Blog | Business Advice

4 Of the most common challenges facing SA entrepreneurs & how to overcome them

By Lorin M


December 15, 2021

It’s not something exclusive to our shores (especially these days unfortunately), as across the world many small businesses struggle to get going and stay going, but stats show that most South African startups aren’t able to keep the doors open past the three-year mark. 

Like in many new businesses around the world, most South African startups aren’t able to last past the three-year mark.

While we live more in a ‘global economy’ than ever before in our history, are there particular hurdles that budding entrepreneurs face in our country specifically? 

We’ve listed a few contextual constraints specific or unique to our region that many Small and Medium-sized Enterprises confront as 4 of the most common challenges still facing entrepreneurs in South Africa. 

  1. Access to Finance    

More often than not, small business owners don’t have enough (if any) capital to fund their efforts (whether that’s for start-up or running costs) and don’t have enough of a credit rating to receive funds from the traditional and very conservative banking institutions found in South Africa. 

Most first-time businessmen and women in South Africa haven’t ‘pitched’ their business to a group of funders, let alone conducted market research, or produced a sound business plan – leaving banks and other lenders resistant to lending to start-ups as they are perceived as a risky investment.

On top of this, these issues are exacerbated by income equality and cycles of social injustice, as a result of South Africa’s turbulent history. History that still rears its head today as seen in the countrywide riots during July of this year. 

Something worth considering is that a large majority of South African SMEs are founded by the impoverished members of our society and of the 5.6 million small businesses reported in 2018, 3.3 million were categorised as “survivalist enterprises”. 

  1. Innovation 

It’s widely acknowledged and accepted that businesses that innovate where possible grow quicker than those that don’t. 

However, most small businesses in our country are set up and run by people looking to find a solution to unemployment or at least a way to make a better future for themselves and their families – not just as an opportunity while they are safely employed. 

This means that for the most part, small South African businesses (particularly in the informal sector) aren’t created to innovate, let alone on the back of an innovative approach. 

  1. Infrastructure  

Many small business owners start their new ventures from home and if there aren’t suitable utilities it becomes difficult to produce goods, conduct services and even communicate with their potential clients and partners. 

Reliable access to roads or public transport and communication services is vital for fostering business growth, not to mention electricity and internet which is a challenge many South African businesses face these days. 

The need for infrastructure can even extend to services such as accounting and legal which are also not always easily accessible or affordable to South African entrepreneurs. 

  1. Human Resources  

Many small South African businesses can find it difficult to attract and retain skilled staff – staff and workers who will care for and be as dedicated as they are to the success of the business.  

Much of this comes down to pay, and often, consistent pay because with small businesses being particularly vulnerable to change in the market and late paying clients, there are times when they simply cannot afford to keep workers around. 

In many cases, small business owners don’t have experience in employment contracts that can protect the business in times of economic downturn. There are a multitude of factors that can result in entrepreneurs and SME owners not being able to pay their staff, and even in some occasions, their suppliers. 

While this may not be a South African challenge, we are susceptible to a lot of turmoil and that is seldom good for business.  

At Bridgement, we endeavour to make the running of a business, your business, possible. 

We’re here to help you make a success of your business by providing insight and understanding to a complex landscape and offering much-needed funding to make that success a possibility.  

Bridgement Business Funding



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