Why Big Businesses Need to Support SMEs

In my entrepreneurial journey, I’ve witnessed many businesses experience challenges and gone through some myself. While hardship can be expected when running a business, the brunt of these challenges could be lessened if SMEs had more support from big corporations.

A large majority of South African SMEs are self–funded, and as a self-sufficient business, at times, you might hit a wall. The support from large corporations in the development of SMEs can reap massive benefits, not just for the corporations and SMEs, but for the South African economy at large.

Economic Growth and Job Creation

South Africans face continual difficulty in securing jobs. The unemployment rate currently stands just below 32%, and with adequate support, SMEs serve as a solution to mitigating the high unemployment rate.

One of the ways that large corporations can support SMEs is through funding. Because funding can be scarce, SMEs end up resorting to alternative funding options. Methods such as bootstrapping can work, but aren’t as effective as large funding options such as venture capital, angel investors, banks loans, and grants.

Funding opens up room to scale and increase production, which inevitably increases the need for more workforce. SMEs can also receive support through collaboration, for example, Pick n Pay has made efforts to work with women-owned businesses as a means to empower women with opportunities to earn an income.

Enhance Brand Loyalty and Social Corporate Responsibility

The latest South African Customer Satisfaction Index (SAcsi) indicates that the most satisfied customers in South Africa are those who shop at Woolworths. One of the reasons why the brand has been able to maintain that is because of how they’ve been able to uphold their part in corporate responsibility and encourage growth in the local economy.

When large corporations support SMEs, they enhance their brand loyalty by building relationships with local communities. Such initiatives encourage trust among customers, leading them to become loyal supporters.

Big Corporations Can Gain Access to New Markets by Supporting SMEs

It’s common to assume that only SMEs benefit from partnering with big businesses, but that couldn’t be further from the truth. Big corporations can access markets where SMEs have built trust.

In South Africa, the spaza shop sector is worth almost R200 billion and has provided opportunities for people from underprivileged backgrounds to earn an income and provide convenience and accessibility in their communities. Major retailers like Shoprite and Pick n Pay are now competing for dominance within this sector due to the market that spaza shops have tapped into.?

The spaza shop economy has strong historical significance and emerged due to economic exclusion and the lack of access to the formal retail sector. Spaza shops allowed people to purchase items in small and affordable quantities within their communities rather than having to travel to town.

How Can Big Businesses Support SMEs??

There are already initiatives in place from large corporations to support small businesses, but there is room for a lot more to be done. Here is a list of ways in which SMEs can receive support:

• Skills development and training: Standard Bank’s skills development programme partners with various organisations to give SMEs access to free skills training.
• Access to funding and funding education: The process of a funding application can sometimes seem complex. This is why it’s essential to provide funding and inform people on how to position themselves best to qualify for it. The upcoming SME South Africa funding summit aims to help entrepreneurs improve their funding prospects.
• Paying SMEs on time: This is one of the simplest ways to support SMEs, as paying on time should be a general rule of thumb. Many small businesses are in a vulnerable position with their cash flow, and payment delays may worsen the situation.?
• Give smaller businesses access to markets: The Shoprite Next Capital initiative gives SMMEs access to their consumer market. Shoprite focuses only on small and enterprise supplier development as a means to empower local SMMEs who display strong potential for profitability.

To hear more on entrepreneurship, funding, and much more, catch me and other experienced speakers at the SME Funding Summit on the 12th of June 2025.