Navigating SA's entrepreneurial landscape: How fintech companies can help overcome SME challenges

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The GEM 2023/2024 Global Report reveals that South Africa ranks as the third least favourable environment for entrepreneurship out of 49 participating economies, as measured by the Global Entrepreneurship Monitor National Entrepreneurial Context Index.

This stark reality highlights the barriers that South African entrepreneurs and Small and Medium-sized Enterprises (SMEs) must overcome to achieve success.

In fact, South Africa was one of only three countries rated as insufficient; across all 13 categories related to enabling conditions;—a measure that includes factors such as entrepreneurial education, access to finance, government support, and infrastructure.

These hurdles are further exacerbated by broader macroeconomic issues, including an ongoing energy crisis, rising consumer inflation, persistent infrastructure and supply-chain disruptions, and a sluggish economy.

Swimming with the sharks: The reality of market competition

Beyond these macroeconomic challenges, South African entrepreneurs face the harsh realities of market dynamics that often only become apparent after launching their businesses.

According to the latest study by InfoQuest, the primary challenge for micro-enterprises is intense competition.

While competition among SMEs is to be expected, new start-ups quickly realise that they are also up against well-established corporate giants. These larger companies benefit from vast resources, including a deep pool of skilled employees across various fields such as Human Resources, Information Technology (IT), and Finance.

They also possess extensive networks of suppliers and partners, robust cash flows, and well-honed business practices—all of which provide a significant competitive advantage.

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In contrast, SMEs often find themselves juggling multiple responsibilities: financial management, marketing, employee training, client acquisition, and project completion.

This delicate balancing act is further strained by the pressures of maintaining a stable cash flow—a challenge that can prove daunting for many small business owners.

The imperative for effective results

With limited time and an ever-growing list of tasks, entrepreneurs and SMEs are often stretched to their limits. Research shows that a third of small business owners work at least 50 hours per week, with a quarter working more than 60 hours, and 70% regularly working on weekends.

The relentless nature of entrepreneurship leaves little room for rest, with nearly half of small business owners forgoing holidays altogether. Even those who do take time off find it difficult to disconnect, with 67% continuing to monitor work daily.

In this high-pressure environment, the need for innovative, time-saving solutions is critical. Such tools not only enhance the competitiveness of SMEs but also contribute to the broader economic stability of South Africa.

This is especially vital considering that SMEs account for over 90% of registered businesses in the country, employ more than half of the labour force, and contribute more than a third of South Africa’s GDP, according to Statistics SA.

The promise of fintech: Simple, seamless solutions

Fortunately, the advancement of technology has ushered in a new era of fintech solutions tailored to the needs of small businesses. Digital-payment platforms, in particular, offer a competitive edge to SMEs that embrace them. However, these solutions must be simple to implement and use, integrating seamlessly with existing systems.

Globally, sources show an increasing number of SMEs are choosing fintech solutions over traditional banking services and are relying on these platforms to improve their finances and create stable business conditions.

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As a result, several platforms are making significant strides in supporting South African entrepreneurs. These platforms offer a range of functionalities, from digital wallets to mobile-payment options and comprehensive payment-processing systems designed to meet the unique needs of small businesses.

Popular platforms like Yoco and SnapScan are lauded for their user-friendly interfaces and ease of integration with existing business processes. Another payment platform, which was specifically developed and tailored for South African businesses, is the Pay@Go payment platform.

The technology enables simplified billing and payment processes that are seamless integrated behind a user-friendly interface. To further empower entrepreneurs, the platform gives local businesses a time-efficient, cash flow-friendly solution that supports various payment methods, automates cash-flow and reconciliation management.

The tracking tool also provides business owners real-time insights into their payments received and outstanding.

In the fast-paced world of fintech development, South African SMEs can enhance their chances at long-term success by building their financial foundation with flexible, scalable, and cost-efficient payment solutions such as Pay@.

There is no longer an excuse to struggle with outdated financial systems that are costly and complex—SMEs need to grab hold of the exciting opportunity that innovative payment platforms present.

By better equipping themselves with future-focused fintech solutions, their entrepreneurial dreams are more likely to turn into a reality.