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Professor Melodi Botha is an associate professor and researcher at the Department of Business Management in the Faculty of Economic and Management Sciences at the University of Pretoria. She is the Programme Lead for the MPhil degree in Entrepreneurship.
Her research focuses on training, educating and supporting entrepreneurs at different stages of preparing, starting and managing a business.
Why is it important for entrepreneurs to focus on personal development and education, even after they are no longer a start-up?
Research in South Africa has revealed that 80% of SMEs fail within the first two years of starting a business. So, if an entrepreneur makes it beyond this stage, it's worth investing time, money and effort to make sure that they succeed by seeking entrepreneurial education, training and development to improve their business offerings.
New competitors are constantly entering the market and established entrepreneurs should make sure that they maintain their competitive advantage by educating themselves in areas such as the most current trends in their industries, changes in the market, offering more and better innovative products and services, staying close to their target market to determine the most effective marketing strategies and providing a stronger value proposition.
For established entrepreneurs, there is also the risk of growing too fast or not being able to manage their growth.
These entrepreneurs should then educate themselves on the most effective growth strategies suited for their business. Personal development is crucial, as entrepreneurs progress through the entrepreneurial process because they learn as they go.
An example is when established entrepreneurs conduct a personality profile to determine how to cognitively adapt to their current entrepreneurial environment. Weaknesses or areas of improvement, such as poor financial planning for example, are highlighted and entrepreneurs can then work on these areas.
What advice would you offer entrepreneurs who stop researching due to time restrictions?
Time is a problem for all entrepreneurs; there is never enough of it. It's a matter of how effectively you use your time and how you plan the activities that should happen within a specific time period.
A big problem with entrepreneurs is also a lack of delegation, as they want to be involved in every area of the business. Entrepreneurs need to determine which activities can be delegated to an employee or partner and focus on the core skills that they are competent in and which help the business to grow.
What skills should entrepreneurs be developing while they are starting and then managing a business?
We recently conducted research on the skills that entrepreneurs need as they progress through the various stages of the entrepreneurial process. We identified two sets of skills, namely functional competencies and enterprising competencies.
The findings further revealed that established entrepreneurs viewed functional competencies such as marketing, financial, operational, legal, human resource, networking, technical, communcation and planning skills as important skills to have during the established stage.
Both start-up and established entrepreneurs viewed enterprising competencies such as creativity, innovation, role model interpretation, opportunity recognition, risk taking, need for achievement and the ability to gather and control resources as important during both stages.
More specifically, financial and legal skills should receive more attention when starting a business. In a similar study, we found that potential entrepreneurs should focus on opportunity recognition, opportunity assessment and creative problem solving during the potential entrepreneur stage.
At the same time, start-up entrepreneurs should focus on opportunity recognition, building networks and resilience, while established entrepreneurs should focus on risk management/mitigation, building and using networks as well as resilience.
Are there any tips and tricks you can offer to people who want to study, but still need the time to run their businesses?
Studying or learning should be a life-long journey that should not necessarly have an expiry date. I am talking about gaining life skills and developing entrepreneurial abilities through everyday learning. Most professional qualifications require continued professional education and I see no reason why entrepreneurs should not adopt the same approach.
Therefore, my first tip would be to plan to study. It should be part of a daily routine to study or learn more about an area where weaknesses arise. Many univeristies offer short courses such as three-day programmes in different speciality areas, which you can attend and not be away from your business for too long.
In early stages of formal tertiary education, my advice would be to focus on your studies first and thereafter focus on the business. This does not mean that you don't have to start planning and aquiring resources while still studying. For example, our second year students, studying towards a BCom in Entrepreneurship, prepare their own feasiblity studies and compile business plans as part of the curricula.
What startling facts and figures has your research revealed that many entrepreneurs don't realise?
In a recent study we determined that many potential entrepreneurs (students) show a strong entrepreneurial intention to start a business in future but rarely go over into action and the rate of actual start-ups, in South Africa, remains low.
This is also the case for entrepreneurship education graduates. However, prior entrepreneurial exposure, such as having entrepreneurial parents or entrepreneurial role models during the course of their studies, increased the start-up rate.
Another interesting study we conducted on women entrepreneurs revealed that women are in desperate need of entrepeneurial training and education. The Women Entrepreneurship Programme (WEP) at the Univeristy of Pretoria measured 180 women who completed the programme.
These women were measured on their skills level before the programme, directly after the programme, six months after the programme and ten years after the programme took place.
They were measured on eight different levels and the WEP proved to be effective in not only transferring entrepreneurial and business skills to women, but also improving their business performance indicators (turnover, employees, sales and profit). Some of the women (35%) started multiple businesses six months after they attended the WEP.
Ten years after the programme, the results of the study confirmed that these women's businesses made a significant difference in their communities and the economy of South Africa as a whole.