Future-proofing small businesses for success

January 16, 2023 | By Gabriel Swanepoel
Without a doubt, small businesses are the engine of the South African economy. Their accomplishments and failures can cause knock-on effects that impact innumerable lives and local communities in long-lasting ways. With small businesses representing 98 percent of all businesses, creating more than half of the private sector workforce and contributing a third to South Africa’s GDP, the long-term effects of the COVID-19 pandemic will only aggravate an already struggling economy. 

For most small businesses, cashflow is everything: it helps companies to ensure that they always can pay staff at the end of the week, maintain stock inventory and put aside money for a rainy day. If SMEs fail, then jobs are lost, and supply chains suffer. The survival of SMEs is a matter of socio-economic survival.

These are extraordinarily challenging times for entrepreneurs – safety precautions limiting foot traffic and lost revenue make cash flow a challenge and financing often a necessity.  For many, the shift to digital commerce means quickly getting up to speed on digital payments, cybersecurity, and more.

Nonetheless, people who go into business for themselves aren’t ones to shy away from challenges. The determination that has taken you this far can, with a powerful support system, get you through these next few months.

At Mastercard, we’re leveraging our insights to guide innovation that fuels the recovery and long-term sustainability of these businesses, connecting business owners to the tools and training needed to pay and get paid, get capital, and get digital wherever they are. We want to empower every business, enabling them to survive and thrive, stronger than before.

Three areas are critical to unlocking that potential and propel small businesses forward: 

Get digital 

In a Mastercard study, 68% of South African consumers said they were shopping more online since the onset of the pandemic – and will continue to do so.

The shift in consumer behaviour, together with a changing commercial landscape, have provided SMEs with a long runway of opportunity to go digital, and future-proof their businesses. Yet, there remains a gap between those who can access these online opportunities and those who can’t. Getting SMEs online requires specific tools, knowledge, and resources that many entrepreneurs don’t have.

That’s why we’re democratizing digital, partnering with the big players across the globe to help small businesses get online fast, from ecommerce platforms to payment acceptance and, critically, cybersecurity vulnerability assessments. Mastercard’s partnership with Google and Standard Bank enables South African SMEs to move their businesses online, accept digital payments and attract more customers through the free access to Standard Bank’s Simply solution.

Pay and get paid

SMEs have been trending toward digital banking and payments for a while, but the pandemic accelerated this shift. In fact, 82% of the SMEs surveyed in our Global State of Pay report said they were interested in increasing the amount of digital payments they make, and they’re looking for low-cost solutions that are simple and easy to use.

That goes for acceptance too. Although digital adoption has been growing before COVID-19, the pandemic has highlighted the importance of digital payment acceptance as part of “staying open”, securing income and boosting growth. While small businesses traditionally lagged larger ones in omni-channel presence, the trend of shopping from home, and the need for touch-free payments in-store ignited a need for them to accept digital payments.

Research from Mastercard shows that the adoption of new payments technologies is rising, with 77% of South African respondents saying they would shop more frequently at small businesses if they were offered more diverse ways to pay. The pandemic is also driving the use of contactless payments as consumers seek ways to shop with minimal contact. New technologies like Mastercard’s Tap on Phone, which turns an Android phone into a contactless acceptance device, is further helping small businesses to adapt this trend. For microbusinesses who largely operate in the cash economy, Quick Response (QR) code technology provides a simple and more affordable solution to accept card payments than traditional POS devices for both online and face-to-face transactions.

Get capital

Cash flow issues have impacted 75% of SMEs, with 71% agreeing that the pandemic prevented them from growing. Getting access to the capital required to adapt and keep your doors open isn’t easy – more than half of small businesses who apply for financing receive less than what they seek or none at all, and 70% of women entrepreneurs are under-served or unserved altogether. Improving financial strength and resiliency is important. Corporate and business credit card solutions provide easy access to credit including supplier management, which increases cash flow and eliminates the cost of chasing collections.

Tools and insights to help SMEs along their digital journey:

  • Want to access free training to help you grow your business and thrive? Access ‘The Entrepreneur’s Odyssey’ here
  • Want to start or grow your e-commerce business? Watch a replay of our South African SME Masterclass here
  • What’s your digital readiness? Take the free assessment here
  • What steps can you take today to reduce cyber risk? Sign up here
  • Want to get free online access to trusted cybersecurity research, education, resources, and tools? Visit our Trust Center here

As SMEs navigate an unfamiliar landscape, think of these as helpful guideposts that will not only help your SME survive – but arrive on the other side of the crisis stronger, more resilient, and better equipped for the digital economy.

Photo of Gabriel Swanepoel
Gabriel Swanepoel, Country Manager, Southern Africa