Results from the 2015 National Small Business Survey released by the National Small Business Chamber (NSBC) show the continued resilience of South African SMEs in the face of economic challenges. The annual survey canvassed 18 500 small businesses throughout the country, providing valuable insight into current trends and sentiments in the sector.
“One of the more significant challenges facing small businesses is the inability to further develop a customer base in order to boost top line growth,” notes Mike Anderson, NSBC founder and CEO. This year’s survey found that some 57% of small businesses cited a lack of funding and insufficient cash flow as the biggest obstacle preventing growth, closely followed by poor sales at 52%. “Cash flow is of vital importance to the health of a small business. Enhanced efforts to encourage and promote best practice between government, larger organisations and their SME suppliers will go a long way in ensuring small business continues to play a role in growing the South African economy,” says Anderson.
According to the survey, the Western Cape is the fastest growing region in South Africa for SMEs, while Gauteng remains the largest. The bulk of small businesses in South Africa operate in the manufacturing and business services market with 14% of respondents each, followed by IT and professional services at 12% and 11% respectively.
The 2015 survey also shows that small businesses have a considerable interest in marketing themselves more effectively. 37% of respondents stated that if their business were to receive a R100k cash injection, it would be used towards marketing efforts. Similarly, 43% of small businesses place sales and marketing as a key area in which they require the most assistance, with business and strategic planning following with 30%. In addition, 32% of respondents believe that failure to market their business has been their biggest mistake thus far.
Despite hurdles on the path to growth, a substantial 78% of small business surveyed plan on hiring more staff in the next year, an encouraging finding given that the vast majority of business respondents have only been operational for three years or less. This is also despite many small businesses citing regulations that make it costly to terminate poor performing staff, as well as the high costs involved in recruiting and skilling quality staff as the primary stumbling blocks preventing them from employing more people.
“The future of the South African economy and the future of job creation are inextricably dependent on small business,” confirms Anderson. “This is why small business matters, and why supporting small business should be a priority for all South Africans. Ordinary citizens can play their part by identifying and supporting local small businesses, knowing that going small has a big impact on the country’s economic future.”
The survey found that 32% of small and medium enterprises (SMEs) regard failing to market their business effectively as one of their biggest business mistakes. Twenty-three percent felt they were selling themselves short, while 20% said they had partnered with the wrong people.
A failure to borrow money and hiring the wrong people tripped up a further 9% each of respondents. Building a customer base and boosting top line continues to be a major concern, with 43% citing sales and marketing as the area where they feel they needed the most assistance. This was followed by business and strategic planning at 30% and financial management at 11%, with IT/technology, social media, HR and legal scoring 5% each.
NSBC founder and CEO Mike Anderson emphasised the importance of cash flow as a key factor in the health of a small business. “Enhanced efforts to encourage and promote best practice between government, larger organisations and their SME suppliers will go a long way in ensuring small business continues to play a role in growing the South African economy,” said Anderson in a statement on Monday. According to the survey, the Western Cape is the fastest growing region in South Africa for SMEs, while Gauteng remains the largest. Forty-six percent of the nation’s SMEs are based in Gauteng, followed by the Western Cape at 31% and KwaZulu-Natal at 12%.The bulk of small businesses in South Africa operate in the manufacturing and business services market with 14% of respondents each, followed by IT and professional services at 12% and 11% respectively. The majority of SMEs have been in business for one to three years (30%), with 25% less than a year old. Sixteen percent have managed to stay the course for more than 10 years, while 13% have been a going concern for five to ten years and 16% for three to five years.
Despite hurdles on the path to growth, a substantial 78% of small business surveyed plan on hiring more staff in the next year. This is also despite many small businesses citing regulations that make it costly to terminate poor performing staff, as well as the high costs involved in recruiting and skilling quality staff as the primary stumbling blocks preventing them from employing more people.
“The future of the South African economy and the future of job creation are inextricably dependent on small business,” said Anderson. “This is why small business matters, and why supporting small business should be a priority for all South Africans.
“Ordinary citizens can play their part by identifying and supporting local small businesses, knowing that going small has a big impact on the country’s economic future.”
Alan Straton
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