SME confidence up, but not all plain sailing ahead - Business Partners
Broad confidence indicators among small businesses in South Africa have exhibited a quarterly uptick despite a challenging economic backdrop, but the path ahead will not be smooth sailing, a report showed on Wednesday.
The Business Partners Limited SME Index – a survey measuring the attitudes and confidence levels of South African small and medium enterprise owners, edged up in the third quarter, signalling optimism that their businesses would experience growth in the next 12 months.
But while the boost is in line with positive gross domestic product data for the third quarter, businesses should not become complacent, warned Mark Paper, chief operating officer at Business Partners.
Statistics South Africa reported that the economy grew by 2.2% quarter-on-quarter in the third quarter, emerging from a technical recession.
"However, with SMEs indicating that cash flow is expected to be their biggest challenge over the next six months, it is vital that they keep their finger on the pulse and plan ahead for any unexpected challenges," Paper said.
He cited fuel hikes as an example of a challenge that had caught many SMEs off-guard this year, impacting their business operations considerably.
"The Index reveals that 68% of SMEs said that the record-high fuel hikes significantly hindered their company’s growth plans for the next 12 months and only 13 percentage points anticipated these increases and planned accordingly," said Paper.
"“The reality is that the South African economy is struggling and since 2019 is an election year, we should expect some uncertainty during the first half of the year as government shifts from some project implementation and policy decision-making to electioneering."
"As such, SMEs need to learn to expect the unexpected or, at the very least, ensure that they are in a financial position where they can ride out a similar scenario in the future if need be."
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