It’s not a universal truth that businesses always want to grow. Some seasons call for downsizing, consolidation, or a focus on profit margin rather than chasing increased revenue. But when your growth strategy calls for action, business funding can drive growth from a small business into a medium-sized company.
While the acronyms SMME (small, micro and medium enterprises) and SME (small and medium enterprises) are used worldwide, definitions actually differ across countries and industries. The South African definition, as per the National Small Enterprise Act, considers the number of full-time employees and annual turnover of the business to determine the size label.
So-called small businesses generally have 11–50 staff, and medium ones 51–250. But, depending on the sector, the annual turnover of those defined as small and medium businesses can vary significantly. For example, small businesses in the agriculture sector will have an annual turnover of R17 million, but in manufacturing this ballpark is R50 million. According to the Act, medium businesses in the catering sector make R40 million a year, but in the transport sector, it’s R140 million.
Business owners are most likely too busy running day-to-day operations to worry about these definitions, though. When considering where to grow, and how to measure that growth, the following indicators will be top of mind:
By tracking these indicators, businesses can monitor their performance, identify areas for improvement, and make data-informed decisions to drive growth.
According to SA’s Department of Small Business Development, cash flow constraints are a significant hurdle to the survival and growth of small businesses. This is backed up by our data, which shows that the number one use of loans by Genfin clients is to manage cash flow.
Capital is needed to buy equipment, machinery and vehicles, invest in day-to-day operations, and pay for service contracts. An added layer of complexity is when large clients impose 60-to-90-day payment terms on smaller suppliers, creating a significant lag between the cash layout to provide goods or services, and when they receive payment.
Business owners will know best why their unique situation calls for capital (in addition to managing cash flow). This resource is a good start for planning your growth and here is how to decide on the right kind of loan for you. But if you’re wondering how others have done it, or curious about your potential, some familiar names have used business funding to grow in various ways.
Amazon: After starting as an online bookstore, Amazon used multiple rounds of funding to expand into various product categories, cloud services (Amazon Web Services), digital streaming, and more.
Netflix: Initially a DVD-by-mail service, Netflix used funding to transition into streaming, expanding its content library and original productions. In 2024 it received the most Emmy nominations of any network.
Nike: The apparel brand uses funding to invest in research and development at the Nike Sports Research Laboratory. Here scientists use an array of tools and collect data on the likes of muscle sensors, pressure platforms, breath analysers, foot scanners, and thermal imaging devices.
Uber: The ride-share company secured substantial funding to expand its service to new cities, countries, and transportation modes (food delivery and bike sharing).
Airbnb: Funding was used to expand this online marketplace for homestays to new markets, accommodation types, and additional travel services.
Coca-Cola: One of the world’s most recognisable brands for a reason, Coca-Cola has a long history of spending heavily on advertising and marketing campaigns.
Nike: Nike still invests significantly in athlete endorsements, advertising, and marketing to maintain its image.
Tesla: The leader in EVs secured significant funding to develop and produce its electrical vehicles, expand its charging infrastructure, and invest in autonomous driving technology.
Our country’s small and medium businesses are the backbone of our economy. We’ve seen first-hand how affordable capital can empower them to invest and grow. From first application to final repayment, the entire Genfin journey is supported by a dedicated business funding analyst. We’re here to help get your application over the line. Contact us to discuss your business goals. Let us help you get it done.
