Monday, June 4, 2012

SMEs - the lifestyle entrepreneur

SMEs also feature the lifestyle entrepreneur. There is much debate about these people. The reality is that while they are growing the business to the size that sustains the lifestyle they want, they do contribute to GDP and employment growth. However, once they have achieved what they want to achieve in respect of turnover and profit levels, they really do not try too hard thereafter. They are usually characterised by their toys - boats, cars, beach houses and the fact that they often only work 3 or 4 day weeks. They now begin with the maintenance programme. The fact is that they are useful to governments in good times, but not so good in the bad times. They do not want growth, nor do they want risk, and they often associate the one with the other. So are they right or wrong?! On the one hand it is their choice to limit their efforts in relation to the rewards. That is what democracy is all about. The government might want to get them revved up to a higher level, but they generally have absolutely no interest. So why should we bother with them. Why not leave well enough alone? They are satisfied and happy, so why interfere? Well, and here I talk only about my experience in South Africa,the problem often arises when they get to retirement. Most of them see the business as a pension. They fully intend to sell the business. The problem is they have stolen, in one way or the other, all the profits out of the business, so there is no value to sell. Eventually they get to the point where they realise that it is unsaleable, they have no pension, and they are trapped. And so begins the beginning of the end. They cannot sell, because they did not grow, and so they often  have no dominance in the local market anymore. The business is in fact in decline. The twist is sometimes the expectation of a child coming in to run the business which never materialises either. It is sad, but here in South Africa I often find 70 year old people who have to keep working because it is their pension. I believe the start of the maintenance programme is the end of growth and is also the beginning of the end. It is slow, inexorable and barely noticeable, but too often a very real reality.

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