Entrepreneurs do NOT employ people

Many people and institutions (economists, governments, universities) claim that entrepreneurs are the solution to high unemployment. Why? Because they believe entrepreneurs go into business to appoint people. This is probably the dumbest statement or logic I have ever heard through my cute little ears.

Let me make it clear today. NO ENTREPRENEUR HAS EVER STARTED A BUSINESS WITH THE PURPOSE TO EMPLOY PEOPLE. This is especially true in South Africa where we have an ultra first world Labour Act. Of the highest standard. But absolutely wrong for a third world country with high unemployment. In SA, the incentive is NOT to employ people – and if this is what our Labour Act set out to achieve, then the compilers of the Act have succeeded and I will be the first to congratulate them on a job well done.

Before you start questioning my logic, consider the following:

• Entrepreneurs CANNOT and SHOULD NOT do everything in their business. They do need people to supply certain services and to complete some tasks
• Entrepreneurs start a business to MAKE MONEY. If they can do a great job with no or just a few people, they would do it.
• Instead of employing people, there are other methods to get the work done – subcontracting, outsourcing, partnerships, joint ventures, etc.
• If an employee is not performing up to standard, the Labour Act makes it too difficult to get rid of this person. If it was easier, then more people will be employed – Guaranteed!

Entrepreneurs are good at identifying opportunities, they can develop a great business concept and they can apply the minimum resources for the highest output. An entrepreneur is like a concert conductor – merely directing various players to achieve the smooth execution of his master plan. And if this can be done with no permanently employed staff, then he / she is the winner.