South African small businesses can help turn the country’s unemployment status and economy around, but to achieve that, promising entrepreneurs and youth will need far more mentorship than what they are currently getting.
This is according to Mitchan Adams, the founder and CEO of local venture builder Aions Creative Technology and a serial entrepreneur.
Adams is no stranger to the world of small business and entrepreneurship, having previously co-founded instant EFT and online payments fintech Ozow with Lyle Eckstein and Thomas Pays. From start-up seven years ago, Ozow last year procured a $48 million (R886 billion) series B investment round led by Tencent.
Adams and his company, Aions Creative Technology, in May, launched a micro-investment platform that will allow the person in the street to invest in rapidly growing start-ups for as little as R50 a month, contributing to what the company calls the ‘democratising of wealth’ in South Africa.
The new platform, Aions Exchange (AEX), will create a unique offering for start-ups seeking funding as well as South Africans looking to build wealth.
AEX will allow investors to own a fractional share in one of the businesses currently being mentored by Aions and to share in the profits when the business is sold after three years. All companies listed on AEX are all high growth start-ups with an innovative and technologically advanced approach to real-world problems.
“Investing in start-ups doesn’t have to be reserved for the rich. In fact, micro-investing is the future of entrepreneurship in South Africa. By pooling investments from the ordinary person in the street and investing in sound and innovative start-ups which can then scale and grow aggressively to be sustainable, we will both create wealth and permanent jobs, which will result in true broad-based shared value,” said Adams.
Adams shared how other entrepreneurs can gain success.
His advice to future entrepreneurs is simple: “Find a problem in your community and come up with a solution to it. Spend some time learning about the problem: solutions take time. And it helps if you have a passion for what you are doing or at least some experience in it. Then, go and find someone who’s started their own business before, or at least a local incubator, and learn the business of running a business.”
The success of small businesses depends largely on getting the right exposure and opportunities.
‘’Millions of South Africans and small businesses don’t get those breaks. We’ve got to become better at giving people opportunities-and, one way to do that is to make the public stakeholders in their success. That way, they benefit from the value-generating power of creating and selling viable businesses,” Adams said.
The reason most start-ups fail is simply because of a lack of business experience.
‘’I see it all the time: people want to become entrepreneurs, but they make mistakes that are easily avoidable. And in its early stage, a start-up can’t survive mistakes,” he said.
It is estimated that approximately 70%-80% of small businesses fail within five years, especially in disadvantaged communities, which need the jobs and economic activity the most.
Among the main reasons they failed was a lack of funding and basic business acumen, which could be overcome with mentorship in the start-up phase, said Adams.
“You can have all the funding in the world, but that does not mean you were going to do the right things with that money. You need people who have been there, and done that, to help you get your pricing right, manage your assets properly, make sense of financial statements, and market yourself properly.”
Adams believes mentorship is critical to help shape the life skills and decisions of South African youth.
This as research has shown that mentoring has had powerful positive effects on young people in personal and professional situations.
“Mentoring connects young people to personal growth and development and, ultimately, to social and economic opportunity. Many young people miss out on this,” he said.
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