Why Women-Led Businesses Need More Than Compliance to Succeed
A purchase order from a major buyer might sound like a dream, but how does a woman entrepreneur buy millions in raw materials without adequate working capital?
Trade finance might not come across as glamorous, yet for many women entrepreneurs, it can be the turning point between just having an idea and realizing a thriving business.
Supporting women with a viable business and a solid plan can be transformative. Whether she is selling homemade goods in a small community or supplying massive companies, she has shown she knows how to hustle. What she needs now is not another grant, but a real chance at growth.
Beyond the Initial Support
Many corporate enterprise and supplier development models start with great intentions, providing early-stage support to emerging businesses. However, this is just the beginning of what is required.
Critical to business growth is developing the supply chain. This means integrating these small businesses into actual supply chains, not just leaving them with tools but no customers and consequently, no cash flow.
The Challenge of Liquidity
Even after breaking into procurement platforms, businesses face significant hurdles due to liquidity issues. A hefty purchase order from a big buyer like Coca-Cola may look impressive, but buying substantial raw materials without working capital presents a conundrum.
While non-traditional finance providers are meant to bridge this gap, the exorbitant rates charged often impede small suppliers before they have an opportunity to scale. We’ve observed loans with interest so high that businesses remain indebted long after fulfilling their orders.
Re-thinking Financial Models
To address these challenges, innovative models like our product were developed, designed to close this gap by partnering with businesses short-term. Avoiding interest charges, we take a fair percentage of the margin post-deal, striving for transparency and automation.
This model is crucial for women entrepreneurs. In South Africa, a significant number of households are led by women who reinvest substantially back into their families and communities.
Challenges of Compliance
Many women running successful businesses remain invisible to formal supply chains due to non-compliance and lack of awareness regarding necessary documentation. Compliance remains low among informal and micro-businesses due to complex administrative burdens and lack of information.
Formalizing these businesses just enough could unlock enormous potential for growth and wealth-building, while still retaining their intrinsic value.
The Corporate Role
Corporates and development finance institutions need to be proactive in addressing these barriers. The red tape and risk aversion are stifling potential growth, particularly for women entrepreneurs.
The gulf between emerging, qualifying small enterprises (QSEs), and corporates is significant, creating a leakage in the small business pipeline. This gap needs attention for women not to fall through.
A Call for Flexible Systems
Women entrepreneurs excel in business but face systemic obstacles due to rigid structures. They require fair products, open platforms, and a financial ecosystem that accommodates their growth.
The next big business might not be in the expected places but could stem from determined women entrepreneurs using their grit and potential waiting for the system to acknowledge them.
