The mark's being missed...
Small businesses, start-ups and expansions have their share of challenges just to keep their doors open. It seems like there are so many things for the small business owner to consider that they can be overwhelmed if they don't have a team in place.
Nowadays, with the various courses and levels of education about business increasing; the difficulty has not lessened. Sure business people are now more savvy, educated and professional. They can put lots of the parameters and systems in place in their planning. They are better equipped with business plans and the studies and reports that are proof that they have done their homework. They have minimised the unknowns.
Yet, despite the growing "support" for small businesses there seems to be a uniformity that exists among them when it comes to access to capital. They just can't access it.
Banks for the most part see the business plans, they acknowledge the credit guarantee schemes in place, they see the cadre of customers the businesses have already, they see the projected financials and the historical figures, they need to lend out the funds that are in the system. Yet, they don't.
Sadly, the reason comes down to collateral. Something that many business people do not have, and one of the reasons why guarantee schemes have been instituted.
This problem is not isolated to non-white business people but is quite broad based within the society. Here are a number of considerations which the finance houses, in my opinion seem to be missing the boat.
Very few, if any, has large accumulations of property to pass on to their children like once before. Present day families place their focus on educating their younger members and tended not to maintain large parcels of land like before.
Many became disinterested in actually getting land and home, seeing the easier route of renting from someone who would have made the investments, and have them maintain the upkeep of said investments.
Many people do not know the various forms of investment available to them. It's not the conversations that they have within the family setting. Talking about money almost seems taboo for many.
Money, in terms of currency, has lost its value. Saving money in banks no longer affords you to be able to plan any growth by way of interest received. The "service charges" and bank charges far surpass any interest payments the banks would pay to customers for using their money.
The qualifications of the applicant emphasised by the educational systems do not carry the expected weight with the financial institutions. The education component is failing.
The relationship banking is truly tested when you want to do a project that requires financing for which you do not fully "qualify" in terms of the banks' parameters.
Too many people are being held to ransom by the banks since they have a dependency on debt financing and have not learned/paid attention to the opportunities of equity financing.
This behaviour is not limited to banks, but even finance houses designed to assist entrepreneurs are exhibiting these characteristics. There so much seems to be a fear of losing, they they miss out on the opportunities to capitalise on real winners.
So what is the end result? The level of disillusionment is high and many small business owners are wondering - why bother?
The tokenism of businesses is prevalent. It means giving them less that they ask for, expecting them to perform at planned levels, and then being justified should they fail, that you didn't put in more because you had a feeling. They came with research, not feelings. Research that said clearly what was needed to succeed.
The dogma of many programs is start small and grow it. I say start at the size that you researched is the right size to begin with which is sustainable.