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MAKING THE MOST OF MENTORING FOR SMMEs

COURTESY
Nici COLUMBINE
SOUTH AFRICA

First Published March 2005

MAKING THE MOST OF MENTORING FOR SMMEs
As the ‘new economy generation’ of young people in South Africa today, we are generally exposed to more options for self- and independent-employment than our parents were. We have greater freedom, many choices, and are more autonomous, yet, in comparison, our life and business experience is limited. In our new millennium, we live in a world of almost instant everything; but we face unprecedented economic and social realities, and are further confronted by an increasingly fast-paced, complex, and unpredictable business world.

The changes and challenges of our transforming socio-economic environment call for our on-going adaptability to respond to emerging market trends and consumer requirements. Simultaneously, this requires us to consider and evaluate our own capabilities with respect to developing and delivering our business in this market. Yet, do we have the ability ourselves to understand where our shortcomings are? Are we alone able to overcome the demands of establishing and sustaining a new business?

While, to some extent, we may be educated or “knowledgeable” about certain disciplines, without having had the opportunities to apply our academic training and gain experience, there is often a lack of many skills and the requisite maturity needed to survive in business. Clearly. there will be a learning curve in the process, but we do not have to do it alone.

Mentoring can provide much needed support and guidance to help us become successful in our own businesses. Mentoring essentially entails the transferral of wisdom, knowledge and skills from a more experienced individual to those who hold more junior or less experienced positions in business. Whereas coaching focuses on raising personal performance within a range of areas relevant to both the individual and the business. Both focus on personal development, but mentoring targets the acquisition of appropriate skills and insights to develop the business, while coaching hones in to enabling sustainable change through personal ownership and motivation.

The reality of initiating and establishing a new SMME business remains daunting for the business owners –on many levels. Only providing financial support will not address the residual social problems caused by inappropriate education, high unemployment, lack of skills and competencies.

“Throwing money at the problem is not a total solution," said John Orford, a co- author of the Global Entrepreneurship Monitor, published by the University of Cape Town's Graduate School of Business.

Mentoring is a tool and process that can be utilised to good effect within the SMME development framework, as the mentor, or group of mentors, not only imparts years of business experience, but also enables us to become empowered to evaluate our current competencies, identify the gaps, and then help us develop strategies to acquire new and required proficiencies. However, it is important that individual business owners are aware and understanding of the requirements, as mentoring within this new environment brings its own set of problems.

Seemingly, the recent consolidation of government funds and agencies, such as Namac with Ntsika, and the National Empowerment Fund (NEF) has identified this challenge, yet not that much progress has been made to respond to the need.

“Our primary objective", says, Moeloketsi Mofokeng, the Corporate Communications Manager at Khula Enterprises, the government's wholesale financing arm for small business, “is to help manage all aspects of the business to ensure that it becomes sustainable, and thus protect the financier’s investment. Although access to finance is still a problem, the lack of a culture and understanding of running a business is the biggest challenge. We have realised that a more comprehensive business support service is required”.

This is echoed by Tom Lodge, a political economist at the University of the Witwatersrand, adding that potential entrepreneurs need special help to move into niche markets in a country historically dominated by monopolies and exclusivity within business sectors.

Typically, a mentoring relationship occurs between someone who is new to a profession and a more experienced person in the same field of expertise or business in general. The initial critical success factor of the mentoring relationship is that there is good rapport and communication between mentor and mentee. The onus is typically on the mentor to have excellent listening skills and be able to give feedback in an effective manner that benefits the accelerated growth of the mentee. Yet, it is the responsibility of the mentee to drive the process. The mentee must realise that he or she has a vested interest, and thus must take some ownership to get the most out of the process.

It is important to realise that there is a difference between a mentor and a business advisor. A mentor can convey aspiration and goals, and share knowledge, skills and attitudes necessary to assist the mentee to achieve specific objectives. The mentor can also assist the mentee to assess his or her strengths and weaknesses and determine which functional or behavioural competencies need to be developed. Whereas a business advisor specifically focuses on providing strategic and tactical advice to ensure the entrepreneur meets the administrative, financial and operational requirements of establishing and running the business.

