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SA small business optimistic - survey

May 24 2016 13:29
Duncan Alfreds, Fin24

Cape Town – Small businesses in South Africa are optimistic about the future, according to a new survey.

A survey commissioned by Xero and conducted by World Wide Worx found that 58% of small and medium-sized enterprises (SMEs) expect to grow in the next year, compared to 29% which expect to stay the same and 12% which expect to shrink.

In his Budget Speech, Finance Minister Pravin Gordhan highlighted the difficult economy and the need to support SMEs.

“In acting together we can address declining confidence and the retreat of capital, and we can combat emerging patterns of predatory behaviour and corruption,” he said.

Gordhan said that a slowing economy had resulted in lower tax collection and projected a national budget deficit of R139bn, 3.2% of gross domestic product (GDP).

Funding

“I need to emphasise that additional spending on higher education, small business development, and amounts set aside for responding to the drought and other contingencies are accommodated through stringent cost containment measures across all departments,” he said.

The State of SA Small Business report found that 40% of SMEs rely of spreadsheets and paper records, which are susceptible to errors.

“Considering that the economic output of small and medium-sized enterprises in South Africa is estimated at 52% of GDP, that’s a potential R1trn of GDP at risk,” said Xero.

The report showed that 27% of SMEs cite access to funding as a barrier to growth, with 83% of small enterprises relying on family and friends or personal savings for startup finance.

“Our research highlights the key challenges facing the small business community in South Africa, and we're encouraged that while some of these challenges are particular to the region, many of them are common across other countries we operate in,” said Gary Turner, Xero co-founder and managing director for Xero in the Europe, Middle East and Africa region.

- Xero is conducting a roadshow in Johannesburg on Tuesday and in Cape Town on Wednesday.


- Follow Duncan on Twitter

entrepreneurs  |  startups  |  small businesses
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