In a country where small businesses contribute significantly to job creation and innovation, the challenges facing entrepreneurs are growing more complex and costly. The FY2025 H1 Small Business Growth Index (SBGI), developed by Absa, SACCI and the Bureau of Market Research at UNISA, offers one of the most comprehensive diagnostics to date of the small business environment in South Africa.
Surveying 1 601 business owners across all nine provinces, the report identifies five major pain points impacting growth and confidence – and importantly, provides evidence-based solutions for both small businesses and government.
Pain Point 1
Rising cost pressures: Whether for electricity, fuel or raw materials, South African SMEs are being squeezed by continuous cost hikes. According to the SBGI, over 60% of businesses have seen spikes in transport and energy expenses, leaving many with no choice but to
raise prices.
What can be done?
Small businesses are advised to audit their expenses, switch to energy-saving devices and explore local supply chains. Meanwhile, government should consider offering targeted subsidies and energy grants, particularly for township and rural-based enterprises.
Pain Point 2
Inadequate access to finance: More than 83% of SMEs surveyed said they would need additional finance in the next six months, but fewer than a third feel confident they can access it. Many still operate outside the formal finance system due to poor credit records or limited knowledge of funding options.
What can be done?
Businesses must maintain updated financial statements and look beyond traditional bank loans to alternatives like invoice financing and equity partnerships. Government, on the other hand, must simplify grant processes and scale blended finance offerings that mix subventions, loans, mezzanine funding and mentorship.
Pain Point 3
Infrastructure disruptions: Loadshedding remains a top concern, with over 93% of businesses citing power outages as a major obstacle to productivity. Unstable Internet and poor water infrastructure compound the issue in many communities.
What can be done?
Entrepreneurs are encouraged to invest in basic business-continuity plans and off-grid energy solutions. Government must do its part by accelerating investment in municipal infrastructure and subsidised broadband for SMEs.
Pain Point 4
Skills and knowledge gaps: The report reveals that fewer than one in five SMEs feel adequately skilled in digital management, supply-chain planning or cyber security. Alarmingly, 44.3% are unsure where to even access training.
What can be done?
Business owners should utilise free online platforms like Coursera or Google for SMEs and create internal upskilling plans. Government should scale TVET-SETA training partnerships and roll out a national “SME Skills Navigator” to close the knowledge gap.
Pain Point 5
Regulatory and market-access barriers: Excessive red tape, slow licensing processes and limited procurement opportunities continue to hinder growth, particularly for small firms outside urban hubs.
What can be done?
SMEs should get involved in chambers of commerce and business associations, which can help unlock information and influence change. In parallel, government must streamline compliance requirements and open more procurement doors to emerging businesses.
Conclusion
The SBGI FY2025 H1 confirms what many small business owners already know: running an SME in South Africa requires extraordinary resilience. But it also shows that practical, scalable solutions are within reach. By combining grassroots innovation with responsive policy, South Africa can unlock the true potential of its entrepreneurial economy.
Invitation to register
Small businesses employing 50 people or fewer are invited to register for the Absa/SACCI/BMR Small Business Ambassador Project.
By registering, businesses stand a chance to win the annual Absa/SACCI/BMR Small Business Ambassador Award valued at R25 000.
To register, complete the form via this link: https://bureau-for-market-research.limesurvey.net/
Enquiries: Bureau of Market Research
- Prof DH Tustin: CEO, Bureau of Market Research | deon.tustin@bmr.co.za
- Prof PK Kibuuka: Research Director, Bureau of Market Research| paul.kibuuka@bmr.co.za
Website: https://bmr.co.za/
