning or formality will potentially restrict the venture. “If you have an idea or concept, drive and passion with a burning desire to succeed, don’t let anything stop you.”

Article by Wiseman Khuzwayo

SOUTH AFRICA needs to find more ways to support and nurture entrepreneurs if the country is to avoid becoming a backward welfare state, where handouts risk draining the country’s innovative talent and its ability to produce equitable growth and employment.

This is according to Endeavor South Africa, which is part of a global non-profit organization that identifies and supports innovative, high-growth entrepreneurs in emerging markets.

Endeavor SA and First National Bank will be hosting the second summit on the state of entrepreneurs in Cape Town during Global Entrepreneurship Week (GEW).

GEW is an initiative in which millions of people and corporate around the world join a growing movement of entrepreneurial people to generate new ideas and to seek better ways of doing things.

Malik Fal, the managing director of Endeavor SA, said South Africa’s economy had structural imbalances that needed to be addressed.

He said the situation was dire. Citing statistics from the SA Revenue Service, Fal said about 6 million taxpayers were subsidizing nearly 14 million social grant beneficiaries.

More than 4.3 million were unemployed out of an active population of about 15 million.

Endeavour SA said the burden was passed onto business to sustain those not working. However, just 300 000 of the country’s businesses employ five or more people, according to the FinScope 2010 South Africa Small Business Survey.

Added to this, South Africa is doing poorly in its ability to foster successful and sustainable new businesses.

It is ranked well behind fellow emerging countries such as Brazil and Chile, where entrepreneurs are starting up enterprises at more than triple the rate of start-ups in South Africa, according to the 2009 report by the Global Entrepreneurship Monitor.

“It is clear something has to be done as more South Africans, both inside and outside the government, add their name to a chorus of those that believe the country’s support to small businesses has failed to make any meaningful impact,” the organization said.

Endeavour SA said the only way out was to find better ways to foster and support entrepreneurs, particularly those starting high-growth companies.

RICH OR POOR – WHY?

“Rich” or “Poor”, however relative statements, are normally used to describe the financial status or buying power people have. In this article we are going to explore the fundamental reason or reasons why some people are “rich” and others “poor”. In order to make this discussion more meaningful it could be important to clarify some basic economic fundamentals as a starting point.

Let’s therefore start the discussion by exploring the development of some historic economic fundamentals. Historically economic activity started to happen when people began to barter. Two knives, were for example exchanged for a pair of shoes. The aim of these bartering processes (exchanged transaction) was to improve the standard of living of both parties. The person getting the shoes would for example now be able to walk without hurting his/her feet, and the other person would gain two knives for self defence, or for better food provision. The supplier of the shoes surely had more than one pair, and the supplier of the knives, probably had some spare artefacts (more knives) in stock. The logic behind the reason why this bartering transaction happened was therefore to achieve a win-win outcome. These two people were in fact solving problems for one another. It is also fair to argue that the knife supplier as well as the shoe supplier had different “talents” and abilities which they utilized to develop these artefacts. The one person had the natural ability as well as the “passion/ intent / drive” to make knives and the other to make shoes. In fact all humans have unique talents and abilities, like the unique fingerprints, we posses. We are therefore created to be able to trade with one another by utilizing our unique and differentiated talents. The aim of this trading process is to help one another to enjoy a better standard of living.

The objective of these economic activities are therefore to improve the general standard of living of all those who are willing to participate in this process.

The ancient “bartering process” had a serious built in restriction in the sense that, person A could need the shoes, but person B not the knives. The bartering process could therefore in this instance not happen. To overcome this problem the concept of money was invented. With money the trading process became much easier, because A could now obtain the shoes in exchange for money, which A earned by selling knives to C and D. Before this could happen, yet another, stumbling block had to be removed. This stumbling block was in the form of determining the relative values of the knives and the shoes. In the pure batering transaction the values of the shoes and knives were determined by consensus between A and B. Both parties were happy that two knives have the same value as a pair of shoes. In order to overcome this problem the values of various products or services were determined by a process where values (prices) were determined by “mass” consensus. Auctions were then created, where the highest bidders determined the various values (prices) of products or services to be traded. In this process a transaction could only take place if there was consensus between the buyer and the seller. In these auctions, (markets) values were never fixed but varied from auction to auction, and became a function of demand and supply. If the demand was high and a limited supply was experienced, prices were very high. On the other hand, suppliers of products or services which were in abundance, received lower prices, or no price at all.

The values of labour (personal services) are determined by the same mechanism. If there is an over supply or a weak demand, values (salaries) will be small. The suppliers of labour (personal services) which are in short supply, and suppoted by a strong demand, will be able to negotiate very high salaries (values for their services).

The relative amount of money a person “makes”, is partly a function of the value of the specific products or services supplied in the market, but also partly a result of the volume a person or business can offer to the market. A person/business could therefore also supply products or services with low unit values, but to a great number of willing buyers, he/she could also earn big money.

