Welcome to the dangerous world of the accidental entrepreneur

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Michael Gerber, in his book titled “The E Myth Revisited”, brings a sobering reality to the debate.

Gerber’s take is that business is complex. According to Gerber we all have three personalities – entrepreneur, manager and technician.

The technician and the manager are who we use as employees in our daily lives, utilising those skills to earn our livings, such as salespeople, administrative people and management.

When we decide that we want to go into business for ourselves, we think from the perspective of the entrepreneur. Our thinking changes from that of technician and manager.

It is then that we lose focus and don’t really take into consideration all the requirements and components that are needed to make a business successful.

At the heart of the challenge is what you as a person are most comfortable with, being an employee or an entrepreneur.

The reality is that not everyone is made up to be an entrepreneur. There is place in the world for employees and entrepreneurs.

There is nothing wrong with being an employee, particularly if being an employee is what your make-up as a person is, and what you feel most comfortable with is being an employee.

Likewise, there are people who are more comfortable being entrepreneurs.

Yes, it is exciting to open or buy a business, no doubt, but sadly this euphoria, glitz and glamour of owning your own business does wear off, leaving you assessing whether you really wanted to be in business for yourself, or asking if you would have been more comfortable staying employed.

Here is where the whole idea goes pear-shaped – not having the luxury of choice as to whether to go into business or not. Companies close down, downscale and right-size everyday, leaving their workforce unemployed.

With no job prospects available in a tough economic climate makes it even tougher. Throw in the government requirements of BBBEE and you leave these retrenched folk in a terrible space where they need to replace their income but cannot find jobs.

The only option they see is to venture into the world of business, starting a business, buying a business or buying/starting a franchise. By far the majority of these people are actually employees at heart and employee-minded people who would not have had as a goal owning a business, but due to circumstances they have become what we call accidental entrepreneurs.

Setting off into a world they have been forced to adopt, these people take their pensions and retrenchment package payouts and invest them in a business they believe will be able to sustain them.

They attend a franchise exhibition and, more often than not, don’t seek out professional advice while being referred to a business by a friend or a colleague, and invest in that business.

There are so many broken businesses that litter the South African business market, possibly having been owned by an accidental entrepreneur, and which are now on the market.

What we are seeing every day is adding to this horrific statistic of business failures in South Africa, of employee-minded individuals buying businesses already on skid row and not having the skills to fix them.

The end game here is also the misery, as the accidental entrepreneur lands up losing not only the business but also the investment, and more than likely also owing the bank and the landlord money.

Broken businesses stem from when accidental entrepreneurs get into a business and realise that they really do not want to be there.

The accidental entrepreneurs then seek re-employment as an employee, sometimes in a job not even suited to what they qualified in or where they came from – just to have a job.

Upon taking up employment again, the accidental entrepreneurs, still sitting with a business, move straight into employing a manager to replace them in the business they acquired.

Now, while there are very competent managers in the market, the manager is not the owner of the business and will have a very different approach to the business than an owner would have.

The manager is an employee who works to get paid at the end of the month. There is a common adage among business owners that “managers are damagers”, and you need to limit the damage.

There are very good management staff in the market who, if well compensated, would be committed, but these managers need to be found and referenced properly. This is sadly something the accidental entrepreneurs neglect in their haste, and employ the wrong manager.

The business’s future becomes clear when our accidental entrepreneurs become absentee business owners and go back to a life where they are more comfortable – that of an employee.

With a manager in charge only partially motivated by salary and probably not equipped to manage the business, the business will probably not make money either and will land up costing money.

This is when the business gets put on the market. Going back to an earlier point, a broken business, the cycle is complete. With the business not being saleable, the accidental entrepreneurs end their involvement and close the business down, adding to the statistics of failed businesses.

Far more damaging and far-reaching is the financial ruin and devastation for the accidental entrepreneurs, their family, and their employees and their families.

In the end there are far fewer entrepreneurs than there are employees, probably for good reason.

Franchisers, business brokers, accountants, attorneys, and all those who are involved in advising and selling businesses should place a very strong emphasis on whether the person has entrepreneurial will, want, skills and flair, and if they don’t, should advise potential business owners against going into business for themselves.

* Article written by Derek Fox, president of the Greater Boksburg Chamber of Commerce and Industry.