New research reveals that as much as 38% small and medium enterprises (SMEs) are unprofitable in SA, with the other 62% are turning small to large profits.
The SME Survey 2014, conducted by World Wide Worx and sponsored by the Small Enterprise Development Agency (Seda), Business Connexion and Microsoft, questioned 1,400 business owners.
The survey also showed that SMEs also showed that female-owned businesses have a better chance of being profitable than those run by men. It found that SMEs owned by couples or a mix of genders are substantially less likely to be profitable than those operated by just male or female-owners.
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“While this result may seem like a big win for women, it comes with an immediate qualifier: the level of female ownership is exceptionally low,” said Arthur Goldstuck, SME Survey principal researcher and MD of World Wide Worx.
The survey found that overall, only a small proportion of SMEs – less than one in five – is thriving. However, 17% are ‘strongly profitable’ while 45% are ‘just profitable’.
However, a significant percentage of SMEs are under some distress, with 38% not making a profit. Survey results show that:
Of the male-owned SMEs:
20% are strongly profitable;
49% are just profitable
Of the jointly-owned SMEs:
16% are strongly profitable;
37% are just profitable
And of the female-owned SMEs:
15% are strongly profitable;
63% just profitable
This equates to a total of 78% of women-owned businesses being profitable, well ahead of the 70% for men.
With a considerable difference recorded in jointly-owned organisations, where just 53% are profitable, Goldstuck said: “This arguably shows that there are additional challenges which come with owning a business together with your spouse or partner, or where joint owners have different personal agendas or management styles.”.
In terms of overall ownership, men dominate, with 48% owning SMEs, while jointly-owned businesses account for 44%. Just 8% of South African SMEs are female-owned businesses.
“There is a massive gender imbalance in entrepreneurship,” said Goldstuck. “This tells us that women are not given enough encouragement or support to become entrepreneurs.”