Understanding the transitioning from an income generating (craft) to a profit generating (enterprise) entity
From what I have seen, many SMEs are the result of what could be called ‘accidental entrepreneurship’.
With many South Africans needing to provide their own income steam due to the high demands on the employment sector, many take the leap to create this income stream through honing their craft and passion or creating a small operating entity (an SMME), selling a service or products as an entrepreneur.
After a while with the initial objective being achieved of generating an income, we often continue on the same course as a means to an end without considering the implications of evolutionary growth (as discussed last week).
Once our ‘company’ has survived the first year, then the second and so on – we suddenly realised that our little craft or entity has become lucrative and is suddenly a company – with more staff, structure and complexity, and is moving from a mere income generating to profit generating business.
The fear of what to do next with the implications and consequences attached to being a shareholder/manager is often the down fall of most SMEs at this stage.
As discussed last week, before you can grow your company you need to know where you are right now (income generating or profit generating), to where you are going and how you want to get there.
The thought of contemplating new processes, capital, statutory and HR issues (including being the staff psychologist and personal banker) and everything else in-between that goes with being a shareholder/manager, is enough to send us running for the hills.
But if we can stop and reflect where we are in a trusted space and give ourselves the opportunity to grown in unison with our companies and structure, failure can be averted.
This is where mentorship is providing an essential support system not only for providing a guiding framework to evolve you and your company to the next level, but the sharing of skillsets and knowledge through the experiences of others over time is the best investment one can make into their future sustainable growth.
Thus, without a single doubt I can say that understanding the transitioning from an income generating (craft) to a profit generating (enterprise) entity is absolutely vital to your success!