Small businesses: One size does not fit all

Dr Lovemore Chipunza Correspondent
Zimbabwe is experiencing a rapid growth of small businesses (small medium and micro-enterprises (SMMEs) across all sectors of the economy. This is attributed to the continued retrenchments that characterise mainly large businesses.

Still fresh in the mind are the infectious three months retrenchments without severance packages which began on July 17, 2015 following a Supreme Court ruling.

In an economy such as that of Zimbabwe’s that is punctuated by liquidity challenges and high unemployment, among other challenges, most retrenchees have no choice but to join the informal sector which is the only hope to earn a living.

Similarly most graduates from various universities and colleges are finding it difficult to penetrate the job market and hence are now also contributing to the increased number of small businesses. While small businesses are highly valued as important sources of job creation, poverty alleviation and innovation, researchers and policy makers in Zimbabwe seem to treat the small business sector as a homogenous group thereby prescribing the same dosage to the entire sector’s challenges.

Unless and until each category/segment is unravelled as an independent unit, this oversight will persist notwithstanding the fact that each one is unique and requires separate treatment.

In an effort to unbundle and unpack the three categories of SMMEs, I am tempted to start with the micro enterprises commonly referred to as the survivalist entrepreneurs because they are the least considered segment yet they form the majority in number amongst the small, medium and micro entrepreneurs.

Survivalist Entrepreneur

Put simply, survivalist entrepreneurs are those who start their business due to lack of employment and not by choice. Many would have tried to secure employment even outside their area of expertise but failed. Despite their level of education, the poor socio-economic conditions which threaten their survival form the core motivation of these entrepreneurs to start their own businesses. Survivalist entrepreneurships are micro-businesses that invest little capital, generate little earning and do not grow beyond providing employment for the owner and/or family.

In the Zimbabwean context, these would include street vendors who sell fresh vegetables, drinks, fruits, airtime and clothes in flea market just to name but a few.

Characteristics of survivalist entrepreneurs

It is evident that survivalist entrepreneurs throughout the world share common characteristics.

At the same time, these characteristics can evolve with changes in the global and or country economy.

Unlike in other countries, the majority of survivalist entrepreneurs in Zimbabwe are educated and do not necessarily come from poor backgrounds.

Most survivalist enterprises in Zimbabwe are run as individuals or family endeavours primarily selling food, beverages and various essential consumer goods mainly of low value, with small profit margins.

If operating away from a residential home, these micro-entrepreneurs are commonly found around taxi ranks and public transit stations.

The objective is to follow high human traffic volume. These entrepreneurs are small business entities that play the cat and mouse game with both municipal and Zimbabwe Republic Police.

Invariably, these are the same businesses that can still survive without a permanent location as they ordinarily do not like overheads.

Survival entrepreneurs operate in an environment that is characterised by low barriers to entry which leads to overcrowded market “niches” (saturated markets) that threaten the existence of existing businesses. This cycle whereby the birth of an enterprise leads to the demise of another is termed “involuntary growth” or churning.

Such a situation calls for the survival of the fittest.

In the absence of essential services and support from key stakeholders and the governments as observed within Zimbabwe, overcrowding markets can easily result in poor trading conditions in and around the trading environment.

Importance of Survivalist Entrepreneurs

Survivalist enterprises form the last line of business.

They provide employment at least to the owners and or a few other people thereby making them their prime sources of livelihood.

Although being categorised as generally unsustainable businesses, literature indicates that some of them have been operating for many years and being run as family businesses.

In view of the harsh economic climate currently prevailing in Zimbabwe, survivalist enterprises play a key role in facilitating trade through breaking bulk, providing the product in an accessible location and usually at a negotiated price.

Despite various governments’ ignorance and lack of assistance for this type of business, survivalist enterprises, especially in Africa, are playing a crucial role in the economy of their respective countries as well as in uplifting women, youth and are recognised as a norm by many families in various countries.

Arguably, survivalist enterprises act as buffer to poverty and lessen dependency on government aid.

Imagine what the economy of Zimbabwe would be like now if the Government was to provide unemployment benefit (UB). If given proper attention and support, survivalist enterprises can positively contribute to economic growth. For starters, this could be achieved foremost by unbundling them from the rest of SMMEs thereby identifying and supporting their needs.

This could then be followed by a deliberate shift from the one size fits all policies to introducing those that are specific and relevant to survivalist enterprises. Such a move will not only make these businesses become viable and sustainable but also grow to small and medium enterprises.

It is never too late for stakeholders such as municipalities and the responsible ministry of small enterprise development to engage and put up workable and viable plans which foster co-existence.

The fact of the matter is that survivalist enterprises, municipalities as well as the Government at large desperately need each other and hence cannot continue to live worlds apart.

The Government should take advantage of their large numbers and formalise these businesses.

Instead of the Government emphasising on the need of to improve the “ease of doing business” to foreign investors only, similar attention should be given to the survivalist entrepreneurs.

Such a development will resonate well with the Government’s 10-point plan and specifically item number 4 which talks about the unlocking of SMEs potential.

It is an honest truth that the knowledge and skills that reside in these survivalist entrepreneurs are the same that were being applied not so long ago in large corporates. As such, if the right intervention and support is administered, survivalist entreprises will undoubtedly grow and become sustainable.

Government support to survivalist entrepreneurs

Ignoring survivalist entrepreneurs is not unique to Zimbabwe but is pervasive in both developed and developing economies.

The fact of the matter is that survivalist entrepreneurs exist at the lower spectrum of the entrepreneurial opportunity scale, which allows them to escape the glare of research scrutiny.

Existing research tends to focus on big businesses that exhibit characteristics of growth.

Results of a survey conducted in a developed country showed that politicians and policymakers are also least interested in the concept of survivalist entrepreneurship.

This is mainly because of the associated recognition and money that comes with research into sustainable business.

While there is evidence to show the Government of Zimbabwe supports SMMEs, more still needs to be done in terms of researching and formulating policies that are specific to survivalist entrepreneurs.

In Zimbabwe survivalist entrepreneurs now anchor the informal sector and hence are an integral part of the emerging economy.

Arguably, they cannot be wished away and neither can they be ignored.

It is therefore vital for the Government to recognise their existence by formally registering and recognising them as essential drivers of the emerging economy. The Government can unlock the potential among survivalist enterprises by designing and aligning policies that are specific to this category.

  • Dr Lovemore T. Chipunza researches on SMMEs and advises entrepreneurs. He is a motivational speaker on entrepreneurship, with a Doctorate in Business Administration from the Central University of Technology, South Africa. For feedback e-mail: [email protected][email protected]
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