Chapter 14
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Categories of SMMEs
The National Small Business Act divides SMMEs into the following categories:
| SMME CATEGORY | DESCRIPTION |
| SURVIVALIST ENTERPRISE | Operates in the informal sector of the economy. Mainly undertaken by unemployed persons. Income generated below the poverty line, provides minimum means to keep the unemployed and their families alive. |
| MICRO ENTERPRISE | Little capital invested, not many assets. Not much training required to operate. Opportunities for growing the business very small. |
| VERY SMALL ENTERPRISE | Between one to five employees, usually the owner and family. Informal – no license required, no formal business premises, no labour legislation necessary. Turnover below the VAT registration level of R300 000 per year. Turnover below the VAT threshold of R1 million per year. Basic business skills and training. Potential to make the transition to a viable formal small business. |
| SMALL ENTERPRISE | Part of the formal economy, use technology. Less than 10 paid employees. Includes self-employed artisans (electricians, plumbers etc) and professionals. Less than 10 paid employees. More established than very small enterprises, formal and registered, fixed business premises. Owner-managed, but more complex management structure. |
| MEDIUM ENTERPRISE | Up to 200 employees. Still mainly owner-managed, but decentralised management structure with division of labour. Operates from fixed premises and complies with all formal requirements. |
The National Small Enterprise Amendment Act (2023) aims to streamline the support services that government provides to small and medium businesses.
The National Small Enterprise Amendment Act amends the National Small Enterprise Act of 1996 and provides for the establishment of the Small Enterprise Development Finance Agency (SEDFA) which will replace and incorporate the Small Enterprise Financing Agency (SEFA), the Co-operative Banks Development Agency (CBDA) and the Small Enterprise Development Agency (SEDA). The SEDFA will function as a one-stop-shop for entrepreneurs and promote the development of Co-operative Banking Institutions (CBIs). It aims to integrate government support (both financial and non-financial) to small businesses. The Act also establishes the Office of the Small Enterprise Ombud Services, which can deal with complaints and promote a more equal trading environment for small businesses.