The above statement will obviously only be valid if the suppliers of the various products or services are able to make a profit from selling these solutions (product/services). The market prices therefore, have to be higher than the costs of producing them, if not, why bother to waste energy, labour and innovations.

With these basic economic fundamentals as background let’s continue our search for the reasons why some people are “poor” and some are “rich”. It seems as if “rich” people have managed to provided products or services (including scarce skills) to the market, which are in high demand, but also in short supply, and where the market prices (values) are much higher that the costs of producing them.

We should also keep in mind that the primary reason to buy, is to solve a problem. People don’t buy products or services they buy solutions, all good salespeople will verify the statement.

We can now argue that relative “rich” people are offering more and or better solutions to the market than “relative” poor people. It is also fair to state that very “poor” people do not have the “understanding” or “intent” to offer any worth while solution to the market. We don’t believe the “being poor” problem, is an “ability” factor. All human beings are blessed with ample “abilities” and we are only utilising a very small percentage of our brains. The more obvious reason for being “poor” is to be found in the “intent” or “attitude” domain.

The following research done by Thomas Sowell which was published in his book; “Ethnic America, Economics and Race”, supports the statement, that being “poor” is largely a function of “intent/attitude” or “understanding” and definitely not “ability”.

THE JEWS

“When eastern European Jews arrived in America in the late nineteenth century, they flooded into the lower east side of Manhattan. By the turn of the century it had become one of the most crowded communities on the face of the earth, with more than 700 people per acre – a higher density than the worst contemporary slums in Bombay, and three times the population of this same ghetto today. In 1894, 50 toilets served 4000 tenants, and hundreds died in heat waves. Officially sanctioned anti-semitism had excluded them from land ownership and numerous economic endeavours.”

“About half the eastern European Jews were illiterate when they arrived in America and most began in manual occupations. Today, American Jews have the highest average incomes of any large ethnic group in the USA, 72% above the national average. What qualities enabled them to move so rapidly from rags to riches? About two-thirds brought with them skills and experience in commerce. They had a passion for learning, and when they arrived in New York, adults and children alike seized on the opportunities for self-improvement offered by the free public libraries.”

“The Jews were also part of an ancient culture which had participated in commerce and revered learning for centuries. Sowell believes that this basic understanding of economic fundamentals is what enabled them to rise of poverty so rapidly. Their upward movement in American society has not been equalled by any other group.”

THE IRISH

“The Irish were the first great ethnic minority in American cities. Four-fifths of the Irish population at that time were rural peasants living in mud huts under worse conditions, and with a shorter life expectancy, than slaves in the American South.”

“When they arrived in America, they were destitute, with no skills and little knowledge of urban life. The only thing they knew how to do well was to organise politically, and they had a sense of identity and cohesion as a people oppressed by foreigners in their native land.”

“Over the generations the socio-economic gains of the Irish have been painfully slow. Their greatest achievements were in municipal politics – by the end of the nineteenth century, the Irish dominated the big political “machines” of Boston, New York and other cities in the north-east. But these successes did not improve the economic conditions of most Irish Americans. In the 1890s the majority of men were still labourers and most women were domestic servants.”

“In contrast to the spectacular socio-economic advancements achieved by Jews, Japanese, Chinese and Poles, the Irish have risen only to the level of average American incomes.” (Quoted from; “Let the people Govern” by Frances Kendal & Leon Louw)

When the case studies regarding the Jews and the Irish, are evaluated against the background of basic fundamentals, it is easy to realise that being “poor” or being “rich” is a function of “intents/attitudes”, as well as an understanding and the practical application of basic economic fundamentals.

Ramaphosa said one of his friends, whom he did not name, had given up a top job at Anglo American after 42 years and had thrown himself into starting a new business. He had not found it an easy exercise at all, Ramaphosa said.

It emerged in question time that this man was Clem Sunter, who penned a praise song in a financial magazine to Ramaphosa after the Shanduka executive chairman was appointed as deputy commissioner of the National Planning Commission.

Rhetorically, Sunter asked who of “these worthy” men and women would champion the interests of the entrepreneurs. The answer was self-explanatory.

Sunter wrote: “I have argued for many years that the only way to turn our exclusive economy into an inclusive economy is to precipitate an entrepreneurial revolution, which means putting a huge focus on our informal sector and creating conditions to allow small business to graduate into the formal sector.”

Ramaphosa described Sunter as being “spot on”. After being head of Anglo’s gold and uranium division, Sunter was now struggling but making his mark in the small business sector.

Perhaps it was a case of “you scratch my back, and I will scratch yours”.

Edited by Peter Delonno. With contributions from Ingi Salgado and Donwald Pressly.

CAPE TIMES – 11 May 2010