Survey shows SMEs' greatest frustrations

Johannesburg – The main reasons for SME failure are cash flow related, according to the latest SME Insight Survey by the SA Institute of Chartered Accountants (Saica), released on Tuesday.

More than 1 300 business owners took part in the 2015 survey. It found that SME success increases with mentorship and technical assistance, and that one of the best sources of mentoring for new SMEs may be more experienced SMEs.

The survey findings provide insights into SMEs’ frustrations and current attitudes to entrepreneurship, of which the need for policymakers to reduce red tape is a big one.

SMEs also indicated that, if government wants to do business with them, it would have to improve payment terms and simplify the tender process.

Another finding that emerged was what respondents thought BBBEE legislation should be the gateway to faster growth of SMEs, but that for most it was not the case.

Apart from red tape, SME owners indicated that their most difficult obstacles are obtaining finance, VAT registrations, compliance with legislation and finding customers.

On a positive note, respondents indicated that the number of people employed in SMEs grows rapidly with turnover, and with the length of time an SME survives.
 
On top of that, many SME shareholders are also the chairpersons of their boards, the only directors, and the CEO, enabling flexible decision-making. Unfortunately this can also lead to poor governance.

“By collecting these insights and investigating the findings, our aim is to influence policymakers in creating a more enabling SME environment and to demonstrate the ways in which small and medium practices can better assist their SME clients," said Saica CEO Terence Nombembe.

According to Bridgitte Kriel, project director for practice at Saica, the 2015 survey results will be shared with various government departments and determine how policies toward this sector can be influenced.

"This information is shared with the purpose of creating healthy growth and sustainability in the sector,” said Kriel.

Saica pointed out that the National Development Plan (NDP) tasks SMEs with creating 90% of new employment by 2030.

"While this might seem like a tall order, by gaining a thorough understanding this sector, government, SMPs and SMEs themselves will be in a better position to succeed and meaningfully contribute to job creation," said Saica.