The challenge: In the dynamic entrepreneurial landscape of South Africa, SMEs play a vital role in driving economic growth and creating employment opportunities – but access to markets, funding, and maintaining relevance amidst rapid changes are pressing challenges. Zwelani Nkomo, an ACCA member and CEO of McGeralds Entrepreneurship Centre, is at the forefront of empowering SMEs to overcome these hurdles.
The problem solver: With a mission to foster SME profitability, impact and inspiration, Zwelani and his team at McGeralds take a holistic approach to supporting entrepreneurs. By leveraging his expertise as a finance professional with a deep understanding of business dynamics, Zwelani and McGeralds are addressing the multifaceted challenges faced by SMEs in South Africa and beyond.
Addressing the pain point of relevance: Zwelani recognises that one of the most significant, yet often overlooked, pain points for SMEs is remaining relevant in an ever-changing world. ‘The salient one, I think, that is even becoming more prominent after COVID-19, is being relevant in an evolving world. And I believe it’s a pain point that SMEs go through without even knowing it – as their real source of pain,’ he notes.
Many SMEs struggle to find their place in the market – unsure of which products or services to offer, how to adapt to technological advancements, and how to position themselves for long-term success. This disconnect from relevance can hinder their ability to break into current markets and capitalise on emerging opportunities.
The Propeller Model – a comprehensive approach: To tackle these multifaceted challenges, McGeralds employs their unique ‘Propeller Model’. This model allocates 40% of the organisation’s efforts to supporting the entrepreneur – recognising their pivotal role in driving the business.
Another 30% is dedicated to understanding the business dynamics, such as financials, clients, market positioning and pricing. And, the remaining 20% focuses on providing external support through mentorship, coaching and partnerships – with only 10% is allocated to funding.
This balanced approach highlights Zwelani’s belief that throwing money at a problem is not the magic pill; instead, it’s about nurturing the entrepreneur, understanding the business dynamics, and providing the right support. Funding, while it may make or break the business, is most effective after the first three elements are in order.
Success stories – igniting entrepreneurial growth: McGeralds has numerous success stories that illustrate the impact of its work. One notable case study involves a pharmaceutical business that was generating R2.1m (£90,000) per year by importing products from China. The business faced challenges due to the lengthy working capital cycle – as merchandise would spend two to three months in transit from China.
Once the products arrived in South Africa, they were sold within two to three weeks, leaving the business effectively trading for only six weeks per year. By analysing the business dynamics and securing a R20m (£900,000) funding facility, McGeralds enabled the business to optimise its cash flow and capitalise on economies of scale. Within three years, the business grew its revenue by 2,900%, from R2.1m (£90,000) to R63m (£2.7m).
The role of accountants – embracing relevance: Zwelani believes that accountants have a crucial role to play in the success of SMEs, particularly in telling the story behind the numbers and facilitating access to finance. However, he also sees untapped potential for accountancy professionals to support SMEs in accessing international markets by advising on pricing strategies, logistics and regulatory compliance.
Zwelani’s advice to accountancy professionals resonates with McGeralds’ ethos: ‘Don’t just sell your expertise but prioritise discovering relevant client challenges. Begin with a clean slate to understand their needs – then leverage your expertise and experience to craft highly relevant solutions. Relevance, not pre-packaged services, is the key to client success in SME support.’
Embracing digital transformation: Understanding the importance of digital transformation, McGeralds has adopted a business development management platform, likened to a ‘Facebook of businesses’. The McGeralds’ Propeller platform enables SMEs to interact, share ideas, and explore opportunities within their ecosystem – fostering collaboration and growth.
‘There are businesses that are 1,300km apart. They’ve never met face-to-face, but they found each other on the platform and this connection nurtured new business ideas that resulted in business growth,’ enthuses Zwelani.
Looking ahead – expanding impact across Africa: With a vision to expand its impact beyond South Africa, McGeralds has established continent-wide partnerships with international organisations like ACCA and Unicorn Simulations. The organisation is actively seeking collaborations with entities such as the United Nations Development Programme (UNDP), International Finance Corporation (IFC), and International Monetary Fund (IMF) to disseminate support and foster entrepreneurial growth across Africa.
‘I believe that we’ve reached a place where we can be a strategic partner to international institutions, especially in disseminating support and ensuring some level of growth and impact in other countries across the continent,’ adds Zwelani.
Source: ACCA Global