Says Bradley Bothma, Director of Sizanani Advisory Services, “There is a plethora of business management consultants, strategists, advisors, mentors and coaches in the market whose services come at a price. Entrepreneurs must be selective of who they are comfortable with as a mentor and must also understand how to get the value out of a mentoring arrangement. It is certainly advisable that the mentor is referred by a credible contact or an established organisation.

Khula’s Thuso Mentoring Programme provides start-up businesses with guidance on the development of a business plan, and, once finance has been secured, a further three-month gratis mentoring for the business owner to assist with the establishment of the business.

However, where the emphasis is needed is longer term. While understanding the financial management is an imperative, it is the management of the risks attached and how to overcome that is the key,” continues Bothma, “This is why we believe that a holisitic approach to help mitigate the risks during the first year in business is so vital. A mentor must play an instrumental role to assist the entrepreneur to realise where his or her own drawbacks are, and then help to implement corrective measures to overcome them.“

Says Bradley Bothma, Director of Sizanani Advisory Services, “There is a plethora of business management consultants, strategists, advisors, mentors and coaches in the market whose services come at a price. Entrepreneurs must be selective of who they are comfortable with as a mentor, and must also understand how to get the value out of a mentoring arrangement. It is certainly advisable that the mentor is referred by a credible contact or an established business advisor accrediting organisation such as the Institute of Business Advisors in Southern Africa.”

Khula’s Thuso Mentoring Programme provides start-up businesses with much needed guidance on the development of a business plan. Once the finance has been secured, a further three-month gratis mentoring to assist the business owner in establishing the business.

However, there is a need for a longer period of mentoring to assist the entrepreneur over the high-risk start-up phase of the business. Mentoring over a twelve-month period enables the mentor to play a more meaningful role in reducing business risk. For example, many new business owners do not appreciate the need to find a good accountant who can compile the management accounts as quickly as possible after start-up and on a regular basis thereafter. A lack of management accounts is a well-recognised early warning signal that the business risk is increasing and that the owner is steering the business in the dark. Entrepreneurs need to become comfortable about speaking about risk in their decision-making. This is where a good mentor can add substantial value.

The mentor would ask typical questions, like whether the particular course of action is going to increase or reduce business risk? There is no point in pushing marketing and sales when the owner does not have access to management accounts showing what his gross profit is. We all understand that when opportunity knocks, the entrepreneur should act swiftly but he seldom asks whether the business is accepting undue risk. An acute awareness of risk management improves the chances of business survival, particularly in the early stages when financial reserves to cover mistakes are not usually available”, continues Bothma.

“This is why we believe that mentors should adopt a holistic approach to help entrepreneurs mitigate risks, especially during the first year in business. A mentor must play an instrumental role to assist the entrepreneur to realise where his or her own drawbacks are, and then help the entrepreneur to implement corrective measures to overcome them.“

Over and above having the requisite business acumen – including competent technical ability in a particular field - the mentor needs to be able to create an enabling environment so that the mentee learns sound business skills and integrates these into their own business management practices. Likewise, a young business entrepreneur needs to be prepared to accept the advice, learn through personal application and hard work; to make the necessary changes and lasting improvements in life and business.

Today, mentoring and business advisory services come at a cost. Not only to safeguard both parties, but also to outline expectations, timeframes and determine the objectives at the start of the process, it is recommended that a mentoring contract be entered into. Further, entrepreneurs need to have some guarantees built into the mentoring arrangement so that, should it not work, there is a way out.

A young business professional may also want to seek the support of an executive coach to complement the mentoring process. However, if a business is in start-up phase this would pose a considerable financial burden, and is not recommended. The ultimate goal is to ‘self-realise’ the value of the learning by achieving success in business.

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