By building the township economy, you will be able to inject money into lower-income communities and affect the overall economy of South Africa. There are many opportunities available for entrepreneurs to take. Still, there are some drawbacks which impact the speed at which township SMEs can grow and establish themselves as big players in the market. In this article, we look at the benefits and drawbacks of building a SME in a township.
The benefits of building a business
- Strengthen the local economy: By creating businesses within the local areas, people spend money locally, which then gets used by companies to improve facilities to help boost business, and this, in turn, creates more opportunities for business and improved living conditions.
- Support for local goods is great: People in the townships look for value rather than brand loyalty. By offering a well-made and local product, you will have your foot in the right door.
- Grow consciously: Growth can be explosive, but you must ensure you don’t grow too quickly without a stable foundation. Build a strong foundation that you can expand in any direction you want.
The drawbacks of having a business in the townships
- High crime rates: As many townships have a high unemployment rate, there is a higher risk of crime which makes running a small business hard. You need to ensure you have the correct security procedures in place to protect your assets against potential criminals.
- Low infrastructure support: When these areas were built, they were not intended to have industrial and commercial areas. This has caused them to have limited infrastructure for operating businesses, which need large areas for production. But there are movements in place to improve the infrastructure of these areas so that they have access to better electricity, water and internet connection.
- Literacy gap: Financial and general literacy is crucial for running a business. It is important to improve the literacy rate in South Africa as well as the financial knowledge for SMEs which operate in townships. By improving these, business owners will be able to read and write critical business documentation and also understand what the numbers mean when someone comes to ask about how the business is doing.
- Lack of access: SMEs which operate in the broad community have access to social groups and resources that can help them when they find themselves going through tough times. These opportunities are less to no existent in townships and cause many businesses to fail.
By keeping these pros and cons in mind, you can start to develop an SME which can thrive in the environment in which it finds itself.
Article brought to you by the NSBC