The state of the SMME in South Africa 2025 report, published by the Shoprite Group, offers insights into how corporate South Africa can better support small businesses to overcome barriers, scale effectively and access new markets.
Small, medium and micro enterprises (SMMEs) are a cornerstone of South Africa’s economy, driving innovation, job creation and inclusive growth. Despite their important economic role, however, they operate in a landscape defined by both opportunities and deep-rooted challenges. This report focuses on three core areas of the SMME landscape: the demographics of business owners, the evolution of businesses over time and the role of marketing in their growth.
Methodology
The study is based on a nationally representative survey, conducted by World Wide Worx for the Shoprite Group, involving more than 800 SMMEs across South Africa. The sample, drawn from a business database of 100 000 companies, ranged from micro businesses with a single employee to larger firms with up to 200 employees, covering all major sectors and provinces. Respondents are business owners or key decision-makers, interviewed through structured telephone surveys to ensure consistency and comparability of responses. The randomised sample design enabled meaningful comparisons across different business types, sizes and demographics, ensuring that the findings provide reliable insights into the demographics, challenges, growth dynamics and resilience of SMMEs.
Key findings
Understanding the SMME demographics in South Africa
The demographic composition of South Africa’s SMME owners offers a clear view of how diversity drives entrepreneurial growth, while also exposing deep-seated barriers.
Gender disparities and the challenge of scaling
The report reveals a striking gender imbalance in SMME ownership, with 51.2% of businesses being male-owned, 37.7% female-owned and the remaining 11.1% under joint ownership. Women are more represented among smaller businesses, owning 51.3% of enterprises with one to five employees. However, as business size increases, female representation declines sharply, with women owning just under 13% of businesses with 51 to 200 employees.
This disparity highlights the systemic barriers women face in scaling their ventures, including limited access to growth capital, mentorship and professional networks. Female ownership is also notably lower in capital-intensive industries, reflecting the persistent gender disparities in access to resources and capital.
The generational divide
The age of SMME owners significantly influences business structure and operational strategy. Most SMMEs are owned by individuals aged 45–54 (up to 37%), followed by those aged 35–44 (around 27%) and 55–64 (23%). Younger entrepreneurs under 34 constitute a smaller portion (6%), suggesting they face significant barriers to entry, such as a lack of startup capital and mentorship. Despite this, younger owners demonstrate a high degree of competitiveness and a strong drive to innovate, often concentrated in emerging sectors such as technology and e-commerce, where they effectively leverage digital tools.
Older entrepreneurs, particularly those aged 55–64, are more prevalent among larger businesses, with 41.1% of businesses employing 51–200 individuals owned by this age group. Their success is often attributed to extensive experience and established industry knowledge.
Geographic disparities
Entrepreneurial activity remains highly concentrated in major economic hubs, with Gauteng leading with 34% of SMMEs, followed by the Western Cape at 31% and KwaZulu-Natal at 15%. This leaves provinces like the Northern Cape (1%) and North West (1%) vastly under-represented due to disparities in infrastructure, market access and institutional support. Urban areas offer robust transport networks, financial services and a concentration of skilled labour, all of which are essential for business growth. In contrast, rural and under-represented regions struggle with limited internet connectivity, inadequate funding opportunities and lower consumer demand.
The role of education and experience
Education and experience are critical determinants of an SMME owner’s leadership capabilities and business success. The report notes that 29% of owners have a bachelor’s degree, while 45% have over 20 years of work experience. Larger businesses show a higher proportion of postgraduate qualifications, highlighting the value of advanced education in managing complex operational demands.
The evolution of SMMEs
Understanding the lifecycle of SMMEs, as well as the challenges and opportunities at each growth stage, is crucial for designing effective support mechanisms. The report categorises businesses by size and longevity to provide a comprehensive overview.
The dominance of micro and small enterprises
The majority of South African SMMEs are small, with 34% employing 1 to 5 individuals and 25% employing 6 to 10 people. Together, these enterprises make up nearly 60% of the sector, serving as key entry points for entrepreneurship but facing significant hurdles, including limited access to funding and a high vulnerability to economic shocks.
