LUSAPHO NJENGE New services include accessing information on incentives available to SMEs and market information to support their growth and access to information
The performance of government and the services it and development agencies provide can significantly improve the establishment and growth of small and medium- sized enterprises (SMEs), according to SME Survey 2014.
The threat of crime is the main concern of SMEs, with 46% highlighting it as their biggest concern. This makes the visible performance of government and policing vital to support SMEs.
About 38% of SMEs use government services each month, but significant room for improvement exists for the Small Enterprise Development Agency (Seda) and the other government agencies to deliver services and improve communication of the support and incentives available, which would enable more SMEs to grow and become stable, the survey indicates.
“Better communication between Seda and SMEs can provide immediate benefits to make SMEs aware of the resources, incentives and business support structures available to them,” says World Wide Worx MD and SME Survey principal researcher Arthur Goldstuck.
However, only about 43% of SMEs were happy with the turnaround times of government departments and agencies, highlighting that the speed of performance by State entities is still regarded as a significant problem.
A significant finding of the survey is that SMEs in cities are more likely to be successful and profitable, as they have better access to support, services, information and resources, as well as a larger market.
“This finding suggests that more resources should be extended to smaller towns in South Africa, as SMEs in cities find it easier to access support mechanisms. Further, all the commercial banks in South Africa provide some form of support for SMEs, but improving the speed, affordability and stability of connectivity will enable SMEs and their staff to improve their access to information and support services,” he notes.
Meanwhile, financial management and accessing skilled staff remain two significant problems for SMEs.
SMEs with a sales force and a marketing budget are significantly more likely to be competitive, but using a sales force is partially hampered by the lack of skilled staff, with financial management difficulties also hampering SME growth and sustainability, the survey indicates.
“SMEs tend to rely on networking and word of mouth to gain new contacts and business. However, online advertising, owing to its affordability, is also increasingly being used,” says Goldstuck.
Most SMEs also have the majority of their supply chain elements within their local areas, which means that differences in support in various regions are important.
Meanwhile, Seda chief strategy and information officer Lusapho Njenge affirms that the agency is assessing its focus areas and, while it will maintain support for start-up and microenterprises, it will also broaden its support to reduce the failure rate of SMEs and support the growth of more established enterprises.
Seda will also broaden its focus, especially the development of agroprocessing and manufacturing SMEs.
Seda will maintain its focus on addressing issues of financial management through interventions such as mentorship and coaching. However, the agency recognises that government services are important to unlock value for these companies and will ensure that uptake of these services is improved.