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Case study: Diagnostic tool to assess the needs and strategic next steps for SMMEs to reach their full potential

SMMEs play an important role to create employment opportunities. In line with their ambition to empower institutions that enable Africa’s development, a local consulting firm approached TRi Facts to conduct how to strengthen SMMEs in South Africa. TRi Facts supported the development of a diagnostic tool for SMMEs that provides customised insights and suggests strategic next steps for individual businesses to reach their full potential.

The South African economy has been struggling for several years with rising levels of unemployment, inequality and poverty. This trend has been worsened by the Covid-19 pandemic with an official unemployment rate that increased to 32,5%¹  and they exceed similar economies with comparable size and growth figures growth figures².

SMMEs play an important role to create employment opportunities. Firstly, the labour absorption rate has been stagnant for the past 20 years with many large corporates in South Africa utilising retrenchments³. Secondly, SMMEs account for more than 90% of all firms and the majority of employment opportunities in other countries in the Global South. Thirdly, SMMEs are generally labour intensive and create more jobs per invested capital compared to larger corporates larger corporates

A local consulting firm wanted to strengthen SMMEs in South Africa in line with their ambition to empower institutions that enable Africa’s development. Research shows that entrepreneurs who receive support grow more than twice as fast as their peers. However, SMMEs require more specific and targeted support than bigger players and consultants often ask themselves where they should even start?

TRi Facts supported the development of a diagnostic tool for SMMEs that provides customised insights and suggests strategic next steps for individual businesses to reach their full potential. The tool is action-focused providing clear guidance to business owners. The local consulting firm can use the tool to identify the company’s growth potential, offer support along the journey and evaluate their progress. In addition, the diagnostic tool is a great opportunity for SMMEs or stakeholders wanting to support the sector to become aware of their needs and the consulting support available thus helping the local consulting firm attract new clients and grow their presence in the South African market.

 

image source: heylagostechie on Unsplash

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References 

  1. http://www.statssa.gov.za/publications/P0211/Presentation%20QLFS%20Q4_2020.pdf
  2. https://ideas.repec.org/p/ctw/wpaper/201802.html
  3. https://www.businessinsider.co.za/total-number-of-job-losses-south-africa-retrenchment-corporate-job-losses-2019-6
  4. https://www.gemconsortium.org/report/gem-2018-2019-global-report
  5. https://www.researchgate.net/publication/259673776_Overview_and_Performance_of_the_SMMEs_Sector_in_South_Africa
  6. https://iig.co.za/the-importance-of-business-health/