SMEs - a new funding website for South African SMEs

There is an interesting new website for businesses seeking funding in South Africa and it can be found at this website

SMEs - Step 3 in the business planning process

So far you should have decided on a harvest strategy (Step 1) and on your business model (Step 2). In Step 3 we move to the next item that has to be addressed. Setting the Vision and Mission.

The setting of the Vision, Mission, Goals and Objectives must be seen as having a funnel effect, where the Vision is at the broadest part of the funnel, in other words the biggest picture on where the business is intended to get to in the far future, and the Objectives as the narrowest part of the funnel, the smallest picture on where the business is intended to get to in the short term future, normally considered the current financial year.

The Corporate Strategy would normally end at the completion of the PESTEL analysis (Step 5)and the Business Strategy would include Steps 6 through 11.

So to return to Step 3, the setting of the Vision and Mission. The Vision should look at where and what the enterprise wants to be in the far future. This will vary in time. Some enterprises think a 10 year horison is fine, while some, like the Japanese think a 50 year horison is fine.

The Mission statement is normally considered as a nearer term concept of where the business will want to be in say 5 years, bearing in mind that the strategy may involve enormous change in the enterprise which will evoke an evolving strategy.

Look at the following examples:

Toyota Vision
"To become the most successful and respected lift truck company in the U.S."
Toyota Mission
"To sustain profitable growth by providing the best customer experience and dealer support."

McDonalds Vision
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

McDonalds Mission
"To be our customers' favorite place and way to eat."

Hopefully this gives an insight into what a Vision and Mission statement should look like.

SMEs - step 1 in the business planning process

Once you have a basic idea of which new business you wish to start up, give a thought to your harvest strategy.

Firstly, remember that the reason for creating a new business is to create wealth for yourself, not to create a salary. The salary is simply the reward for the work you do as an employee of the business. The wealth is the reward for being an entrepreneur and taking the risk in starting the business.

But so long as the business is being run by you, it is highly unlikely that you will be able to extract the wealth you have created.  The best way to extract the wealth is to sell the business. This simple fact is one that many entrepreneurs and business owners often miss.

So before you start a business, decide what your harvest  strategy is for the new business. Who will buy a business of this sort? What basis will they value the business on? What profit and turnover levels will you have to achieve to be able to extract the amount of money you want in the selling price? Remember that the selling price is a function of turnover, profit and sometimes assets. It is not a figure you suck out of thin air. 

So understand the process and plan accordingly, and if the business cannot give you the required selling price in the allotted time, decide whether you want to proceed, or whether you want to find a different business. 

SMEs - step 2 in the business planning process

The second step in preparing a business plan for an SME is the business model.

The business plan requires you to define what you intend to sell to whom, and how you intend to do so, with the intention of making a profit. This sounds simple but can be complex in a business with many divisions or products.

Take the example of a computer store. Is the core profit of the business achieved through selling the product or through servicing the product and the client once the warranty has ended? It is important to know this, so that appropriate pricing and marketing strategies are defined and applied in advance.

The business will fail if both sales and service both discount their prices in the mistaken belief that the other is making the business' profit. So the model is an important component in assessing the future viability of the business.

SMES - future opportunities

The question of alternative power will continue to grow in importance. So too will the issue of sewage processing. The opportunities that lie here will, I believe, become fairly substantial over the next decade or so.

The use of solar and wind power is going to become very important at a home owners level. This will also see a return to older methods of heating and cooling, in order to reduce the power consumption of the home. These technologies are already being resusciated in the construction of large buildings, so why not smaller homes too?

An effort to reduce the need for power, and to generate a certain amount of own power, could see a significant drop in the need for power from external generators such as utility companies. Initially this will be driven by "green" people, but over time it is more likely going to become a cost issue.

Go look at www.shellfoundation.org.

I believe a similar issue will arise around water and sewage. Many of us allow enormous amounts of rainwater to go to waste, and our toilet systems consume vast amounts of water. By installing a system to recycle sewage so that it creates water for the garden and also an inert compost, we can once again reduce the need for water.

These technologies are not new, but definitely underutilised. Now is the time to start building brand in these areas as these will be long term trends and not short term fads.

Rob Smorfitt

SMEs - do business plans (1/2007)

This is a highly debatable topic. There are many business owners who are highly successful, yet they have never had a business plan. Similarly, there are many businesses that have failed because they never had a plan.

There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made. I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was merely a mental plan.

Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.

Rob Smorfitt

SMEs - do business plans! (1/2007)

This is a highly debatable topic.

There are many business owners who are highly successful, yet they have never had a business plan. Similarly, there are many businesses that have failed because they never had a plan.


There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made.

I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was perhaps merely a mental plan. Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.

Rob Smorfittt

SMEs - mixing personal with business goals (1/2007)

SME clients?! I had a meeting with a SME client today, and it was interesting in that it gave me an insight into how entrepreneurs are their own worst enemies at times. The main cause is their passion, which stops them from distinguishing between their personal lives and their business lives at times.

The SME client wants to grow his business and believes that he needs bigger premises to be able to lay his factory out better, and to have a more "acceptable" (upmarket) showroom than he has now. The SME manufactures a product that is a niche market product, aimed at the higher income groups, and in many cases the "old money" income group. The product could possibly be classified as a luxury product.

His wife feels they need to invest in a property, in order to create an income stream to form part of their pension.The natural conclusion they have drawn is to put these two separate issues together, and they now need to buy their own factory. However, to do so will increase their monthly "rental" costs five fold. It took an hour of discussion to get them to consider that they need to view the two decisions in isolation from one another, and that the main goal of the SME business is actually to increase sales, while the personal goal is to create a passive income through a property investment.

They are now going to assess their options for these two very separate and diffferent goals independently of each other.

But the interesting part of the story for me, is how they initially did not see them as separate.

This is a failing of many entrepreneurs and SME owners, and often leads to them making bad decisions in their personal life in order to achieve a business goal. I know I have done the same. Have you?While faith in oneself is paramount to entrepreneurial success, it should never allow decisions to be made which are to the detriment of your family. It is a difficult line to draw and follow, and as financier to our own businesses it is difficult to say no, but we must learn to temper our decisions with a dose of personal and family care! Failure is an ugly thing for the entrepreneur and his family.

Rob Smorfitt