WeeklySA_AdminENVIRONMENT: Prospectsof success for companies have to do with the time they were established…
By Own Correspondent
Only 25 percent of new businesses make it to 15 years or more, according to data from the United States Bureau of Labour and Statistics. Despite vacillating economic conditions between and across markets, that statistic has remained consistent for 30 years.
A new study from the Strategic Entrepreneurship Journal of 1 0000 businesses suggests an elegant explanation: a business’s long-term success depends significantly on its founding conditions not just changes in its markets.
“A venture’s performance following environmental change depends on its internal processes,” says Carrington Motley, an instructor in entrepreneurship at Carnegie Mellon University and co-researcher of the study. “Environmental conditions at a business’s founding shape those processes, and they quickly become cemented and embedded in beliefs about how to operate.”
Motley and his co-researchers, Charles E Eesley of Stanford and Wesley Koo of INSEAD Asia, examined performance for more than 1 000 ventures founded from 1960 to 2011. The businesses operated in 19 industries ranging from agriculture to energy and utilities. The researchers used data from the Bureau of Economic Analysis to quantify dynamism within each industry over time and within each venture’s founding year. They used alumni survey data to establish the composition of each business’s founding team as well as its longevity and ultimate outcome.
“Businesses founded in dynamic environments by a functionally diverse team show meaningfully more ability to survive during market change,” Eesley said. “However, they don’t necessarily have an increased likelihood of a positive exit.”
Businesses founded in dynamic environments typically favour slower, decentralized decision-making and increased creativity and flexibility. A founding team with many distinct functional roles compounds these behaviours — they have broader strategic focus and seek large amounts of information. These risk-averse structures and strategies help businesses persevere during environmental change, but the study also found that these businesses where less likely to gain IPOs or acquisitions if their market stabilised.
“In stable, more predictable environments, being more aggressive can produce better outcomes,” Woo said. “The risk of untested assumptions is less, so continued use of risk-averse processes produces fewer benefits and may detract from a venture’s ability to respond to opportunities.”
The researchers argue that the key differentiator for businesses founded in dynamic environments by functionally diverse teams was slower decision-making. They tested the theory by first examining their performance in industries where fast product development was critical to competitive advantage and second by determining how quickly they took to receive angel or venture capital funding. Businesses founded in dynamic environments by functionally diverse teams fared worse in both instances.
Whether an industry is in a state of flux or stabilising, the study indicates that typically businesses benefit from market change only if that change better aligns with their founding environment. Despite its premise that founding processes become entrenched, it offers an insight to entrepreneurs hoping to both survive chaos and thrive in calm.
Businesses need to examine their founding structure and internal processes and consistently re-evaluate whether they are best suited to their market environment.
UNDERSTANDING CORPORATE CULTURE KEY TO WOMEN ENTREPRENEURS’ SUCCESS
HURDLE: Many face difficulties when it comes to targeting big business as clients….
By Isaac Moledi
Why do female entrepreneurs make waves in various industries but often face challenges when it comes to targeting big businesses as clients?
This is one of the questions that disturb entrepreneur Connie Matlejoane who believes that the same challenge can be raised about promotional product industry. According to Matlejoane, female entrepreneurs are able to make waves in various industries – from tech to fashion to food – but often face difficulties when it comes to targeting big business as clients.
She believes that the promotional products, the industry her CRM Enterprise is operating in, is no exception. The area is one that she is working hard to overcome and share learnings for others.
CRM Enterprise, a PTY Limited black femaleowned company with Level 1 B-BBEE rating, operates in promotional products, corporate gifts and branding industry. “We keep your brand top of clients’ minds with our wide range of promotional products and branding solutions,” she says referring to what her company offers.
“Our Brand Promise is to offer our clients exciting range of high-quality and on-trend products that will inspire consumer confidence in your brand.” Matlejoane, an entrepreneur from Klipfontein View in Midrand, Johannesburg, says she has built a thriving business despite facing numerous challenges along the way. After being retrenched from her previous job, she decided to start CRM Enterprise in 2018 to contribute to the economic growth of the country and create employment opportunities in the township where the company operates.
She started CRM Enterprise with just a desk, laptop and cellphone in the corner of her bedroom. The company has since grown into a successful operation with six permanent employees.With a strong focus on transparency, partnership and improvement, they deliver on speed, price, and care to provide exceptional services in corporate gifts, promotional products, PPE as well as branding and signage solutions. In addition, she says CRM Connect is part of the CRM Enterprise family, providing internet café services and small business support services. With a commitment to excellence and empowering small businesses, she believes that CRM Enterprise has become a leader in its industry.
“The industry is high-volume, lowmargin and driven by bulk orders, which means that corporate clients who procure promotional products in bulk are essential to building a profitable business.”
According to Matlejoane, female entrepreneurs can get a seat at the table by being persistent, building a track record and also deliver excellent customer service. They must also understand corporate culture and decision-making processes and must have negotiation skills.
She elaborates on these points and shares her top three tips for other female entrepreneurs who want to make waves in this industry.
Build a track record.
One of the biggest challenges faced by female entrepreneurs in the promotional products industry, and small and medium-sized businesses in general, is gaining the trust of procurement and marketing professionals who prefer to deal with suppliers they know and have a track record with, rather than risk a mistake with a new entrant or a small business.
By accepting even the smallest orders, keeping an active online presence, responding to requests for quotations quickly and sticking to clients’ deadlines once the order is secured, female entrepreneurs can prove themselves and build a track record.
Create solid relationships.
To secure corporate clients, female entrepreneurs must also differentiate themselves from their competitors by delivering excellent customer service and being willing to challenge themselves, even when it seems impossible. Building solid relationships with suppliers and having the skills to negotiate effectively can also give female entrepreneurs an edge.
Understand culture and decision-making processes.
Understanding the corporate culture and decision-making processes of potential clients is another essential aspect of winning business from big businesses. By studying clients’ “About Us” and corporate governance sections of their websites, and meeting face to face with clients, female entrepreneurs can tailor their proposals and suggestions to what is important to the client and make the most cost-effective recommendations.
“Being a female entrepreneur can also be an advantage as more businesses are actively empowering women and supporting women-owned businesses in their supplier development plans. The future for female entrepreneurs in our country is bright, as long as they are willing to put in the hard work and dedication required to succeed.”
Looking to the future, Matlejoane says her company’s ambitious goals include, among others, building a state-of-the-art branding factory.
