{"id":354939,"date":"2019-11-18T14:49:38","date_gmt":"2019-11-18T12:49:38","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=354939"},"modified":"2019-11-18T14:49:38","modified_gmt":"2019-11-18T12:49:38","slug":"the-brutal-impact-of-south-africas-economy-on-small-business","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/354939\/the-brutal-impact-of-south-africas-economy-on-small-business\/","title":{"rendered":"The brutal impact of South Africa&#8217;s economy on small business"},"content":{"rendered":"<p>A new study by financial services company Retail Capital shows that small businesses in South Africa are buckling &#8211; knocked by a low-growth economy, unreliable utilities and rising operating costs.<\/p>\n<p>The study, entitled: <a href=\"https:\/\/www.retailcapital.co.za\/inyourcorner\/#first_to_know\" target=\"_blank\" rel=\"noopener noreferrer\">Roll With The Punches<\/a>, found, among other things, that business is only good for 10% of our SMEs, while the other 90% are floundering thanks to the weak economy.<\/p>\n<p>Collectively, SMEs keep 10.8 million people employed, accounting for 66% of all formal jobs, they contribute 20% to the GDP and pay 6% of corporate taxes.<\/p>\n<p>&#8220;They are South Africa\u2019s lifeline,&#8221; the group said.<\/p>\n<p>Retail Capital conducted the study in October 2019 and surveyed over 700 entrepreneurs using ovatoyou\u2019s online quantitative methodology.<\/p>\n<p>More than half (55%) of respondents say that demand is shrinking and there is less business as people are buying less, while 58% say operating costs are a threat to their business.<\/p>\n<ul>\n<li>47% are being subjected to unreliable resources and services, such as load-shedding, water-shedding and fuel levies;<\/li>\n<li>33% are stymied and held back by red tape, governance and compliance regulations;<\/li>\n<li>15% are affected by strikes and labour laws; and<\/li>\n<li>59% ranked the banks as the least likely to support SMEs<\/li>\n<\/ul>\n<p>\u201cSmall businesses are burning the midnight oil to keep the lights on and our people employed. They\u2019re your local woodworker, craft beer distiller, the face of the shish n\u2019yama, and poultry farmer.<\/p>\n<p>&#8220;They get up every day and fight the good fight, to feed their families and bring home the bacon, all the while trying to contribute to our economy. But it\u2019s not easy. Our entrepreneurs are operating in an extremely challenging environment,\u201d said Retail Capital chief executive officer, Karl Westvig.<\/p>\n<p>These hard knocks are taking a toll on our SMEs and they need support to stay afloat. But help is not always at hand, especially from the banks: 58% ranked banks among the least likely to support them, he said.<\/p>\n<p>Technology and rapid digitisation is also affecting our SMEs, with a noteworthy 32% saying that it is a threat to their business. \u201cMany small businesses don\u2019t have the luxury of looking at digitisation, they are focused on sustaining their current businesses,&#8221; Westvig said.<\/p>\n<p>&#8220;Given the majority of SMEs employ fewer than three people, keeping up with technology is the last thing on their minds. They often don\u2019t have time to work on their business vision, or plan too far ahead as they are tied up in the operational daily grind. Unfortunately missing this trick could affect their sustainability and longevity,\u201d says Anni Wilhelmi from the Women President\u2019s Organisation.<\/p>\n<p>To make ends meet SMEs often self-sacrifice, taking a salary cut before implementing short-time or retrenching (58%).<\/p>\n<p>This as in a small business, \u201crelationships with staff are often more intimate and they are aware that when they retrench an employee, they retrench an entire family,\u201d said Arifa Parkar from the Western Cape Business Opportunities Forum.<\/p>\n<p>Up to 13% also start a side hustle to diversify income streams, or identify a gap in the market where there is demand, often in niche industries. So while 17% of SMEs are in retail, specialist services (15%), construction (9%), hospitality (6%) and owned restaurants (5%), the majority are running small businesses such as own a biscuit brand, sell bags and perfumes, print labels, offer vehicle finance and childcare and even manufacture tutu sets.<\/p>\n<p>More women are also starting their own businesses with 65% of the survey identifying as female, \u201c11 years ago when I started the National Small Business Chamber, only a few members were women. Now they\u2019re dominating the SME sector,\u201d said the chamber\u2019s CEO, Mike Anderson.<\/p>\n<p>\u201cThe report\u2019s data provides a sense of how brutally tough it is out there,&#8221; said Westvig.<\/p>\n<p>&#8220;My advice to small businesses is to dig deep, there are no shortcuts. It\u2019s going to be hard, but put in the time and ride it until you come through on the other side. What happens now doesn\u2019t mean it will happen in six months\u2019 time. I think we have gone to as low as we can go. Once SMEs see hope, they will see through the curve.\u201d<\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/business\/337321\/tough-economy-takes-a-toll-on-small-business-in-south-africa\/\" target=\"_blank\" rel=\"noopener noreferrer\">Tough economy takes a toll on small business in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A new study by financial services company Retail Capital shows that small businesses in South Africa are buckling &#8211; knocked by a low-growth economy, unreliable utilities and rising operating costs.<\/p>\n","protected":false},"author":10,"featured_media":118344,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26,11957],"class_list":["post-354939","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline","tag-retail-capital"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/354939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=354939"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/354939\/revisions"}],"predecessor-version":[{"id":355011,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/354939\/revisions\/355011"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/118344"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=354939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=354939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=354939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}