Survey shows SME owners remain positive – this is why

Posted on September 23rd, 2014

Survey shows SME owners remain positive - this is whyThe Business Partners Limited SME Index (BPLSI), which measures attitudes and confidence levels among local SME owners, has released what are mostly positive results for the 2014 second quarter.

The good news is that business owners are reporting increased confidence in both their businesses’ growth potential and the South African economy. This optimism is being attributed to various factors including, a strike-free couple of months and the new Small Business Development ministry.

Below, are 7 key findings from the survey: 

1. Entrepreneurs are confident that their businesses will grow

Business owners, across various industries, expressed average confidence levels of 75% that their business will grow in the next 12 months, an increase of 2% when compared to both the first quarter of 2014 and the second quarter in 2013.

2. Entrepreneurs are confident in the South African economy

Average confidence levels of 58% were recorded when business owners were questioned about whether the South African economy will be conducive for business growth in the next 12 months, a quarter-on-quarter increase of 6%, and year-on-year increase of 5%.

This is against the backdrop of the International Monetary Fund (IMF) cutting South Africa’s economic growth forecast for 2014 from 2.3% to 1.7%.

“Entrepreneurs instead tend to focus on factors they can control within their businesses”

3. Increased confidence levels are being attributed to entrepreneurial optimism, and a ‘business as usual’ stance

According to managing director of Business Partners Limited, Nazeem Martin, the increase in confidence levels may be attributed to entrepreneurs’ eternally optimistic attitude for bucking the trend and that their businesses, over which they have control, will prosper despite the generally adverse economic environment.

“Rather than focusing on the many negative conditions surrounding them, entrepreneurs instead tend to focus on factors they can control within their businesses, as well as what has improved for the better in recent months”, he said.

The improved confidence levels are also being ascribed to the view by many SME owners that business can again continue as usual, this is following the mining and manufacturing strikes, which have begun to recede from their minds.

4. Exporters are also showing increased confidence

“For exporters, the windfall gains due to the weaker rand, coupled with the various expansion prospects that many South African businesses may perceive in Africa, could also have boosted business owners’ confidence levels,” said Martin.

5. Though confidence levels are high, it seems as if SMEs are in dire need of support and business mentorship

The survey reveals that even with increased confidence levels, business owners are increasingly expressing a need for support and business mentorship.

According to Martin, the numbers show that it is tough and often lonely for entrepreneurs in their working environment, who are often in desperate need of a sounding board, as well as assistance.

“While SMEs acknowledge the role that the ministry could play, they may doubt the benefits of the ministry”

SME owners surveyed displayed average importance levels of 83% when asked how important access to SME specific information, resources and support are for the development and growth of a business. Mentorship received an average importance level of 79%.

6. The new Small Business Development department has increased business owners’ confidence levels in government efforts

When surveyed on whether government is doing enough to foster SME development in South Africa, average confidence levels of 39% were recorded – a quarter-on-quarter increase of 8% and year-on-year increase of 7%.

“The announcement of a Ministry for Small Business Development after the May elections and the generally positive pronouncements of newly appointed Minister Lindiwe Zulu could also have contributed towards the increased confidence levels, as SMEs may view this as a commitment from government to taking them seriously and to eradicating the many stumbling blocks which inhibit the establishment of new businesses and the growth and expansion of existing SMEs,” said Martin.

7. Business owners do, however, have doubts on whether the Small Business Development department will have much of an impact

When SMEs were surveyed on how confident they were that the newly introduced Ministry will aid small and medium businesses, an average confidence level of 49% was recorded. “While SMEs acknowledge the role that the ministry could play, they may doubt the benefits of the ministry and the sense of urgency with which it will tackle its tasks, as it was only established earlier this year,” concludes Martin.