Considering the impact of COVID-19 on small businesses in South Africa, 2021 may not seem like the year for entrepreneurship.
But it’s in environments of rapid change and uncertainty that entrepreneurs have been known to thrive. Their passion means they take control and own their futures like the bosses that they are.
We’re already seeing signs of recovery in the entrepreneurial space. All things being equal, the end of the pandemic should see entrepreneurs reaching new levels of success.
Unfortunately, all things are not equal.
According to the South African results of the latest Mastercard Index of Women Entrepreneurs Index (MIWE), as women try and move forward to overcome gender biases, the pandemic worsened social and cultural obstacles, taking them a few steps back.
How do we compare?
The World Bank put Africa at the top of the list when it came to the growth rate of female entrepreneurs worldwide in 2019. While this is good news for the continent, in South Africa, it seems that women are still in the minority when it comes to running businesses.
More than half of our population is female but MIWE found that women make up only 19.4% of business owners, making us 45th in the world when it comes to female-run companies. That’s a long way behind Uganda (39.6%), Botswana (38.5%), and Ghana (36.5%).
Yes, there are women owning it all over the country.
Vuyolwethu Dubese founded InnovTel, a learning platform that offers free or affordable knowledge-sharing experiences to help entrepreneurs and students build impactful businesses.
Nkhensani Nkosi created Stoned Cherrie, one of the country’s most successful fashion brands.
Arlene Mulder, owner of WeThinkCode and ToyBox, is a recipient of the Forbes Woman Africa Technology and Innovation Award.
Boitumelo Ntsoane founded AfrilinkHealthcare, a small medical centre that helps the Tshwane Department of Health conduct health campaigns in schools.
While funding and access to loans is slowly improving for women, it’ll be a long time before these practical developments change the messaging that women have heard for decades, which is that they simply weren’t welcome at the table.
We all know that SMEs are vital in creating a stronger economy and reducing unemployment, so it’s more important than ever that women are supported in starting their own businesses.
Let’s take a closer look at the top 4 challenges faced by female entrepreneurs in South Africa, and the advice you can follow to navigate through these challenges.
1. Access to finance
This is, historically, the largest barrier to entry for women. With less access to capital and fewer assets than men, getting a loan to start a business can be difficult. Many women in South Africa also don’t own property, so they have no collateral in the loan application process.
Yet studies show that women manage credit better than men, and when invested in, women achieve a 27% credit turnover, compared to 8% in businesses run by men.
Government has begun to acknowledge the importance of female entrepreneurs, and is giving them financial support along with private enterprises. It’s structures like these that will move women from dreaming of a business to smashing it.
Research suggests that men are more confident in their pitching techniques than women. Women tend to be less comfortable when pitching, and this can make their pitches less compelling. There are a few things you can do to overcome this:
- Know all the facts and figures and focus on the finances when pitching
- Work on a confident presenting style
- Create a compelling pitch deck
2. Gender bias
The corporate space in South Africa is largely dominated by men, so women simply have fewer advantages. In addition to the unwillingness of banks to give them credit, women have the added challenge of negative socio-cultural attitudes and limited access to business and development services.
Women also often shoulder the majority of the household responsibilities. There is a subtle but strong belief and expectation that the woman will be the parent who raises the children, while the man works. The oldest daughter is often given the role of childminder, particularly in rural areas.
It’s no wonder that women are generally more afraid of failure than men. This is according to the Global Entrepreneurship Monitor Women’s Report. This fear creates an inhibition in women and an unlikelihood that they will pursue the idea of starting their own businesses.
Network. The more platforms you use to expand your network, the better. Use your social platforms and email list. You have to be incredibly proactive to get funding. The more you spread your message, develop credibility, and establish the “know, like and trust” factor, the most likely it is that people will be ready to invest when you ask.
It’s also worthwhile joining a group or community where you can speak to people about how to build confidence. Confidence and mindset are so important in business, and the more self-belief and resilience you have, the more you can stand up to societal biases and move beyond them.
3. Networking and role models
It’s also more difficult for a woman to build her network in male-dominated communities. This is particularly important when it comes to finding a mentor or role model. Starting a business requires important decision-making, and mentors can help to give advice and avoid mistakes.
In 2019, a global study mentioned in Forbes found that three in four women can’t name a successful female entrepreneur. Interestingly, though, the study found that women in South Africa can name female and male role models in equal percentages. This is heartening for our nation.
There is a rise in networks in South Africa for women to find role models and support through connection, inspiration, and collaboration, such as Future Females, Women in Business Accelerator, and Entrepreneur Organisation. Find the one that best fits your goals and start networking with smart, like-minded women.
4. Lack of training and education
Many women in South Africa are illiterate and unskilled. Because of this, operating a business in either the formal or informal sector is a challenge that is unlikely to be overcome any time soon. Lack of resources and training is an obstacle to women starting their own businesses because few banks want to fund people who have no trade or other skills.
According to MIWE, women are making progress in this area, and South Africa now ranks 23rd in the ‘Knowledge Assets and Financial Access’ component. This measures where women find themselves academically in tertiary education enrolment.
Check out empowerment programmes that offer training in various areas, helping women to educate and empower themselves.
- South African Women Entrepreneurs’ Network
- B’avumile Skills Development Initiative
- The Social Makeover
More advice from powerful women
Here’s what some of South Africa’s top female entrepreneurs have to say about starting a business and owning it:
- Don’t wait for an invitation to participate; open the door yourself;
- Have a clear business plan;
- Invest in other women, when you’re in a position to do so;
- Keep your eyes firmly on your finances; and
- Dream big.
The way forward
According to McKinsey’s estimations, if women and men could start and grow businesses at an equal rate, the global GDP would likely increase by $28 trillion by 2025. This is excellent news for the world’s economy. There’s no question that South Africa has its share of entrepreneurial success stories but let’s hope that these top challenges faced by female entrepreneurs in South Africa become a thing of the past, and women get their equal slice of the pie sooner rather than later.
Take a look at this article and download the free guide to creating the perfect pitch deck for your small business.