Small businesses are an integral part of any growing economy. Such businesses contribute to not only local economies but the overall economy of the country. They help by stimulating economic growth, eradicating poverty, promoting innovation, providing skills development, and creating employment opportunities to people who may not be employable by a large corporate entity. Entrepreneurial initiatives impact the local community by acting as an accelerator of infrastructure development and improved lifestyle through job creation.
In the South African business landscape, there is a noticeable surge of opportunities for SME’S especially black women. While women-owned businesses are still in the minority in South Africa, the growth of entrepreneurship among women in the country has been encouraging. A survey conducted by SME South Africa found that, in the past year, around 47% of South African SMEs are led by women – a 6% increase from the previous year (Fin 24, 26 September 2020).
Whilst there are abundant possible opportunities the SME’s are still facing some challenges which affect their effectiveness and sustainability. All relevant stakeholders need to engage with these challenges and if addressed can aid in SME’S becoming more sustainable.
Some of the challenges faced by these SME’s are:
1. Access to market: Small business enterprises operate in the informal economy and struggle to gain access into the formal economy. Hence incubation is of paramount importance to guide SMEs to enter markets. Incubation can provide a range of support for SMEs such as upgrading of products, quality monitoring systems, information on investments, building networks and business branding.
2. Access to funding: funding is critical for improving technology, hiring the right people, and launching a comprehensive marketing strategy to get a foothold in the market. However, sourcing enough money to start a new venture can be difficult for SMEs. In some cases, funding is not provided because small businesses lack in basics such as providing a comprehensive business proposal and a viable business model. Hence incubation is vital to aid in training small businesses with financial literacy and administration.
3. Business mentorship: A continuous mentoring relationship is not present in most small businesses. Incubation can be a time-based event. While skills are gained through incubation events, mentorship in the form of continuous support for both the business and the individual entrepreneur or small business owner is important for the continued success and perseverance of the entrepreneurial journey. This allows for progress to be monitored and should threats arise in the process they can be addressed effectively.