Ricochet News

Coaching or Mentorship and the value for SMMEs

By Marvin Draai - Jul 18, 2019
Coaching or Mentorship and the value for SMMEs

Port Elizabeth - South Africa has some of the highest drop-off rates for small businesses (up to 95% of start-ups don’t make it past year 2), and the least amount of jobs (only 28% of total jobs) created by the SMME space, with 56% of all jobs in South Africa created by the largest 1000 companies.

With the world norm being at least 60% of jobs created by SMME’s we are certainly lagging far behind.

In a recent publication by the Small Business Institute, they claim that 98.5% of the country’s economy falls in the SMME category and combined with the above statistics, the target in the National Development Plan for 2030 of 90% job creation has become an extremely difficult and an almost unattainable challenge.

Just like the world over, the SMME sector should play a much bigger role in bringing about the change required and ridding South Africa of the 27.6% unemployment rate.

It is clear that there are many reasons for SMME’s not being able to grow. A slowing economy is a big contributor, together with tough labour laws, entry practices and significant amounts of red tape.

Where companies have gone past these challenges, there were other challenges, e.g. SMMEs struggling with access to new markets; or financial management and not being able to access any form of funding available due to lack of financial readiness and compliance etc.

Where interventions have worked however, and where mentorship or coaching has been identified as a crucial part of the development of the business, the results have only been good.

Often people ask about the difference between mentorship and coaching, and there are differences. According to “Management Mentors” there are 25 differences, but here are the 5 most important:

  1. Coaching is task orientated; Mentoring is relationship focused.
  2. Coaching is short term while Mentoring is always long term.
  3. Coaching is performance driven while Mentorship is development driven.
  4. Coaching does not require a design phase while mentorship does.
  5. The coachee’s immediate manager plays a critical role while with mentorship the role is indirect.
  6. The highest priority of a business mentor would be to help develop business skills that are not just relevant for the mentees for the short term, but also for the future. For a business coach, the biggest priority is to improve performance in the present.

So then, what is considered the best “fit”? In the entrepreneurial space, this is a choice made by the entrepreneur. It is a fact that many people and entrepreneurs don’t realize they need guidance through a mentor or coach. This gap alone is a big contributing factor to the stats as they point to the large numbers of drop- offs.

Once the value of having a mentor or coach is realised, the next challenge is to find the right person to get the right fit. With the stats of failed businesses as they are, one aspect we have control over is who we choose to be part of our leadership and ‘think-tank’.

The question then is- how do we get the most out of this relationship? Honesty and respect are the biggest factors to ensure we succeed in this relationship. Being clear however on our objectives and goals and setting a plan to achieve these goals and track them regularly are important. One of the challenges however is to keep the entrepreneurs honest and focused on these goals.

South Africa is currently experiencing the lowest economic growth in years, growth rates having slowed to under 1% and unemployment at record highs of above 27%, with the outlook according to ratings agencies also looking bleak. It will be up to us as citizens, in all spheres of society and government to turn this ship around.

Small business and its roles need to be highlighted and proper resources and support provided to ensure that we reduce the failure rate and increase the employment rate created by SMME’s.

Only by recognizing the importance of SMME’s in our economy and providing them with the best mentorship or coaching and include them on platforms with larger business and government, will we be able to make inroads and achieve the goals set in the National Development Plan for 2030.

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