Vusi Thembekwayo: Why small businesses need more than funding to scale

Access to capital remains a major obstacle for South African entrepreneurs, but securing funding at the right time, building strong teams and developing systems to support growth are equally critical to turning small businesses into sustainable enterprises, says entrepreneur Vusi Thembekwayo.

Thembekwayo explores these challenges in Underdogs: How Small Players Can Become Business Titans, co-authored with business adviser and finance educator Michael Hinton and published by Jonathan Ball Publishers.

The book examines how smaller businesses can compete with established companies by identifying market opportunities, understanding customers and using limited resources strategically, without assuming that growth requires becoming the biggest player in the market.

Thembekwayo said the aim was not to romanticise the difficulties of running a small business, but to show entrepreneurs how others had overcome similar obstacles.

“One of the things we were careful not to do in the book was to romanticise the challenges of running a small business. The book is not about saying to the reader there are no challenges running a business,” he said.

“If you’re running a small business and you are an underdog, this is a practical guide about what other underdogs did and what you can learn from them,” he added.

Thembekwayo said effective strategy and execution could not replace adequate funding, particularly for businesses looking to expand their operations.

“To be clear, those are not competing, those are not mutually exclusive. So it’s not that you either need good ideas and good strategy or you need funding. You need all of those,” he said.

He said capable management teams, operational excellence, continuous improvement and the ability to attract skilled employees were also essential to sustainable growth.

“There is no universe where a limitation of funding resources does not constrain the growth of a business,” he said.

Thembekwayo cited research putting South Africa’s funding gap for micro, small and medium-sized enterprises at $350 billion. He argued that the growing number of funding providers and products had not resolved the challenges entrepreneurs face when trying to secure finance.

“What South Africa needs is patient, early-stage risk capital,” he said, calling for banks and the state to help provide funding to businesses at earlier stages of development.

For Thembekwayo, the timing of funding is as important as its availability, particularly for entrepreneurs moving from establishing a business to expanding its operations.

“Money itself is not the constraint. It’s when the money finds you,” he said.

Thembekwayo said scaling a business required a deliberate approach rather than simply hoping for growth.

“Scale is a science. Scale is not a wish. Scale is not a religion. Scale is science,” he said.

He identified five areas entrepreneurs should prioritise: strategy, customers and competitors, autonomy and automation, leadership, and energy.

These involve establishing a clear business direction, understanding customer needs and competitors, developing systems and standard operating procedures, investing in employee development, and building leadership capacity.

Thembekwayo said entrepreneurs could limit their businesses’ potential if they remained the sole drivers of every operation.

“You cannot scale beyond yourself. That doesn’t happen,” he said, emphasising the importance of developing leadership skills and building teams capable of supporting expansion.

Underdogs draws on businesses including Nando’s, Canva and Under Armour to illustrate how smaller players have identified opportunities and established competitive positions.

Thembekwayo cited Nando’s as an example of founders backing an unconventional vision, while Canva illustrated the importance of positioning a business within an ecosystem that provides access to networks and opportunities.

“There is no amount of ingenuity and character that can outcompete ecosystem,” he said, arguing that entrepreneurs needed to consider where they operated and how close they were to customers and potential partners.

The book challenges the assumption that smaller businesses must replicate the strategies of larger competitors to succeed. Instead, it examines how businesses can identify gaps in the market, respond to customer needs and build systems that support sustainable growth.

Co-author Michael Hinton, a business adviser and finance educator who has spent more than 25 years working with leading African brands and corporate boardrooms, said the book’s lessons were relevant to owners of small and medium-sized enterprises.

Hinton also lectures at the Gordon Institute of Business Science (GIBS).

“None of the businesses in this book began with perfect circumstances. What they had was the discipline to keep going and the willingness to do things differently from the big players. That is available to any business owner, whatever the size of the business,” he said.