The success of entrepreneurship in South Africa
Trying to think of a way to overcome this, the VA owner researched internationally and realized that there was an overseas market for South African transcriptionists. She set up a website, submitted it to various search engines and non reciprocal link directories and obtained a lot of international enquiries in this way. The first stumbling block to the success of this venture came when this owner of the virtual assistance business attempted to set up a payment system whereby she could receive international payments.
She turned to PayPal, which was conceptualized by a South African partner. Because of this she thought that PayPal would be open to doing business with South Africans. She was horrified when she realized that while she could make payments using her PayPal account she would not be able to receive payments. When questioned as to why this was, PayPal gave the reason that fraud in South Africa was too high to allow the payment option – thus the owner of the virtual assistance business was judged by a perceived image of her country.
The entire field of international payment was fraught with obstacles – for instance, it costs Americans $50 to transfer money internationally. For a small entrepreneur who needs to receive money monthly rather than wait until the amount due is significant enough to cover this cost, this can be fatal to the business. The virtual assistant is reconsidering the viability of international trade. She has been able to set up a website, do international marketing very cheaply and knows that she can provide an excellent, quality service.
But the problem of receiving international payments without losing too much has proven overbearing and almost impossible to overcome. However the owner of the virtual assistance business can be glad for one reason that she is operating in the South Africa of today, the New South Africa, and not the South Africa of the 1970s, 1980s and early 1990s. During that time the government of South Africa was ruling under the oppressive apartheid system which denied everybody except white people any kind of opportunity in that country – they were marginalized in every form possible, from housing to education to employment.
(Briefly, “Separateness,” (Afrikaans, Dutch); policy implemented by National Party government (1948-94) to maintain separate development of government-demarcated racial groups; also referred to as “separate development,” an d later “multinational development”; abolished by Constitution of the Republic of South Africa of 1993. ) (Allrefer. com 2006) Quite naturally, the rest of the world objected to this policy and harsh sanctions were imposed upon the country.
This was a direct result of the rest of the world not liking the culture of the country and had dramatic impact upon the economy and the success of business within the country – all were affected, entrepreneurs of small, medium and large businesses. Unfortunately this included the very people that the countries imposing the sanctions were trying to help. Indeed the impact of apartheid in South Africa is still felt today and will be felt for generations to come.
But the fact that it is gone – the new generation of South Africans never knew or experienced it – and that technology is making advances all the time, and the new generation of South Africans use it better than any other generation of South Africans, means that the demise of apartheid and the advances offered by technology offer great opportunities for South Africans in the future. There are some who think that those South Africans who were marginalized in the past have a slight advantage over their white counterparts as they are used to the entrepreneurial mindset and having to think creatively about ways of earning a living.
Encouraging entrepreneurship is seen as the sure way to solving the unemployment crisis in South Africa (over 40% of the country are unemployed). But in some countries the ethnic group the entrepreneur belongs to can play a role in the success or failure of the venture. If we look at the example of Europe, businesses owned by ethnic minorities have a significant impact on economic growth in Europe. In the European Union there are at present roughly 13 million resident immigrants and ethnic minority populations.
Their businesses – mainly small and micro enterprises – play an important role in the European society and in particular in urban areas, where most of the businesses are concentrated (European Commission, 2006). Though data are not available for all Member States on how many new businesses are started by people with immigrant background as compared to all new businesses created, evidence in some Member States indicates that the impact of immigration on entrepreneurship is increasingly important.
In at least two Member States the percentage of ethnic entrepreneurs (start-ups) is already reported to be proportionally higher than the percentage of national entrepreneurs (start-ups). (European Commission, 2006) Many of the problems faced by ethnic entrepreneurs, when starting and growing their businesses, are shared with small businesses in general. However, the following problems appear to affect ethnic entrepreneurs more than entrepreneurs of small businesses in general: Access to finance and to support services Language barriers.
Limited business, management and marketing skills, Over-concentrated in low entry threshold activities where the scope for breakouts or diversification into mainstream markets may be limited. (European Commission, 2006) Solutions to these problems must be found and once they have been overcome, we also need to look at the effect of excessive regulation upon entrepreneurs (Shokrai, 1996). Before a person decides to start an international business, the following are just some of the things he needs to consider: What is international thought, culture and law regarding what he wants to do?
Will what he plans be as acceptable overseas as it is in his own country, does the law regarding international business differ from country to country and how does this impact upon him, does he need a business plan, does he need to register his company, how does he register it, what are the employment laws that are applicable, is there assistance that is rendered by officials for the sort of venture that he is going into?
It’s virtually impossible to list all the things a prospective business owner will have to consider, but they include Business Formation Laws, Consumer Protection Laws, Contract Laws, Hiring Laws, Environmental Laws and Regulations, Intellectual Property Laws, License and Permit Laws, Employment Laws, Securities Laws, Tax Laws and Zoning Laws. (AllBusiness, 2006) Is the culture in both his own country and internationally geared to help or hinder a person to interpret these laws, assess which is necessary or applicable to the business he is wishing to set up, give legal advice, etc.
In other words, is the culture towards entrepreneurship a help or a hindrance towards the entrepreneur in this respect? An entrepreneur may have the most fantastic of ideas but because of being unable to determine what laws are applicable, the venture may be a failure. In this way the culture pertaining to law can be a decisive factor in the outcome of the venture. In addition cultural beliefs and practices can limit access to knowledge, which is important in the success of an international venture. These are known as information or knowledge barriers.
Many small players have limited information about global markets – especially in comparison to large, more seasoned competitors. This makes it difficult to find the right market at the right time (Harcourt, 2006). Keeping an open mind would help greatly in eliminating this barrier. Additionally, aspects of cultural differences can lead to logistical barriers in international trade. When a firm becomes heavily involved in international business, logistics is seen as a critical part of the strategic planning process.
An effective international logistics strategy not only offers significant cost savings but also can help firms penetrate new foreign markets. Indeed, international logistics is recognized as an integral part of the marketing mix that furthers the global marketing process (Carter, Pearson and Peng, 2006). This means that an increased understanding of beliefs, practices and cultures is demanded for an international logistics policy to be effective. What means one thing in one country could mean something completely different in another country.
Getting started in international import and export can provide challenges all of its own. It requires great understanding of cultures and beliefs of other countries, in order to ensure that efficient business is done. An effective export strategy is required. There are several steps required with which to do this: Establishing contacts, identifying and researching the market which you wish to enter, making the deal and delivering the goods. (Gaebler Ventures 2001 – 2006).
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