A spike in company closures this year – 155 in July alone, taking the total for 2025 so far to 908, reports Statistics South Africa – has added renewed urgency to the need to scale and grow SMEs in SA.

In 2024, this sector accounted for 80% of the SA workforce, according to a 2024 survey by financial inclusion NPO FinMark Trust, with about 3 million medium, small and micro entrepreneurs employing around 13.4 million people and adding about R5 trillion to the country’s economy.

The findings ‘emphasise the pressing need for micro enterprises to grow into small, medium, and in some cases, large businesses to drive sustainable growth’, say the survey authors.

While data underscores the scale of the challenge, the path to sustainable growth for MSMEs is not purely structural or policy-driven – it hinges on the capabilities of the people steering these businesses. Owners and managers who aspire to move beyond survival mode must cultivate a distinct set of competencies that enable them to navigate complexity, seize opportunities and build resilience. To paraphrase Albert Einstein: problems cannot be solved with the same thinking that created them. Scaling requires a new mindset, coupled with sharpened skills, to unlock the next phase of growth.

‘Driving sustainable growth and scaling organisations requires managers to change their thinking – relaxing control and empowering others in the business to take ownership,’ says Colette Muller, dean and head of the University of KwaZulu-Natal’s Graduate School of Business and Leadership. ‘For growth to be sustainable, all parts of the enterprise must work together in an interconnected way, with change embraced as a constant rather than a disruption. This requires not only digital fluency and collaborative leadership but also a deep commitment to ethics, compliance and embedding social impact in business practices so that growth is both legitimate and durable.’

Muller’s view highlights the complex, systemic nature of scaling – a reminder that growth is rarely linear and often requires leaders to hold multiple priorities in balance. Yet there is also value in cutting through that complexity to focus on the essentials.

‘Forget complicated management theories and endless spreadsheets. At its core, great business management boils down to just three things: purpose, priorities and planning,’ says Jon Foster-Pedley, dean of Henley Business School Africa. ‘It sounds simple, but far too often, entrepreneurs and SME managers get lost in the weeds, wasting time and money on the wrong issues.’

To be truly effective, he says, decision-makers must first understand the fundamental value their business provides. ‘What do you do that truly matters to people?’ Once that core value has been defined, clear standards can be set to maintain it, the most important tasks can be prioritised to keep that value flowing and meticulous plans devised to make it all happen.

‘If you can master this trifecta – understanding your value, setting and upholding standards, prioritising and planning accordingly – your business will not just survive, it will thrive.’

And herein lies the paradox of simplicity – the solution is easy to grasp conceptually, yet its implementation will have to contend with a multitude of challenges, from entrenched habits, culture or psychological resistance to skills gaps, resource constraints and market volatility. Here, Foster-Pedley emphasises the cultivation of tenacity and resilience.

‘Entrepreneurs and managers can learn not to fear failure, to lean into it and learn from it,’ says Foster-Pedley. ‘Confidence in running a business, as in life, isn’t something you’re born with; it’s forged through experience. It’s built by successfully overcoming challenges and gaining a deep, honest familiarity with your own strengths and weaknesses. You can only become a truly confident leader by doing the work and learning from every success and failure.’

This notion is perhaps best captured in the concept of ‘failing forward’ – the idea that setbacks should be leveraged as catalysts for growth rather than reasons to retreat. This mindset becomes particularly crucial when considering the broader support ecosystem for SMEs, where the challenge lies not just in providing funding or resources but in developing the psychological resilience and adaptive capacity that entrepreneurs need to navigate the inevitable obstacles to scaling a business.

Of course, business incubators play an important role in helping SMEs achieve this – but research into their effectiveness, in SA at least, is patchy.

One recent study comes from Sibusiso Mweli’s thesis and dissertation for his MBA at Wits University on factors influencing the performance of SME incubation beneficiaries. The study surveyed 43 SA SMEs that had completed incubation programmes and found that two capacities in particular – dynamic capabilities (the ability of the company to adapt, reconfigure resources and learn) and innovation capabilities (including new‐product or process innovation) – are strong predictors of post-incubation performance.

Mweli recommends that rather than just expanding incubator programmes, incubators should design interventions that build those internal capacities more deliberately – for example, via targeted training, experiential learning and infrastructure that fosters experimentation.

While no training programme could ever compete with the ‘school of hard knocks’, there is still value in it – as long as it’s the right training. Which can pose a dilemma to organisations that want to upskill their leadership but are faced with a plethora of options, from formal business education to training programmes and workshops.

‘Training programmes shouldn’t just impart knowledge, but should also provoke a change in thinking, challenge assumptions and link directly to measurable outcomes in the business,’ says Muller.

‘Effective programmes will reflect on the practical local context – for example, B-BBEE compliance, labour relations, township economies and public procurement – and build in opportunities for reflection on how disruption, whether from regulation, markets or technology, changes the rules of the game.’

Muller and Foster-Pedley agree that any business training worth its salt will blend theory with real-world application, ensuring managers acquire skills they can apply to meet their company’s specific needs.

‘Classroom learning has its place, but true mastery is forged in the fire of real-world experience,’ says Foster-Pedley. ‘There’s no substitute for experiential and immersive learning under pressure – not just to grasp the monumental challenge of building a successful business, but to cultivate the resilience and resourcefulness needed to see it through.

‘While we certainly teach strategy and innovation, what we consistently hear from our graduates is that the most transformative part of their education is the radical ability to practise what they learn as they learn it, all within the context of their own organisations,’ he says. ‘It is in this dynamic process of learning and applying, failing and trying again, that they build the resilience and wisdom essential for true leadership. Akin to how the blacksmith refines and transforms metal in the forge, the process of learning, applying, failing and trying again is the repeated heating, hammering and cooling of the metal – the essential cycle that transforms it.’

The irony facing SA’s SME sector may be that its greatest strength – the entrepreneurial grit that enables 3 million business owners to survive in challenging conditions – could also be a limiting factor when it comes to scaling. The very self-reliance and hands-on control that helps micro enterprises navigate immediate crises can become psychological barriers to the delegation, systematic thinking and calculated risk-taking that growth demands.

Can SA entrepreneurs learn to trade the familiar comfort of control for the uncomfortable uncertainty of building systems that can function without them?

By Robyn Maclarty
Image: Gallo/Getty Images