South African small business They are facing huge challenges due to rising costs, weak demand and declining margins, putting their survival at risk.
Recent data has shown that more than half of small businesses are either struggling, contracting, or at risk of closing their doors.
Despite this dire situation, funding remains one of the most discussed solutions, yet it is often accompanied by misunderstanding.
According to the South African MSME Access to Finance Report 2025, the most sought-after form of funding for small businesses is asset financing.
The assumption driving this search for capital is simple: access to funding should promote growth. However, this assumption is not universally valid.
Take the story of Orion Harman, for example.
Upon securing funding for his recycling initiative, Liquid Gold, which turns organic waste into sustainable fertilizer and animal feed, Harman felt he had reached a pivotal moment in his entrepreneurial journey.
With a mission to empower communities through circular economic principles, Harman anticipated the capital would accelerate his business growth.
Yet, the reality proved to be more complex, revealing layers of pressure they had not imagined.
“One of the biggest misconceptions is that funding alone will make development possible,” Herman said.
“Capital without the right operational discipline, market access and technical capability can put more pressure on a business than accelerate it.”
As funding became available, Liquid Gold had to make important decisions.
Pricing strategies needed reevaluation, operational systems needed cultivation, and various investments had to be prioritized with new discipline.
Development was not limited to quantity alone and focused its attention on the quality of decisions.
The turning point for Liquid Gold came not from funding alone but from the widespread support that came with it.
Through the SAB Foundation's Social Innovation Fund, the funding was paired with invaluable mentorship, technical guidance and access to a broad network.
Each of these components addressed specific challenges facing Harman.
Technical assistance reduced costly errors, while guidance sharpened their decision-making abilities, and new networks opened doors to previously inaccessible opportunities.
“Funding is an enabler. But growth is driven by execution, knowledge and access,” Herman said.
This reality is not alien to Harman; Countless entrepreneurs across South Africa face a turning point where funding becomes available, often while the fundamentals of their business are still being established.
Financial management may still be mature, operational systems may lack stability, and market routes may remain unregulated.
In such cases, while capital may propel a business forward, it does not strengthen the fundamentals that are essential for success. Without adequate support, funding can expose weaknesses more quickly than they can be mitigated. Therefore, the design of funding programs becomes paramount.
Approaches that integrate capital with mentorship, training, and ongoing support are more likely to foster businesses that not only survive but thrive.
They recognize that funding is only one aspect of what is needed to develop a sustainable enterprise.
The implications of these insights are clear.
South Africa has one of the highest small business failure rates globally, estimated at 70 to 80%. Small, Medium and Micro Enterprises (SMME) Fail within five years.
If financing alone were sufficient to boost growth, those figures would show a different story.
In an environment where failure is common, structured support can profoundly change outcomes.
Businesses that benefit from both funding and guidance are significantly more able to stabilise, grow and create jobs.
They are better prepared to understand the multifaceted realities of entrepreneurship in a volatile environment.
For Harman, this double support illuminated the way forward.
“The mentorship helped us focus on unit economics and understand where value is created. It changed the way we think about scaling, especially in a capital-intensive space,” he said.
The small business financing gap in South Africa, some way over R350 billion, is a significant barrier that cannot be ignored.
It is necessary to bridge this gap; However, current discussion focuses primarily on the amount of money required, often neglecting what happens after it is released.
This oversight is a critical area where many businesses falter.
Finally, South Africa does not just face funding problems; It suffers from the following problem.
While financial assistance can provide momentum to businesses, it is continued guidance and guidance that ensures they stand and ultimately succeed.
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