Small and Medium Enterprises (SMEs) have a major role in the South African economy as it represents 91% of businesses, offer employment to 60% of the labor force and account for 34% of GDP’s economic output. SMEs in South Africa foster diversification through their development of new sectors of the economy. Therefore, the South African government recognizes the importance of SMEs and their contribution to the economy which is why the government offers support and development to SMEs to empower their success across South Africa. The Banking Association South Africa supports SMEs through stakeholder engagement, and by introducing several initiatives such as:
- Risk Capital Facility (RCF) – EU Fun admin by Industrial Development Corporation
- Research and Knowledge Management
- Financial and Investment Committee – credit extension to distressed SMEs – NEDLAC
- Financial Sector Program (FSP) – USAID
- Financial Sector Charter and BBBEE
- Downstream banking and financial inclusion – Micro financing, co-ops, and banks.
On the other side, government initiatives actively promote SMEs. For example, the National Small Business Act of 1996 offers the establishment of National Small Business Council and the Ntsika Enterprise Promotion Agency. Another initiative, Khula Enterprise Finance is responsible for helping small and medium-sized enterprises get finance on behalf of SMEs, from commercial banks, financial institutions, specialist funds, and joint ventures.
Examples of Successful SMEs in South Africa
All entrepreneurs start from scratch and face many challenges on the journey to success. Here are two examples of such SMEs that have grown into successful businesses.
Bos Ice Tea is a South African brand of ice tea which uses 100% organic rooibos as the main ingredient. Rooibos is considered to be extremely healthy. The owners, Grant Rushmere and Richard Bowsher wanted to create a global brand but had to start small. He approached retailers and secured contracts to get the funding. Rushmere and Bowsher spent as much on marketing as their turnover and their revenue actually increased. Today the company has grown from zero to R100 million in just 10 years.
Sam and Rob Paddock started an online education business without a lot of money. However, they tapped into the growing market and created valuable partnerships with South Africa’s prestigious academic institutions. They faced many setbacks on the journey and not all of their ideas about online education succeeded. However, they were able to create a company from zero to R128 million in worth in a decade.
Road To Success and How to Survive Challenges
Founding a startup is never an easy task, it is always a risk but with determination, a solid business idea and work plan, anyone can succeed. Every startup in the world faced setbacks and challenges but they did not quit and bounced back with solutions. Here is an example of Nkazi Sokhulu’s entrepreneurial journey. He is the co-founder and CEO of Yalu – an innovative and transparent credit life insurance company that is disrupting South Africa’s multimillion insurance industry.
Nkazi Sokhulu’s entrepreneurial journey was not easy. He began while he was 26 years old with no funders when financial institutions were not taking him seriously. He went into a lot of debt before getting any funds. Some of the key lessons Sokhulu learned that age should not stand in the way of entrepreneurial spirit. He believes that if you have a good business idea, you should just start it without waiting for the money to come in. Another important lesson he talks about is to always be prepared for hard times. He says “Mistakes will happen, plenty of them. Don’t hide them, don’t run away from them: deal with them in an open and honest way”.
What You Need to Start Your Own Business
Starting a business requires a lot of courage and many considerations that you need to study before starting. You need to have a good business plan backed by market research. Even if you don’t have money to start the business, you can try to get funding from financial institutions. Having a solid team that you can trust to work with you is also essential in your startup.
If you are not offering a new product or service then it is important to set your product apart from your competitors. Offering lower price, engaging in latest trends of marketing, offering a different version of the product and distributing it in locations that are not being served by your competitors is the way you can set yourself apart.
A common trait among all successful entrepreneurs is that they schedule their week correctly. They have a weekly goal plan that they work towards which adds to the overall objective of the company. Having a schedule and work plan can be one of the underlying success factors for any business.
Expanding Your Business in International Markets
SMEs that have become successful in South Africa may look to expand their operations into international markets. Expanding into international markets present a challenge of a language barrier that the company must overcome in order to penetrate successfully! Business translation can help overcome this challenge. You can hire the services of a business translation agency that can translate your important business documents which you will need in order to expand to international markets. AfroLingo is one of the most trusted translation agencies in South Africa that has worked with a huge number of clients and participated in their success.
Contact AfroLingo today for a custom quote.