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What can your small business do about unemployment?

Posted by Sureswipe on 26 January 2017

Changing South Africa’s employment situation hasn’t entirely been put on the shoulders of small business owners, but increased entrepreneurship is often seen as a solution. On the other hand, small businesses often do not have the capital for more staff. Are small businesses a feasible answer to the country’s unemployment?

By 2035 the number of Africans joining the working age population will exceed that of the rest of the world combined. Statistics such as those make solving Africa’s employment issues even more critical.

Read more: Omidyar Network releases African entrepreneurship report, it’s a must read

Currently 5% of the SA population is carrying the remaining 45% economically. The South African unemployment rate rose to 27.1% in the third quarter of 2016, the highest it has been in 13 years, while 47% of the South African population earn below the R3500 proposed minimum wage.

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As adequate employment in the public sector seems to be unlikely in the near future, entrepreneurship is seen as a way to ensure a sustainable economy in the future. The thinking being that where people create their own employment and are able to employ others this alleviates the burden on government and the public sector.

The concern however is that even when entrepreneurs are able to start their business, they have the tendency to fail. So if 8 out of every 10 new businesses in South Africa fail in the first two years and entrepreneurial activity has dropped by 34% since 2013, how can entrepreneurship ever be an effective response to our unemployment crisis?

Read how to rebound after business failure

In the current state, entrepreneurship cannot adequately address the employment situation, but that is not to say that this cannot change. The key is to focus on the ‘why’- in this case, why it is that entrepreneurs in South Africa are failing and how to change the situation.

The Global Entrepreneur Monitor 2014 report shows that the rating of South Africa’s entrepreneurial ecosystem - the conditions that enhance or diminish new business creation - have decreased. The biggest reasons for the decline are the poor ratings on primary education, government programmes, restricted and inhibiting regulatory environment and restrictive labour laws.

In real terms, what this means is that entrepreneurs deal with an environment that does not foster their success but in fact impedes it. It is crucial that entrepreneurs and other business leaders begin to have the difficult and important conversations with government and other stakeholders about how to make real change in the entrepreneurship landscape. More than just conversations, we need swift action and changes to make successful businesses a reality.

While it is important that governments across the continent cultivate an environment that makes it easier for entrepreneurs to start businesses and create programs that finance and support their operations, it will take effort from all sides to truly make an impact.

For many people this seems incredibly abstract in the face of the day-to-day struggle of starting, maintaining and growing their business idea into one that is sustainable and profitable. Even for established small businesses, the realities of salaries, overheads and running a seamless operation, make it difficult to consider your possible role in the bigger picture. But what if your business could be the difference?

Start looking at ways that you can aid in the change. Whether it’s even one person, mentor a budding entrepreneur and encourage other entrepreneurs to do the same. If we all work hard to play even a small part in changing the employment situation, that can be the difference between poverty and change.

Topics: small business, unemployment, Growing Your Retail Business, unemployment solutions

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