KPMG's entrepreneurial development initiative is assisting SMEs. Hendri Pelser speaks to the man who makes it happen

Pierre Delaney had a good run in the corporate world and, after 33 years with KPMG, he was ready to retire and play golf on Wednesday mornings. But, despite his impressive track record, the former director still had some unfinished business.

Pierre ran the firm's Owner-Managed Division for 20 years and constantly saw the need for a hands-on approach to assist entrepreneurs to keep their doors open and become sustainable businesses.

"Your typical small-business owner is not big enough, and does not want to deal with different people or different firms (concerning HR, finances or tax)," he says.

"I was getting increasingly frustrated that some of the emerging SMEs simply could not afford our services because of the size of the group."

Pierre resigned as a director and approached KPMG's executives with a proposal that would mean deferring his retirement for a while.

Best possible scorecard

He proposed that the firm make him available to SMEs in need of assistance, on a full-time basis. This would not only mean that he could pursue his passion, but also improve the company's BEE rating in terms of EDI (entrepreneurship development initiative).

"We need the best possible score card to get work from large business and government. But if the business you are supporting through EDI is not able to stand on its own in five years' time, then you are failing. EDI must stabilise and grow the business to become sustainable, financially independent and finally operationally independent."

Pierre sayshe had come across many viable SMEs that were struggling because of red tape or bad advice from lawyers or accountants not familiar with the SME environment.

"If we can help these businesses, then we are achieving the objectives of EDI in a measurable way and the client benefits as well."

Have your cake...

Pierre hit the road in September last year and found a couple of businesses to work with.

One such an SME was the Brits, Gauteng, brick manufacturer La Pointa Trading. It was owned and managed by three individuals who still had full-time jobs. As a result, financial, administrative and operational procedures were lacking and the business was in danger of having its loan recalled.

Co-owner Asmeralda Motau says that, as a start-up, businesses are not always aware of all the systems and procedures they need to implement. They kept records, but they did not keep proper financial accounts.

"Pierre and his team sat with us to help us understand where we were so that we could take the business forward. If you run your business like a spaza shop, you never know where your money goes. We found out that we had put more money into the business than we had realised.

"We would probably not still be in business without their help - they were a godsend because we were hitting hard times."

Her partner, Pluto Lekhuleni, echoes this, saying that sorting out these administrative matters has helped the business to survive and grow.

As a result, Pluto is in the process of buying out the other shareholders and will give up his full-time job as a quantity surveyor to become a fully fledged SME business owner.

...And eat it

Pierre was making a difference in the lives of the business owners, but he realised there was a greater need for assistance in rural areas as these SMEs face different challenges.

"In Delmas, for example, there are no SARS or Department of Trade and Industry offices, and very few people with the skills to help SMEs.

"I recognised that the people in rural areas are less sophisticated than the people I was dealing with in Gauteng," he says, explaining the intense and hands-on environment he suddenly encountered.

Through the Limpopo Department of Agriculture, Pierre was introduced to four emerging farmers who had been placed under judicial management.

"Once this happens, you can't go out to look for finance and you live hand-to-mouth.

"From a technical perspective, though, the farms were still completely viable, but the gap was in the administrative and financial management. I basically came on board as a financial manager.

"Clearly, this intervention has made a difference." The businesses are being taken out of judicial management, now that systems and processes have been implemented and experienced managers have been employed to help the new business owners.

Angel in Disguise

The challenges Pierre had faced so far were almost dwarfed by his next challenge: 14 small businesses had been created in Limpopo to supply a chicken-processing plant.

These previously disadvantaged individuals were given land and start-up capital, and the idea was to develop entrepreneurship while the processing plant increased its EDI score card.

Pierre says the viability of the model could not be questioned, but the small businesses were faltering and he quickly found the problem: the SME owners had not received any business training, some were illiterate, and no financial or administrative systems were in place. In addition, some businesses were registered for VAT but had never filed a return while other emerging owners did not even know what type of business entity they owned.

"Once the business owners understood that when something goes wrong in the business, it is ultimately their fault and that there is no one else to blame, you have them. They would all have failed in six months' time, but now some of them have a chance."

He says his workshops are very well attended, and the rate of entrepreneurial development has been astonishing.

In Pierre's mind there are three pillars a business needs in order to be sustainable. The first is the right type of entrepreneur.

He is no daydreamer, and is acutely aware of the failure rate among start-up SMEs: his next pillar is having the right product or service.

But there have been countless small businesses that have fallen by the wayside, even with the right recipe and the right people. The third pillar, says Pierre, is having the right administrative processes in place - and this is where KPMG's EDI programme comes into play.

More to come

With the expertise of one of the biggest auditing firms at his disposal, Pierre has assisted more than 20 businesses so far.

There is a distinct twinkle in his eye when he speaks about his work.

He says supporting and assisting emerging and struggling businesses essentially means becoming part of the family and there is no quick fix - you need to be available day and night until the SME can stand on its own feet.

As a result, his phone is never quiet as calls and SMSes test the handset's life span to its limits.

In the first five months of the project, KPMG has given SMEs more than R2-million in billable hours and another R800000 in administration.

Pierre says this bill increases by about R500000 a month at the moment, but the real value lies in making sure small business owners stay in business, create wealth and grow the country's employment capabilities.

In the meantime, he is happy to get a quick round of golf in over the weekends; that is, when he is actually free.