The other day, James Farrar Tweeted:
Anyone know how to make this 2.0 …http://southafrica.smetoolkit.org/sa/en ??
I took one look and my heart sank. The site, SME Toolkit South Africa is a brave attempt to help the budding business person understand how to set up and manage their business. It centres on issues around finance and provides a great deal of detail about how a business person might manage cash flow, look after their record keeping and collect their debts. It even provides a cash flow tool (illustrated above.) It has almost certainly been written by a committee of bankers and accountants. As such, the sections on accounting are next to useless.
Accountants train for 3-4 years. It takes that long to understand the basics and even then many don’t get it right when they try to put it into practice. How then is the entrepreneur supposed to make sense of the principles involved? They can’t and they won’t. That’s why almost all business people who attempt to do this kind of work for themselves fail. I know this because in more than 20 years as a practicing accountant, 10 of which I spent as a partner in a British firm of Chartered Accountants, I never met a single untrained person able to keep a decent set of records.
Almost every person who talks about this ‘stuff’ comes at from the wrong perspective. They assume the only way to go is to teach the 600+ year old principles set out by Luca Pacioli – he was the guy who invented double entry book-keeping. In other words ‘we’ try and train people to be accountants.
Computer software is no better. Almost all packaged applications have been designed with Pacioli’s principles in mind. They were built for accountants. It should come as no surprise when they fail in the layman’s hands. What’s the answer?
Accounting is an administrative chore which earns the business person nothing. It doesn’t make sense to teach the SME how to keep books and records. Instead, we can teach them about cash flow in simple everyday terms and then provide the tools that will help them take control and understand their financial condition.
But first, we need to listen and discover their challenges. Outside the big South African towns, professional advisors are geographically dispersed. A business person might have to travel 200km to find an advisor. That suggests online solutions operating in real time might provide an answer. That’s OK provided advisors are prepared to take up the challenge. An old colleague who lives in SA told me they are not. Like so many other professional advisors, they are stuck in a past that is not relevant to the needs of SMEs. That means brining the two sides together and showing them a different way.
I’m a firm believer in getting women to explain fiscal prudence because they are often budget masters. So for me one of the key steps means engaging with women as teachers in communities where the guiding principle is mutual help and respect.
Don’t assume that all businesses are made equal. Cash flow in particular varies enormously from one trade to another so gaining an understanding of the challenges is critical to communicating a compelling message. Nothing works better than real life examples and as South Africa has a strong story telling tradition, (look up the deirvation of Ubuntu) community stories should be naturally attractive.
From a technology perspective, a range of solutions are on the market that could readily solve the SA SME problem. Some are better than others and I do know of one that uses community principles as a way of supporting users and soliciting ideas for future development. It’s a kind of mini-SDN that uses free services. Unfortunately, SAP doesn’t make any of the solutions that I am thinking about. That doesn’t matter. SAP can still become a trusted partner in establishing and supporting SME’s in the formative and early stages. That sets the groundwork for the future when the business is ready for a solution that SAP does sell. That seems to me to represent a good start. In other words, it’s an investment in the future.
This has of necessity been a gloss over the topic and does not consider alternative approaches where SAP could have a direct involvement. That’s for another day. Over to you.