MIKE ANDERSON Supporting small businesses is important to unlock employment opportunities and make a lasting positive impact
The majority of small businesses in South Africa plan to actively increase their customer base and generate more sales during the next year, the 2016 National Small Business Survey of more than 17 950 small businesses found.
The survey, conducted by nonprofit body the National Small Business Chamber (NSBC), showed the resilience of the small business sector in South Africa in the face of economic challenges. Seventy-six percent of these businesses have been in operation for less than five years, said NSBC founder and CEO Mike Anderson.
“More than half (56%) of the businesses have considered expanding their operations into Africa and beyond, while a further 25% indicated they would consider doing so in the future. This is an encouraging finding illustrating small business’s optimism for future growth prospects,” Anderson enthused.
The biggest obstacles preventing growth of the small businesses surveyed were poor cash flow and difficulties in scaling to meet clients’ needs. A lack of funding and competition from large businesses were also cited as challenges to growth.
However, while a lack of funding remained the most significant hurdle to growth, 75% of small and medium-sized enterprises (SMEs) did not apply for a loan or other means of finance for their business in the previous year, the survey showed.
“Of the 25% that applied for loans, the majority chose to approach banks followed by government agencies. The majority of small businesses surveyed indicated that finance for growth would be the most likely that they would apply for, followed by working capital and equipment finance,” confirmed Anderson.
The survey found that many entrepreneurs (46%) do not check their business or personal credit scores, and only 15% did so before applying for credit. A further 69% of small businesses do not have insurance to cover their business arguing the need to become well established before doing so.
Meanwhile, 39% of the small businesses surveyed indicated sales and marketing as a key area for training and skills development, and most cited a failure to market their businesses effectively as a significant mistake, he highlights.
“A majority of businesses surveyed also indicated that, if their business were to receive a R100 000 cash injection, it would be used towards marketing efforts.”
SMEs are key to unlocking greater employment opportunities and hold the potential to make a positive and lasting impact for South Africa in general. The survey showed that small businesses in South Africa aim to grow and this is why supporting small business is so important, concluded Anderson.