Government and Small Business Support: Help or Hindrance?

A Reality Check on Supporting Small Business in Towns Around the Witzenberg

I live and run businesses in a small town.

Many people see that as a disadvantage.

We are further from Cape Town. Our immediate market is smaller. We do not have every service, supplier, mentor or networking opportunity available on our doorstep.

All true.

But small-town businesses have advantages too.

People know one another. Relationships matter. Trust travels quickly. Operating costs can be lower. Competition may be less intense in certain sectors. And thanks to the internet, geography is nowhere near the limitation it once was.

A business in Ceres can sell to Cape Town.

It can work with a client in Johannesburg.

It can provide services to somebody on the other side of South Africa.

In some industries, it can serve clients anywhere in the world.

So when we talk about developing small businesses in towns like ours, I think we sometimes begin with the wrong question.

We ask:

What can government give entrepreneurs?

Perhaps we should first ask:

What is preventing entrepreneurs from reaching customers, making sales and growing businesses?

Those are not the same question.

Good intentions are not enough

I do believe most government and municipal small-business programmes begin with good intentions.

Local economic development matters.

A growing small-business sector creates employment, circulates money through the local economy and gives people alternatives to waiting for scarce formal jobs.

Supporting entrepreneurs therefore makes sense.

But a programme should not be judged according to how impressive it looked at the launch.

It should be judged according to whether the businesses it was designed to support actually become more sustainable.

That is where I believe we need to become much more critical.

A ribbon cutting is not economic development.

Neither is a building with the words “business hub” on the front.

A business hub only has value if it helps businesses do business.

Location still matters

We have seen small-business premises made available locally in locations that, in my opinion, immediately create another obstacle for the entrepreneur.

Retail businesses need customers.

That sounds painfully obvious, yet it is astonishing how easily this principle can disappear when economic-development projects are planned.

If you put a new business away from natural foot traffic, away from passing vehicles and away from established commercial activity, that entrepreneur now has an additional problem:

They first have to persuade people to come to the location before they can persuade them to buy anything.

That costs money.

Marketing becomes more important. Signage becomes more important. Transport becomes more important. Security may become more expensive. Customers need a specific reason to make the trip.

For an established destination business, perhaps that can work.

For a fledgling copy shop, takeaway, clothing business or service provider trying to build a customer base?

Location can make the difference between opportunity and isolation.

Free or discounted rent sounds wonderful.

But cheap premises in the wrong location can become very expensive premises when there are no customers.

We need to understand what businesses actually need

This is where I think government support often loses touch with entrepreneurship.

Business is not an academic exercise.

You can teach bookkeeping.

You can teach marketing theory.

You can teach business-plan preparation.

All of those things have value.

But there are lessons that become very different when you have actually had to find a customer, make payroll, deal with a supplier who wants payment, recover from a bad month and decide whether you can afford to buy a piece of equipment.

That practical experience needs a much stronger voice in small-business development.

Before a municipality builds a business hub, I would like somebody around the table to ask:

Where are the customers?

How will people get there?

What businesses will operate there?

Do those businesses depend on foot traffic?

Is there public transport?

Is the area visible?

Is it secure?

What will the entrepreneurs’ additional operating costs be?

What happens after the subsidised period ends?

How will success be measured?

And perhaps the most important question:

Would I invest my own money in a business at this location?

If the answer is no, why are we expecting a young entrepreneur to do it?

Sometimes removing an obstacle is better than creating a programme

Government assistance does not always need to come in the form of funding, training courses or subsidised premises.

Sometimes the best support government can provide is to get an obstacle out of the way.

If a small entrepreneur can operate legally and safely from home while building a customer base, perhaps the solution is to make that easier.

If informal traders need better access to customers, perhaps the solution is designated trading areas where customers already move.

If entrepreneurs need knowledge, perhaps municipalities should involve retired business owners and experienced entrepreneurs as mentors.

If businesses need markets, perhaps public procurement processes can be made genuinely accessible to qualifying small local suppliers.

If a business district has vacant municipal space in a high-foot-traffic area, perhaps that is where subsidised premises should be offered.

Small-business development should begin with the realities of doing business.

Not with the need to create another programme.

There are lessons elsewhere

Other towns have at least demonstrated the importance of thinking about where small businesses are placed.

Parys in the Free State established an SMME container hub in the town itself, with small businesses operating from converted container units.

The concept is simple.

Affordable trading space.

Visible location.

Access to the existing movement of people through town.

It does not magically guarantee that every business will succeed. No development project can do that.

But it starts from a principle I agree with:

Put businesses where business can happen.

Colesberg provides another useful lesson in thinking commercially about geography.

The town sits on major national routes, including the N1 and N9, and municipal economic-development planning has recognised the commercial possibilities created by that traffic and location.

That is the type of thinking I want to see more of.

Do not try to force an economy to happen where planners would like it to happen.

Look at where people already move.

Look at where money already changes hands.

Look at what the town already has.

Then create opportunities around that.

Entrepreneurs need markets more than monuments

South Africa has no shortage of entrepreneurial energy.

What we often lack is an environment that allows that energy to turn into sustainable businesses.

Entrepreneurs need customers.

They need workable infrastructure.

They need reasonable regulation.

They need access to markets.

They need reliable services.

They need practical advice.

Some will need capital.

But what they do not need is support designed around what looks good in a report rather than what works at a till.

That distinction matters.

Because every unsuccessful small-business development initiative represents more than wasted money.

There is an entrepreneur behind it.

Someone invested time.

Someone had a dream.

Someone may have borrowed money.

Someone may have convinced a family member to help.

Someone may have left a job.

Someone believed an opportunity had been created for them.

We owe those people more than good intentions.

Measure success at the cash register

I would love to see local economic-development programmes judged differently.

Not by how many workshops were held.

Not by how many people attended a launch.

Not by how many buildings were allocated.

Not by how much money was budgeted.

Ask instead:

How many businesses are still operating after 12 months?

How many created jobs?

How many increased turnover?

How many moved from subsidised premises into fully commercial operations?

How many became taxpayers?

How many no longer need government assistance?

That is success.

The purpose of small-business support should ultimately be to create businesses that no longer need small-business support.

Anything else risks creating dependency instead of development.

Help entrepreneurs succeed, then get out of their way

I am not arguing that government should abandon small business.

Quite the opposite.

South Africa desperately needs a thriving entrepreneurial sector.

But if government genuinely wants entrepreneurs to succeed, then government support must become more practical, more commercially aware and more focused on outcomes.

Give businesses access to customers.

Remove unnecessary barriers.

Create safe places to trade where people actually shop.

Bring experienced businesspeople into development programmes.

Make information easier to access.

Create opportunities.

Then allow entrepreneurs to do what entrepreneurs are supposed to do.

Compete.

Adapt.

Sell.

Fail occasionally.

Learn.

Try again.

Grow.

The question is therefore not whether government should support small businesses.

Of course it should.

The question we should be asking much more often is:

Is this support helping entrepreneurs build sustainable businesses, or are we simply creating the appearance of helping them?

Those are two very different things.

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