In contrast, mid-sized businesses (11–50 employees) account for 29% of the sector, demonstrating their importance in creating more stable jobs and generating higher revenues. Larger businesses (51–200 employees) make up between 11% and 12% and are critical for anchoring industries and supporting economic stability.
Business longevity
The longevity of a business provides valuable insights into its resilience and adaptability. Nearly 30% of SMMEs have been operating for over 20 years, showcasing their ability to withstand market fluctuations. Start-ups, defined as businesses less than 5 years old, account for 20% of the sector. While they bring innovation and dynamism, they face significant hurdles, such as establishing a customer base and navigating complex regulatory environments.
Competitiveness, stability and economic impact
Competitiveness varies significantly by business age and size. While 69% of businesses operating for over 20 years rate themselves as ‘very competitive,’ younger businesses (one to five years) report a lower rating of 53%.
Maturity has a notable economic impact on SMMEs. Mid-sized businesses are significant contributors to profitability and job creation, with 43% reporting net profit margins exceeding 20%. In contrast, start-ups face greater financial risks, with 25% breaking even and 10% reporting losses.
Marketing strategies and digital adaptation
The report reveals how marketing strategies and social media platform choices evolve as businesses mature, reflecting a shift in priorities from initial brand visibility to sustained customer engagement.
Start-ups rely heavily on social media (92%) and word of mouth (68%) as cost-effective channels. As businesses grow, their strategies become increasingly diverse. Businesses that are six to 10 years old show increased use of websites (81%) and email marketing (28%). Mature businesses (those more than 20 years old) maintain a strong digital presence but also incorporate traditional channels, such as print advertising (13%) and radio (5%), demonstrating a balanced, multichannel approach.
Social media platform preferences also shift as businesses grow. Facebook (95.8%) and Instagram (67%) are the most dominant platforms for start-ups. In comparison, mature businesses show increased use of LinkedIn (32%) and Platform X (25%), reflecting a focus on professional networking and broader audience reach.
Recommendations
The report offers a roadmap of actionable recommendations for stakeholders.
| 1. Support start-ups (0–5 years): Help start-ups access resources through incubators and accelerators that provide mentorship, seed funding and market access. Strengthen their digital foundations by offering workshops on optimising platforms, such as Facebook and Instagram, and teach cost-effective digital marketing techniques to maximise limited budgets. |
| 2. Encourage multichannel diversification for growing businesses (6–10 years): Introduce advanced social media marketing on platforms like LinkedIn and offer guidance on email marketing and building professional networks to strengthen brand credibility. |
| 3. Expand traditional media access for established businesses (11–20 years): Offer subsidies for traditional channels like print and radio and provide support for public relations as an affordable alternative to traditional advertising. |
| 4. Promote professional networks and niche platforms for mature businesses (21+ years): Offer training in LinkedIn advertising and Pinterest’s visual marketing strategies to help businesses connect with new customer segments and enhance brand image. |
| 5. Strengthen mid-sized businesses: Expand their reach and capacity by adopting new technology, investing in workforce development and optimising supply chains. Support and incentivise mid-sized businesses to explore regional and international markets for new growth opportunities. |
| 6. Encourage longevity in established enterprises: Assist them in diversifying revenue streams, implement continuous innovation and collaborate with younger start-ups to ensure a more supportive ecosystem. |
| 7. Develop cross-channel marketing strategies for all stages: Help all businesses integrate digital and traditional channels to create unified marketing campaigns and connect with their audience across multiple touchpoints. |
| 8. Offer customised social media packages based on business age: Provide tailored social media packages (e.g. Facebook and Instagram for start-ups, LinkedIn for mature businesses) to help businesses efficiently allocate resources to the most effective platforms for their stage of growth. |
The private sector is vital in tackling challenges SMMEs face. Initiatives such as Shoprite Next Capital (SNC) are examples of how companies can address systemic barriers to unlock the full potential of the SMME sector, driving innovation, economic growth and job creation nationwide. SNC is an enterprise development programme which sets out to provide access to markets for small businesses and promotes their participation in retail through direct buyer access and personalised growth plans.
Find out more
- The full report, The state of the SMME in South Africa 2025, is available at; https://www.shopriteholdings.co.za/docs/shp-smme-report-2025.pdf
