Top 5 things to know about small businesses in South Africa in 2016
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South Africa does not invest in procuring accurate statistics on small businesses in South Africa, making it difficult to find the exact number of companies that operate in the country.
According to SME experts, what complicates matters is that there is no clear definition of what a small business is, and a lack of measurability across informal industries.
Estimates place the GDP contribution of small businesses at 52% and 61%.
Here are the top 5 things about small businesses in South Africa – and how owners are handling the current economic environment.
The majority of small business owners are self-funded
63% of small business owners report using personal savings while 20% found investment or a loan from a family member, partner or friend. Only 6% turned to business angels or venture capitalists.
Small business owners are not big on ‘the cloud’
When it comes to financial management, over half (51%) the small business owners surveyed use desktop accounting tools, and over a third still manage their finances manually. Only 8% have moved on to cloud accounting software.
Cash flow is a big worry
While 41% of business owners said they had no cash-flow worries, a big chunk of responding owners (38%) said that they were hit with unexpected cash flow issues – from late-paying clients, to unforeseen slumps in sales.
The biggest challenge is the competition
Business owners cited competition from other business as the biggest challenge they face – though access to funding was another challenge worth noting. Keeping ahead of competitors was cited as the thing most likely to keep small business owners up at night.
Small business embrace technology
Two-thirds of small business owners said that technology was very important or essential for their business operations, with smart devices and apps making their lives and the running of their businesses easier. Only a small portion of businesses (29%) generate income online, though, with 49% of businesses opting for traditional brick and mortar.