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      ThinkSales State Of B2b Sales In South Africa 2021 Survey

      The 7 Strategies of SA’s Strongest B2B Sales Performers for 2021

      ThinkSales State Of B2b Sales In South Africa 2021 Survey

      3 Sales Strategies SMEs Can Borrow from SA’s Strongest Performers

      ThinkSales State Of B2b Sales In South Africa 2021 Survey

      SA’s Strongest Salesforces Focus on Value, Not Discounting

      ThinkSales State Of B2b Sales In South Africa 2021 Survey

      ThinkSales State Of B2b Sales In South Africa 2021 Survey

      Devastating Financial Gender Gap Has Grown: Women Are Better Investors, But Retire With 30-40% Less Than Men

      Why SMME’s Need To Think Small

      Devastating Financial Gender Gap Has Grown: Women Are Better Investors, But Retire With 30-40% Less Than Men

      Five Money Management Principles To Start 2021 On The Right Financial Footing

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      Home BUSINESS Doing Business in SA Business Landscape

      Are Banks Missing an Opportunity?

      Allon Raiz by Allon Raiz
      Jan 24, 2013
      in Business Landscape
      0
      Are Banks Missing an Opportunity?
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      I was fed, clothed and educated by and on small business. My parents were consummate entrepreneurs – always innovating in their own business and exploring new business opportunities. However, the one consistency was always whom they banked with – come rain come shine, my parents banked with ‘beep’ bank.

      I queried why they had chosen to stay with ‘beep’ bank over all these years – despite increasingly competitive offerings from other banks and their response was simple, “Because they believed in us when we were small.”

      There is a huge opportunity in this insight for banks when one considers the two primary reasons that small businesses have failed in a post-2008 economy; the first reason is primarily a failure as part of a supply chain in a failing economy or industry, for instance, one major client or supplier goes under and the rest of the businesses in that ‘ecology’ follow suit.

      Conversely, a major client may go out of business without paying for goods. The second reason is simple mismanagement and the subsequent failure of the business – whether it was being run in a boom time or in the current recession.

      Currently, banks do not make a distinction between small businesses that have failed to survive as part of the extraneous factors and those who have purely been mismanaged.

      Backing the jockey

      I propose a new approach – a new way to assess the creditworthiness of small business-owners by considering the distinction between solid individuals with the requisite experience, business acumen, and personal mettle and those who don’t.

      Banks need to consider a credit-based solution or product to enable the business that failed due to extraneous factors, such as those mentioned above, to get a second chance at getting their businesses on their feet again.

      Banks are missing a trick by indiscriminately corralling all credit-defaulting entrepreneurs into one paddock and effectively sending them into the black abyss of debt.

      It’s crucial to get certain entrepreneurs back on their feet because our entire country benefits from the growth in the SME-sector, according to the SBP SME Growth Index Study (2011), 77% of all new private hiring comes from the SME sector – meaning that 77% of all new jobs are placed in the SME sector – making it a crucial avenue for job creation in our economy.

      Additionally the bank will stand to recoup their losses if they back the right individual. The correct measure of the future viability of an entrepreneur would be utilising a careful combination of psychometric tools in conjunction with more traditional credit assessment tools to arrive at credit-worthiness score that would be more accurately reflective of the individual’s business-making ability.

      Fostering a community

      Imagine the story-telling ability of the bank that perfects a product that is aimed at entrepreneurs who’d hit hard times in the recession. Imagine a bank that demonstrates a soul and faith in people and not the numbers they represent. Imagine being the bank that brings the statement ‘they believed in us when we were small’ back to life.

      This bank will enjoy love and loyalty from the hearts and minds of South African consumers for years to come. It will also be an opportunity to recoup debt as well as make huge returns by bankrolling these individuals and their business.

      The bank that succeeds in harnessing this insight effectively will be profitable in more ways than their bottom-line. Who knows? Even Steve from ‘beep’ bank would want to work there.

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      Allon Raiz

      Allon Raiz

      Allon Raiz is the CEO of Raizcorp, the only privately-owned small business ‘prosperator’ in South Africa and the only South African Enterprise Development faculty accredited as a Centre of Excellence by the UK-Government approved Small Firms Enterprise Development Initiative (SFEDI). In 2008, Raiz was selected as a Young Global Leader by the World Economic Forum, and in 2011 he was appointed for the first time as a member of the Global Agenda Council on Fostering Entrepreneurship. Following a series of entrepreneurship master classes delivered at Oxford University in April 2014, Raiz has been recognised as the Entrepreneur-in-Residence at the University of Oxford’s Saïd Business School. Follow Allon on Twitter.

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