Brent Downard, Head of Credit at Merchant Capital

In today’s retail landscape, the most fundable businesses are the ones with diversified revenue streams, clear operational visibility, and a proven appetite for growth. Running a successful retail business in a sector under pressure is not just about selling more of what you already offer. It is about evolving your business model to attract both customers and capital.

But South Africa’s retail sector is showing signs of renewed momentum with Trading Economics reporting a 7% year-on-year growth in January 2025, more than doubling the growth rate seen just a month earlier. This suggests clear appetite in the market, but that appetite is shifting. Consumers are choosing convenience, flexibility, and businesses that can deliver across multiple touchpoints.

So, what does that mean for small businesses seeking funding? While revenue may open the door, funders look deeper. They want to know how that revenue is generated, and whether the model behind it can scale, adapt, and survive disruption. A single income stream might seem stable now, but true fundability lies in diversification, ingenuity, and the ability to create value in more than one way.

Consider a local pet store. On the surface, its revenue might rely on walk-in sales and predictable monthly dog food purchases. But add a grooming service, or a subscription-based online store, and the model shifts. Average spend increases. Customer stickiness improves. Operational overheads begin to scale more efficiently. The business hasn't been reinvented but it has been reimagined to be more dynamic, and ultimately, more attractive to funders.

This kind of layered revenue approach matters because it shows your business has legs. It tells capital funders that you are not dependent on one trend, one product, or one season. You are building a business designed to last.

It also matters in a market where customers expect more. Many businesses overestimate what drives loyalty. While companies often focus on service delivery, customers are increasingly expecting personalised, seamless experiences across all channels. That requires not only operational maturity but also new ways of engaging and selling.

Fresh growth opportunities

Having an online store opens up several growth opportunities. It enables your business to reach a broader audience and operate beyond its physical location. While online sales do come with their own costs, such as delivery fees, platform commissions, and fulfilment, these are typically variable costs. That means you can scale your reach and revenue without significantly increasing your fixed overheads. From a funding perspective, this model signals scalability. It tells us your business is structured to grow efficiently, without needing to triple your base infrastructure. What many SMEs underestimate is how much this impacts their fundability. Key ways to secure funding go beyond your organisation’s latest turnover figures, it is built on patterns, consistent growth, and multiple income streams. These are the green flags that let us know a business is ready to grow with the right support.

Of course, there are other fundamentals that matter just as much. Strong cash flow management, well-controlled overheads, responsible debt levels, and efficient stock management all play a role in making your business more fundable. These factors give funders confidence that your operation is not only growing, but also well run and financially resilient.

Funding can also be a powerful enabler. Used strategically, it gives you the headroom to invest in growth, whether that means testing a new offering, hiring staff, or upgrading systems. From grooming stations in a pet store to a digital ordering platform in a bakery, scale needs capital. The role of a funder is to make that capital accessible, fast, and flexible so that the SME can keep building with confidence.

Ask yourself whether you are giving your business the best shot at being seen, funded, and scaled, or are you still relying on a single stream and hoping for the best?

At Merchant Capital, we fund businesses that are ready to level up. That does not always mean size. Sometimes, it means mindset. Fundability is not just about what your business is doing today. It is about what it is capable of doing next.