Philip Copeman

Author and Activist

My disagreement with the Sanlam/Business Partners Entrepreneur of the Year award.

It is an error to believe that "The failure rate of startups is extremely high". This error is both wrong and destructive thinking. This belief will unneccessarily scare off start up entrepreneurs. SME failure rate is low. SMEs don't go out of business. What actually  happens when a business fails  is simply that the entrepreneur morphs off into something else, taking experience with them.  Business failure is uniformly spread accross the economy. Workers give up and resign from corporations all the time. Business failure is just not easy to see in a large corporation. If a product fails in a large corporate, you simply close that section, paper in the walls and either retrench the staff or move them over to another department.

So it is with start ups. If a business fails, the entrepreneur moves to something new, they don't lie down and die. Sure in a smaller business sense, the wrenching may be traumatic, but losing your job in a large corporate can also be traumatic to the fired worker.

All your reasons for failure can be summarised by the fact that SMEs often lack fully functioning accounting system. Without solid accounting procedures, any business is at risk of making bad decisions. This is why here at the TurboCASH Project we take pride in delivering a free accounting package, so that any SME should know that there is no capital impediment to them taking on a good accounting system. The added benefit is that it is open source and free.

However an accounting package is a necessary but not sufficient condition for success. It can easily happen that a business gets broadsided by a change in consumer habits,  an incomming technology wave or a voracious competitor. This is just part of evolution. The entrepreneur should dust themselves off, take what they have learned,  pick up the pieces and head back in with a new plan.

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