Is gender disparity decreasing within the SME sector?
Recently, hundreds of people gathered in Cape Town for a youth entrepreneurship conference which formed part of the Telkom Cape Town Entrepreneurship Week, which in turn forms part of Global Entrepreneurship Week, billed as the “largest festival of entrepreneurship in the world.”
The SME Toolkit South Africa will also be hosting its annual Young Entrepreneurs Business Plan Competition Awards evening on 15 November. Hosted by Business Partners, IFC and IBM, the awards event is a culmination of two months of workshops and interviews with young entrepreneurs who would like to take a leap into the field of business. The Toolkit is an online resource which offers software, business forms, tools, articles and training to help small businesses grow and prosper.
These are all manifestations of the growing push by governments, the private sector and civil society around the world to try to persuade young people to choose business ownership as a career path.
The theory is largely uncontested. More business owners mean more people standing on their own feet. It means more job creators, more gaps in the economy being filled and more wealth being created. And, as leading US entrepreneurship researcher Scott Shane found in many corroborating surveys, business owners tend to be happier than the general population.
But the conversation in South Africa over entrepreneurship is often very confused. Common mistakes range from glamorous entrepreneurs inappropriately held up as role models as opposed to solid local business owners, to young people mistakenly told “if you can’t find a job, start a business.” Business owners know that a critical requirement of business survival is previous work experience.
Part of the problem is that business owners are rarely part of the conversation on entrepreneurship. Many business owners are too busy to attend a conference like the upcoming one in Bellville, for example, even though the issues discussed there affects them deeply. When they do participate, their perspective is often tied too closely with their own businesses, because business ownership is such an all-encompassing, some would say overwhelming, experience.
It is therefore helpful and interesting to explore the views of someone who has made a study of the lives of business owners, even if it is just to place your own career path into the broader world of business ownership.
One such thinker is a Canadian market researcher called John Warrilow who has come up with a theory of the lifestyles of business owners which is grounded by the fact that you would immediately recognise yourself in his scheme.
Warrilow says that there is no such thing as a typical business owner – the range of the types of people running their own businesses is simply too wide. Add to this the wide range of industries that business owners operate in, the different phases of growth of their businesses, and it becomes even more difficult to point to an “average” or “typical” business owner.
But Warrilow has figured out that there are roughly three types of business owners. No, not retailers, manufacturers and service providers – he says you get all three types across all sectors. Rather, he classifies business owners according to what they want to achieve with their businesses. He calls his three classifications empire builders, freedom fighters and craftsmen.
The empire building is the one most generally associated in popular imagination as the “typical entrepreneur” – always busy with the next project, an insatiable thirst for growth and wealth, aiming to take over or revolutionise whole markets and industries. These are the Richard Bransons, the Mark Shuttleworths and the Patrice Motsepes that are so often used as role models. But Warrillow reckons they make up a mere 2% of business owners.
And rather than the glamorous lives that the very few top entrepreneurs lead, Warrilow describes the lifestyle of most empire builders as difficult, dogged by boom-and-bust cycles as they lurch from one project to the next. Very often an empire-builder type entrepreneur is dirt poor and in the process of liquidation. But they don’t stay like that for long. Interestingly, he says the empire builder is less concerned with money than with power. They tend to see money as simply another tool with which to build their empires.
Warrilow’s freedom fighters, on the other hand, seek financial independence above anything else and ultimately the freedom to spend their time as they wish. They are not interested in becoming the next Richard Branson, because that would bog them down too much and distract from their goal of freedom. Warrilow reckons about 28% of all business owners fall into this category.
The way Warrilow describes freedom fighters is roughly along the lines of what Business Partners call “lifestyle businesses.” It is conceivable that most of Business Partners’ clients fall into the category of freedom fighters.
Warrilow says the freedom fighter’s lifestyle depends very much where he finds himself in his business’s growth cycle. It is difficult in the beginning as they grow their businesses virtually from scratch, and gets systematically easier as they put more and more systems in place to ensure that the business runs on its own.
They are generally strong family people, and place great store in staff relations and customer care. Freedom fighters learn to become sophisticated business people, because they have to master difficult remote control systems such as accounting and business-performance analysis in order to gain their independence from the day to day running of their businesses.
Craftsmen, Warrilow’s third category of business owner, would rather not be bothered by business systems. They are first and foremost interested in practising their craft, and prefer to identify themselves by their craft first, and as business owners as an afterthought only. They say “I’m a plumber”, for example, or mechanic, film maker, vet, farmer, or grocer, before they say “I’m a business owner.”
Warrilow reckons that no fewer than 70% of all business owners fall into this category. Most craftsmen don’t ever grow their businesses past a handful of employees, because they tend to be uncomfortable with stepping away from doing the job themselves and taking up a manager’s role in the back office. It is understandable that their business paperwork is not often in the best shape.
The next time you are called upon to advise a young person, perhaps even your own children, about choosing business ownership as a career, it may be helpful to supplement your own experience with a broader view such as Warrilow’s. Ultimately, the answer to the question of “what’s the life of a business owner like?” is something along the lines of: “Often challenging, often very satisfying, but it depends…”