“Everyone at home is depending on this business,” said Nthuthuko Dubazane, responding to a recent survey done by Kandua.com, sent out to their pros (home service providers) to determine the biggest growth barriers that these small businesses face, chief of which is access to market and customers.
Kandua.com is South Africa’s largest online home services marketplace, which connects around 30 000 vetted small service businesses and independent professionals like Dubazane, who runs a glass and aluminium company, to potential customers.
The survey findings underscore the point made by President Cyril Ramaphosa in the most recent SONA: that small, micro and informal businesses create the most jobs and provide the most opportunities for poor people to earn a living. Enabling these businesses to stabilise and grow is crucial to alleviating poverty and unemployment.
“60% of the professionals surveyed by Kandua.com have between 3 and 10 permanent employees, and also employ several contractors on a project basis. In the context of South Africa’s unemployment rate, each of these jobs and each of these businesses represent not only an individual income, but often a family’s survival,” says Arjun Khoosal, co-founder and CTO of Kandua.com. “We surveyed our pros to understand how we can help them succeed.”
Access to market
“I can manage my business. What I need is more work,” said Liza Ntsinde, owner of a specialist cleaning company, in her response to the survey.
“Almost 40% of pros cite access to new customers as the number one thing that is stopping them from growing their businesses. Therefore, our primary focus is helping our pros get more jobs and easy access to the market,” explains Khoosal.
“The home services sector has significant market failure: home service professionals rely on word-of-mouth marketing and paper-based processes. Homeowners struggle to find small businesses they can trust, despite preferring their more affordable prices and personalised service. We use technology to match demand and supply, to help pros to formalise and gain market access, and to address trust and convenience barriers for customers,” Khoosal explains.
Access to finance was another roadblock for business growth, mentioned by a third of the pros surveyed. “This is not surprising,” says Khoosal. “It’s hard to find a piece of research on small businesses enablement that doesn’t highlight funding as an issue. What we are striving to understand is what other barriers exist for our pros, because addressing some of these may unlock funding opportunities that are not currently available to them; or enable their growth in other ways.”
An important consideration is that many of South Africa’s micro and small businesses are informal, characterised by casual employment and a lack of business and tax registration. Both a 2021 report by the UNDP and Department of Small Business Development and a 2019 report by the International Finance Corporation (IFC) highlight how increased formalisation of businesses can help them to access opportunities. Formal businesses have more options for institutional funding and support and are more likely to be productive employment creators.
Khoosal sees the right kind of tech as a key enabler in this respect as well: “Simple things like having visibility of your income and expenses, a directory of your customers, or an idea of how much money you are still owed is crucial. For the typical small service business, neither pen and paper nor complex business management software is fit for use. This is why we are expanding the range of easy-to-use tech tools we offer.”
“It’s up to tech disruptors to not only build clever new products, but to design them in a way that makes them accessible to the people who need them most to excel and access opportunities,” Khoosal concludes.