By: Allon Raiz, Founder & CEO, Raizcorp
South Africa has developed a culture of glamourising entrepreneurship that amounts to false advertising, with the warning label missing. Roughly 96% of new businesses fail within ten years worldwide, a statistic too significant to gloss over when entrepreneurship is sold as the answer to unemployment.
What failure actually means
A business shutting down is not the same as an entrepreneur failing. Provided the lessons, networks and skills gained from a failed venture are put to use, a second attempt has a genuinely higher chance of success. The real indicator worth watching is not how many businesses fail, but how often entrepreneurs re-enter after failure.
South Africa’s low re-entry rate is a culture problem
Research comparing entrepreneurial re-entry rates found South Africans try again just over once on average after a failure, compared to roughly three and a half times in the United States. In a culture that shames business failure, a banking environment that structurally penalises entrepreneurs with a prior failure, and a community where failure invites gossip rather than support, a low re-entry rate is unsurprising.
The dangerous myth of the business plan and grant funding
There is no evidence supporting the idea that a good business plan paired with grant funding is the recipe for a vibrant startup economy. Treating entrepreneurs as though they can be processed on a weekend course, from unemployed on Friday to founder on Monday, does deep damage to self-confidence when the inevitable setback follows, and makes a second attempt even less likely.
Not everyone is an entrepreneur by choice
First-world countries typically show early-stage entrepreneurial activity rates of one to two percent of the population, while emerging economies run far higher, often five to twenty percent, disproportionately made up of “necessity entrepreneurs” who would take formal employment in a heartbeat if it were available. Government’s genuine role is creating the conditions, opportunity, risk tolerance, culture, that let entrepreneurship happen naturally for those suited to it, not manufacturing entrepreneurs on demand.
Frequently asked questions
Does a failed business mean the entrepreneur has failed?
Not if they apply what they learned. Entrepreneurs who use the lessons, networks and skills from a failed venture in a second attempt have a genuinely higher chance of eventual success.
Why does South Africa have such a low entrepreneurial re-entry rate compared to the US?
A combination of cultural stigma around failure, banking practices that penalise entrepreneurs with a prior failure, and community environments where failure invites gossip rather than support.
Is a good business plan plus funding enough to guarantee startup success?
No. There is no evidence supporting this common assumption, and treating it as a guaranteed formula sets entrepreneurs up for a confidence-damaging shock when it does not work out.
The real fix is normalising a second attempt
South Africa’s entrepreneurship problem is less about the failure rate itself and more about a culture that makes trying again after failure so much harder than it needs to be.
Further reading: How to Build a High-Performing Team | Department of Trade, Industry and Competition for official small business support information
Originally published in May 2019. Updated September 2026 to tighten this op-ed from Raizcorp’s Allon Raiz on the real risks behind glamourised entrepreneurship. The underlying argument remains as relevant now.
