Small businesses confident about the future

The latest Sage Business Index has come to show remarkable optimism about the future and resilience from South Africa’s small businesses.

Drawn from a survey which polled 10000 business across Europe, North America, South Africa and Asia, the index features South Africa in the second highest place in terms of confidence expressed by small businesses.

The Sage index also revealed that whilst there is a general decline in confidence in global and local economies, small businesses remain cautiously optimistic in their own growth prospects.

The research, which included 2,026 South African small to medium size businesses, was carried out by Populus,a UK based opinion and research consultancy firm.The global survey results revealed that business performance held steady or improved over the past six months and that despite economic challenges ahead, businesses are looking to invest for growth in the next six months.

Businesses are also calling on their governments to provide more support by reducing the red tape which they say is stifling both their growth and a general economic improvement.

Across the board, businesses said that compared to six months ago, the global economy was in decline with the average index score declining 15% to 44.47.  In respect of their local economies, business confidence was higher with an index score of 47.11; however this is a sharp decline from the 57.17 previously scored.

South African businesses rated their own business prospects positivelyat 62.58.This is in sharp contrast with their index scores for the South African and the global economy which were  much lower at 44.10 and 45.92 respectively.

Commenting at the official results presentation in Johannesburg today, Ivan Epstein, CEO d Sage AAMEA (Asia, Australia, Middle East and Africa) said, “Looking at the results against an international backdrop, South Africa scored the second highest index rating of all the countries polled in terms of individual business confidence. Entrepreneurial spirit and business culture was identified by businesses as one of the most important aspects for doing business successfully in South Africa. This endorses my strong belief that South Africa is a breeding ground for successful entrepreneurs and small businesses.”

In terms of international business performance there was some positive news with over two thirdsof businesses surveyed showing either steady or improving revenues over the past six months. Only 12 percent of businesses said they were forced to reduce their number of employees.

In South Africa,75 percent of businesses polled showed either steady or increasing revenue. Employee numbers remained consistent with 50 percent of businesses reporting that they had not increased employee numbers over the period.

The biggest challenges identified in the survey of the past six months were the rising cost of energy, fuel and raw materials (53 percent); winning new customers or accessing new markets (47 percent); maintaining or growing revenue (41 percent); and managing cash flow (37 percent). South African businesses cited similar challenges with political instability emphasised as a further concern.

In terms of investment priorities looking forward, 41 percent of South African businesses intend to invest in sales and marketing 37 percent will consider diversifying into new markets and 32 percent will invest further in training and/or the launching of innovative products and services.  

Businesses are in agreement with the factors that restrict the. Irrespective of country the least favourable aspect of doing business is government bureaucracy and legislation, followed by governments handling of economic challenges.

Over half (53 percent) of South African businesses polled say that government bureaucracy and legislation is one of the least favourable aspects of doing business. When probed further, 62 percent of businesses stated employee and labour law whilst 48 percent said procurement and tender proceduresfor public sector contracts were the most cumbersome aspects. Smaller businesses further citeda lack of sufficient support and advice.

“We want to represent an honest picture of the realities facing businesses every day and most importantly define how Softline, Sage, governments and industry can further support small and medium sized businesses in both South Africa and around the world,” concluded Epstein.

 

 

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