Small businesses driven by real-world customer needs are the most successful, and pooling resources for economies of scale is vital.
In his budget speech late last month, finance minister Pravin Gordhan announced that government was allocating R3.9bn over the next three years to small, medium and micro-enterprises (SMMEs), and co-operatives. The funds supplement the R1.5bn in contributions from the private sector, raised through the CEO Initiative, to set up a small-business fund to support entrepreneurship.
Gordhan’s announcement builds on previous government initiatives to support SMMEs, including a favourable tax regime and plans to spend 30% of government’s procurement budget on goods and services provided by such businesses.
This kind of monetary support is welcome news. The lack of adequate access to funding is one of the top reasons why SMMEs have such a high failure rate, low growth rates, and employ far fewer people than they potentially could. In providing this support, the government and the private sector are showing that they are serious about reaching the National Development Plan goal of having SMMEs create 90% of jobs by 2030.
However, secure, affordable funding is only one part of the equation. In my experience, working to help small businesses realise their potential, there are a couple of other hurdles (and ways to overcome them) worth highlighting that can make the difference between whether a small business sinks or soars.