By

Success Factors Necessary for SMME’s Growth: A Summary of

the Narratives of Successful Contractors

Abimbola WindapoUniversity of Cape Town

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•Construction Industry Development Board

•16 Successful Contractors who responded to the personal interviews

Acknowledgements

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• Success and Growth Defined•Need for Success•Is there a “recipe” for success?•Study Methods: Successful Contractor Narratives•Is it Possible for SMME’s to Grow Successfully into Large Companies?•Success Factors Necessary for Company Growth• Environmental• Leadership, Company Organization Structures & System• Time•Conclusion and Recommendations

Presentation Outline

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• Success: the attainment of an aim or status

• Growth: the process of undergoing development or expansion (maturity & capabilities)

Source: http://daimanuel.com and growth2.jpg

Success & Growth Defined

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• There is only one alternative to success: failure

• Construction Business/Industry is endangered

•Skills attrition and sustainability

•Employment generationSource: animals.nationalgeographic.com

Need for Success

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• There are no hard and fast rules that can be set for commercial success

•However, certain clear arrangements are evident in successful companies

Is there a ‘Recipe’ for Success?

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Study Methods: Successful Contractor Narratives

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• Yes• Lubbe Building & Electrical Contractors was founded in 1981

•1990 -contract for construction of high-rise flats in Israel

•2010 – Generation of Turnover + R93m

Source: Lubbe Construction (Pty) Ltd Profile

Is it Possible for SMME’s to Grow into Large Companies?

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Success Factors Necessary for SMME’s Growth

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• Opportunities: -•Government Policies/Regulations•Type of Market•Economic Conditions• Industry Structure

•Threats to overcome: -•Client’s Unstructured Methods of Payment•Government’s unclear method of

Procurement

Environmental Factors

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• Strengths &•Weakness

Leadership, Company Organization Structure & Systems

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• Aspirations (mission & Vision)•Capabilities/Competencies•Style of Leadership•Type of Leadership•Leadership Role•Values, Character – Behaviour and Personality•Experience

Source: b2binternational.com

Leadership Factors

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Type & Size of Business Structure

Founding Teams – Differentially able to navigate within the constraints of the founding environment

•Past experience together in a construction company•Experience together were varied but

relevant

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Resources Available to the Company at InceptionWeakness - Lack of Financial Resources

Source of Finance: -•Severance Benefits•Family•Mortgaged Properties•Savings

Source: myspaceantics.com

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Developing a Strong Financial Base

Track Record

•Good quality products & services delivered at the right time•Maintaining good relationships with clients and suppliers – paying on time

Acquisition of necessary tools & equipment

•Assets can be used a surety for loans •Can be used even when mortgaged•Company can bid competitively for projects

•If there is an abundance of resources, especially finance, young organizations will grow•Without adequate cash reserves, the company only works for the bank

Key Strategic Management Decisions made by Company Leader (s)

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Developing & maintaining a strong work force

Company Diversification Geographically & by Products/Services

•Companies spread across at least two different locations•Diversification into more than one service and or product area

Company Organization

•Leadership spanned across two steps of command/hierarchy•Responsibility & authority are given to subordinates•A path is created for followers to achieve their goals

•Help in effectively executing its business operations•Succession plans – right attitude & work ethos

Key Strategic Mgmnt Decisions essential for organizational performance cont’d

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Efforts Put into Running the Business

Procure Profitable Contracts

Running

Pushing until it gives way

Rowing –Non StopSources: guardian.co.uk; benjaminkarner.worldpress.com

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Time Dependent Factors

•Time to grow, mature & obtain experience

•Adaptability

•Strategies are time related to: -•Economic Conditions

•Recessions•Economic Booms

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It is imperative that SMME’s put clear arrangements in place (success factors) so as to grow & develop successfully, once the door of opportunity opens.

Allowing time to grow & mature, & ability to adapt to changing conditions is also important

Conclusion & Recommendation

Source: magazine.enlightennment.org

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