From the future of jobs and cyber threats, to political and societal turbulence, small business owners in South Africa are confronting numerous external challenges as they try to grow their operations.
Even with these challenges South African small business owners remain optimistic, with 76% reporting they expect to grow at least 25% in the next three years, according to the GoDaddy Global Small Business survey.
One of the biggest issues facing workers globally is the rise of automation, artificial intelligence and robot disruption that raises concerns about the future of jobs.
However, the vast majority of small business owners in South Africa believe they are insulated from those risks – 70% felt protected against job loss from these technology developments.
While technology disruption is likely to pose challenges, it also can reduce the barrier to entry to create a small business.
Only half of South African small businesses reported either having their own website (28%) or are planning to build one soon (22%), while around 42% said they rely solely on social media platforms.
Local small businesses were least likely to have a website among the countries in the survey, and the most likely to rely on social channels.
The GoDaddy Global Small Business Research Survey was conducted in April and May 2019 in Australia, Canada, Germany, Hong Kong, India, Mexico, South Africa, Turkey, United States, and the United Kingdom.
Research firm Savanta conducted the field research of the 4,505 small businesses in the countries. The South African respondents comprised companies with less than 25 employees.
Almost half (46%) of South African small businesses cited political instability and social turbulence as may be caused by change, including economic, technological or cultural factors as a major challenge to their growth prospects.
Around one third (34%) identified insufficient investment as a significant obstacle to growth, followed by failure to keep up with technology (20%) and cyber-security risks (13%).
While few small businesses (7%) in the South African sample reported being victims of a cyber-attack, for those who did, the consequences were severe.
Those who were attacked reported that it shut down their business for some time, customers couldn’t reach them, they had to spend money to repair systems, and they lost access to accounts needed to service their customers, the survey found.
GoDaddy also looked at the attitudes of small business owners. Here are some of the key findings:
- Small business owners in South Africa value the flexibility of running their own business, with nearly half (48%) saying it’s the best aspect of being an entrepreneur. For 13% of respondents, the money they can make is the biggest plus of running their own small business, while 12% cited helping the world to solve a problem;
- On the flipside, 32% said that risk of failure and uncertainty about the future is the worst thing about being a small business owner;
- Encouragingly, 91% of South African respondents said they would start their own business if they had to make the choice again knowing what they know now, and 84% reported they are happier since becoming an entrepreneur;
- The skills shortage is a major challenge for small South African businesses, with 76% saying it is somewhat hard, hard, or very hard to find talented workers;
- 57% of small South African businesses serve mostly local customers (within 80 kilometres of their location) and only 10% serve mostly international customers;
- 41% of small business owners worked for a corporate employer before setting up their own venture; 26% were working for a small business; 16% were unemployed and 16% were students.