According to National Small Business Chamber (NSBC)’s 2016 National Small Business Survey, small businesses are resilient despite the current economic challenges. About 92% of them actively plan to increase their customer base and generate more sales over the next 12 months.
“Results from the 2016 National Small Business Survey show the continued resilience of South African SMEs in the face of economic challenges. The annual survey canvassed more than 17 950 small businesses throughout the country, providing valuable insight into current trends and sentiments in the sector,” notes Mike Anderson, NSBC founder and CEO.
This year’s survey found that a majority of small businesses, 76% of which have been in operation less than five years, cited a lack of funding and poor cash flow as the biggest obstacle preventing growth. Competition from larger businesses along with difficulties in scaling to meet clients’ needs also featured as primary challenges holding small businesses back from achieving growth.
According to the survey, 56% of 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 further illustrating SMEs optimism in future growth prospects.
The 2016 survey once again shows that small businesses remain committed to marketing themselves more effectively with most businesses citing a failure to do so as their biggest mistake to date. A majority of businesses surveyed also indicated that if their business were to receive a R100k cash injection, it would be used towards marketing efforts. Similarly, 39% small businesses place sales and marketing as a key area in which they require further skills training and development.
While a lack of funding remains the most significant hurdle to growth, some 75% of SMEs did not apply for a loan or other means of finance for their business in the previous year. Of the 25% that did, the majority chose to approach banks, followed in second by government agencies. The majority of small businesses surveyed indicated that finance for growth would be the most likely they would apply for, followed by working capital and equipment finance, respectively.
Interestingly, the 2016 survey also found most entrepreneurs at 46% do not check their business or personal credit scores, and 15% only did so just before applying for credit. A further 69% of SMEs do not have insurance to cover their business citing a wish to become more established before doing so.
Anderson says the results of the 2016 National Small Business Survey show that SMEs are committed to growing their businesses for the betterment of the South African economy. “This is why supporting small business is so important. SMEs are key to unlocking greater employment opportunities and the potential to make a positive and lasting impact for South Africa in general.”