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. 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.
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 training 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. 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.