SME - opportunities to think about

Franchising offers many opportunities. But I am not talking about buying a franchise. The bulk of franchise opportunities in South Africa have come from the USA or EU. They are therefore Euro-centric in their design and conceptualisation.

In the African context, there is a strong socio-cultural trend to a more Westernised approach to life. This means that there is a lot of room to merge the Afro-centric with the Euro-centric and develop uniquely African franchises.

I am not suggesting it is broadly applicable, but there are certain narrow focus areas where it is possibly applicable.

An example of this would be clothing, and another example fast food. There are certain unique food tastes which are deeply ingrained in the African culture, but which could be presented in a Euro-centric manner expected of a franchise. Clothing too offers similar opportunitities.

SMEs - more opportunities

SME opportunities. So I am focusing on opportunities in agriculture and mobile apps. What about you? What about other opportunities?

Africa is so far behind on infrastructure, and South Africa falls further behind daily, so construction is an obvious one, as long as you quantify the risk attached to doing government business. Electricity has to expand in terms of the available power and the reach. There will be many opportunities in areas such as solar and other types of energy.

The biggest deterrent to closing construction and power opportunities, particularly in South Africa, will be the  ongoing manipulation for own gain by government officials, as well as intolerable and unnecessary regulations which simply slow development down. Labour will also stop a lot opportunities from happening as the cost of labour continues to escalate, particularly in South Africa.

Retail is going to be a growth sector for sometime to come. The growth in democracy in Africa is leading to increased income for many citizens, and consequently they have greater disposable incomes. Avoid giving credit as they people are all new to this world and have little idea on how to manage credit, which means you could could take a large hit if you do offer credit. Stick to cash or establish relationships with credit organisations who are specialists in advancing credit, but they pay you on delivery of the goods.

Transport into Africa is still going to be dominated by road and air transport for sometime, because Africa cannot afford to restore the rail systems they have destroyed through neglect. This is going to take sometime before it is restored. But these present new opportunities.

Franchising in Africa i think will be big as well, for the same reasons it is successful elsewhere in the world.

We will look at other opportunities in the next blog as well.

SMEs - the future as I see it

SMEs that are driven by entrepreneurs are always seeking opportunities. So where would I bet on the next big range of opportunities would come from. I believe that two key areas will be mobile applications running on the cloud. More specifically it will be geo-locationary applications. I believe the current wave will be followed by much more sophisticated applications which revolve around location. I am currently working with two applications in this arena. The next area is agriculture. The complete supply and value chain. I believe that food security is becoming a critically important issue globally. Everyone is panicking, well at least the governments are. The entrepreneurs are out shopping. I have seen most of the continents represented by agents looking for fruit and vegetables, as well as processed products. I believe the days where large players are able to manipulate the farmer are long gone. South Africa at present is filled with entrepreneurs here to do deals in the agricultural sector. So get out your programmer's gear or your wellington boots. There is a whole lot of money here for the taking.

SMEs - global growth crisis - opportunity or not?

The global financial/growth crisis appears to get worse every day. There is not a day that someone claims SMEs are becoming negative about the future as a consequence. Is this necessary? No! SMEs are small, nimble and innovative. If this is true, then surely they will never have a better opportunity to exercise these attributes to find new opportunities? I have never seen so many new opportunities arising as I have as of late. Yet, people generally do not. Open the mind. Look outside your industry sector. There are so many new industries springing up. Why not a change? When things are tough SMEs are often able to offer large businesses more cost-effective solutions, simply because they have a lower cost base. Anyone who claims to be an entrepreneur cannot but be overwhelmed with all the new opportunities. They are there aplenty. Do not allow naysayers to make your thinking negative. Research shows that businesses that are generally formed during these "difficult" econ0mic times generally do much better than those that evolve during "normal" conditions.

SMEs - funding for opportunities in South Africa

There is a new website offering funding opportunities in South Africa and can be viewed at this website

Types of opportunity

Leading on from what I learned from Prof Casson, I can advise that I also found there to be two main categories of opportunity. The first is your basic transactional opportunity. In this case these is demand and you see the opportunity to meet the demand with your supply, either directly or indirectly, and you do so. Deal done. In some cases this could be a business where it is a repetitive transactional cycle such as a supermarket. It could also be someone who only sells fire damaged goods, so although repetitive there is no predictability of supply. The other is where there is a demand and supply, but there is a lack of a market mechanism for matching supply to demand. A good example is SME finance. There is no shortage of businesses wanting funding. There is no shortage of finance available for lending. But it does not happen at the level it should, simply because there is no market mechanism. Supply cannot properly evaluate demand at a great enough volume to make the market function efficiently. Once this structural hole is filled the problem will be erased. So when looking for opportunities try and find the structural holes. They generally are also the more complex opportunities discussed in an earlier blog article.

Stock of opportunities

I had the pleasure of engaging with Prof Casson from Reading University on the topic of opportunities. Prof Casson is an economist, and in one of his papers he discusses the stock of opportunities. The question is whether the number of opportunities is limited. The discussion is very interesting, but a key factor for me was the fact that Prof Casson suggests that there is an inverse relationship between the number of opportunities and the complexity of the opportunities. In other words, the less complex an opportunity is, the more of them exist, and the more complex it is the fewer exist. While on the face of it, this appears to be very simplistic. However, when considered in greater depth it is very interesting. Complex opportunities have less competitors. The greater the complexity, the greater the barrier to entry. Is this not what we are all seeking? Bigger barriers to entry means fewer entrants and therefore increased profitability. The question is, when we are looking for opportunities, do we factor these thoughts into our thinking, or do we too grab at the first thing that crosses our mind/desk? This is particularly applicable to SMEs, who too often take whatever comes first that looks easy. They immediately put themselves at a disadvantage. Do you?