Many budding entrepreneurs focus on one thing after they have conceived the idea for their new venture: How much capital will it need and who will provide me with the money. Many of these people are misplacing their energies: they focus entirely on seeking one or more providers of capital, rather than getting their idea onto a firm footing and off the ground.

The various definitions of entrepreneurship invariably include the elements of organisation, operation and assuming the risks associated with a business venture. Many people who wish to start up a new venture are missing all of these elements: they are not organised, have no sense of how they will operate the business and expect an outside provider of finance to assume all the risks. This is hardly a recipe for success.

There is no doubt that the central force of successful owner-managed enterprises is the owners themselves. Not even the most perfect opportunity (if such a thing ever existed) would be successful in the hands of the wrong person. You have to prove that you understand your business and will be effective in its management. Then finding the money will be relatively easy. Sizwe Tati, the Managing Director of Khula Enterprise Finance Limited puts it this way: "Seek first non-financial assistance to get your business plan and other essentials in place, and the money will chase you".

One of the myths about entrepreneurship is that it is all about taking risks. The reality is that successful entrepreneurs are adept at reducing their risk. Successful entrepreneurs focus on maximizing value creation while minimizing resources. In other words, you have to do more with less. An example of the application of this is that successful entrepreneurs commit resources in stages, with a minimum commitment of resources (and therefore costs) at each stage.

Wherever possible, successful entrepreneurs use the skills, talents and resources of "outsiders" rather than bearing the costs and risks of investing in that capacity themselves. This enables them to be more flexible. They have the ability to change quickly to lessons learned as they develop their business, responding to changes in their environment and opportunities to do things better.

It won't be easy! Entrepreneurship should carry a HEALTH WARNING! The statistics relating to start-up success are particularly sordid. Even successful businesses are always faced with problems to be addressed and challenges to be overcome. All business owners, particularly those who are venturing into their own business for the first time, need knowledge and tools. Not only do they need knowledge of their products and markets, but also need to know how to "balance" their business.

Every business is a balancing act and it is all too easy to lose balance and fall off the tightrope. It is essential that the business is set up "in balance". You need to identify the points of sensitivity and understand their influence on the balance of the business. Ensure that you develop your own understanding; this is not something to be delegated.

Providers of capital, particularly the traditional banking industry, face criticism, even from Government, for failing to provide easy access for budding entrepreneurs. I suggest that lack of finance is not the most challenging issue facing the development of owner-managed businesses. The dismal performance of start-up businesses has a negative effect on the individuals involved, their families and our economy. I submit that it is irresponsible to allow people to go into business on their own without the necessary training, support and disciplines.

Andrew McGregor is a director of the business PLAN. He can be contacted at adml@tbp.co.za or (011) 782 6746.

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