The Irony of Designing Small Business Programmes Without Small Businesses in Mind

BY: .

This article explores the real struggles of small businesses in South Africa and shows how well-intentioned interventions often overlook the realities on the ground. Despite accounting for an estimated 50% to 60% of employment and serving as vital engines of livelihoods and community resilience, small businesses in South Africa continue to grapple with policies and initiatives that fall short of meeting their actual needs.

This is the central irony I wish to highlight: We speak of empowering small businesses, but too often we craft solutions from boardrooms and conference halls, without adequate regard for the daily realities on the ground. As a result, what we produce, however sophisticated on paper, often feels like a square peg forced into a round hole in the eyes of small business owners.

Here are a few practical challenges that persist in the daily experience of small business owners across rural towns and township economies.

Firstly, operating costs remain excessively high. For a micro-enterprise, rent and labour costs consume a disproportionate share of limited revenue. These businesses do not enjoy the economies of scale available to larger firms. Worse, they often cannot pass on costs to customers whose incomes are already stretched thin. This cost burden traps small businesses in survival mode, leaving little room for growth or job creation.

Secondly, regulatory compliance remains a barrier. Many small businesses wish to operate formally, but the complexity of registration, tax filings, and licensing requirements is overwhelming. For entrepreneurs with limited administrative skills or digital access, compliance becomes a full-time job - distracting from running and growing the business.

Thirdly, limited access to technology hinders productivity and competitiveness. While large firms digitise rapidly, many township and rural businesses struggle with the basics: reliable internet, affordable devices, and practical digital skills. In a post-COVID economy where online transactions and marketing are essential, this digital divide becomes a matter of survival.

Fourth, weak cash flow management cripples resilience. Many small businesses fail, not because they are unviable, but because fluctuating income, late payments, and lack of working capital leave them exposed to minor shocks. Without affordable, short-term finance, they remain constantly vulnerable.

So, the question is: how do we respond in ways that are practical, realistic, and truly supportive?

There are several targeted policies and programmes that could help support small businesses.

First, address high operating costs through community-based solutions. Invest in local business hubs and incubators that offer shared, affordable space, reliable utilities and administrative support. This lowers overheads and fosters networking and knowledge sharing among entrepreneurs.

Expand youth employment schemes such as YES4Youth to include small businesses, not just large corporates. By subsidising wages for graduates placed in micro-enterprises it eases the labour cost burden and builds future skills pipelines. A dedicated National Youth Service Programme could support local businesses through structured graduate placements.

Second, simplify compliance processes. Establish one-stop compliance centres, in townships and rural areas to assist entrepreneurs - offering support in local languages for registration, tax matters and basic accounting. Complement this with mobile-friendly digital tools designed for low-data environments.

Create structured partnerships with universities and professional bodies to match final-year accounting and law students with small businesses. These students can provide pro bono compliance support as part of their practical training.

Third, bridge the technology gap. Partner with technology providers to deliver discounted devices, affordable data packages, and tailored software solutions for small businesses. Equally important, roll out targeted, practical digital skills programmes, not generic workshops but hands-on training focused on digital marketing, online payments, and cybersecurity basics.

Fourth, strengthen cash flow resilience. Financial literacy must be embedded in all support interventions, delivered in practical and context-specific ways. Where needed, offer materials in local languages. In parallel, expand access to short-term loans via microfinance institutions and co-operative banks - with fair interest rates and minimal red tape.

We must also enforce prompt payment practices within the public and private sectors to ensure that small suppliers are not being crippled by late payments.

If we truly believe that small businesses are central to tackling unemployment and poverty, we must match belief with action. Programmes must be co-designed with entrepreneurs, not imposed on them. We must listen to their frustrations and craft policies that respond to their daily realities. 

When our interventions reflect the lived experience of small business owners in Lusikisiki, Embali, Soweto or Thohoyandou, we will finally unlock the true potential of this sector: sustainable growth, meaningful employment and inclusive prosperity.

Dr Lungisani Dladla, PhD (UKZN) is a programme management specialist, researcher, and Director: PreciXion Consulting and Development, a South African based consulting firm. He has over 15 years’ experience in public employment programmes (PEPs), small business development and research in the public service and NGO fields.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of KwaZulu-Natal.