SA small business owners should be proud of their resilience

Small business owners in South Africa should be proud of their resilience following the dip during the pandemic years when the South African economy faced a number of headwinds.

The current economic downturn has been characterised by high levels of inflation, the rising cost of credit, fuel hikes and a cost-of-living crisis. These realities placed millions of small enterprises across the country under immense strain but despite these challenges, many continue to demonstrate a resilience and maintain an optimistic outlook heading for 2024, Pheladi Kunutu, area manager at Business Partners Limited, says.

“Our own research through the Business Partners Ltd SME Confidence Index, in addition to surveys conducted by other industry stakeholders, indicate a steady rise in confidence on several fronts, including the belief that small businesses will be able to grow their ventures in the months ahead. Additionally, the confidence that these business have that the South African economy is conducive for business growth has remained stable, despite an onslaught of difficulties and economic barriers.”

Most recently, business leaders such as chief economist, Dr Azar Jammine, attested to the resilience of South African businesses. “As a specialist SME financier, we also continue to see outstanding examples of how local entrepreneurs leverage innovation and apply creative thinking to overcome obstacles fighting their way through to a brighter future.”

According to the most recent, Small Business, Big Opportunity survey conducted by Sage, more than 80% of business decision-makers are confident that their companies will be successful over the next 12 months.

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Small business confidence

Similar results were seen in the quarterly SME Confidence Index conducted by Business Partners Limited, which saw overall business confidence increase to 71% in the first quarter of 2023, a 7% increase compared to the previous quarter.

This sustained confidence resulted in tangible results, with 74% of South African SMEs reporting growth over the last year, according to a report conducted by Xero.

“Considering the extreme and mounting financial pressures small enterprises face, these results herald positive prospects and prove, yet again, that the local SME sector is as resilient as it has always been believed to be and ready to face the challenges head on,” Kunutu says.

What specifically makes South African entrepreneurs resilient? Kunutu says that the will and ability of entrepreneurs to up the ante in terms of running efficient operations is a key contributor. The Sage study found that over a third of business owners attribute higher levels of business confidence to the ability to work more efficiently.

For Kunutu, greater levels of efficiency can be attributed to the wider availability and accessibility of technological tools that can automate processes and build more effective workflows. “Tasks involving aspects such as financial management and accounting, tax administration, team communication and project management have been made more efficient by software and tools, many of which are freely available or relatively cost-effective thanks to competition in the market.”

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Agility in the sector

Many local small businesses have also proven themselves to be extremely agile, both during the pandemic years and in the post-pandemic period. The ability to adapt quickly to market fluctuations and changing socioeconomic conditions is one of the hallmarks of resilient businesses, Kunutu says.

“We have seen extraordinary examples of agility in the sector, particularly in response to the electricity supply crisis with more businesses adopting alternative energy. In response to the series of petrol and diesel hikes, some local businesses have switched to more fuel-efficient modes of transport such as e-bikes. Pioneers in this sector include Green Riders, an e-bike delivery and logistics service, that is bringing ‘greenification’ to the last-mile delivery industry.”

With examples such as these, we see not only solutions to beating price hikes but also solutions to social empowerment, job creation and upliftment. The agility of these kinds of businesses rests on their ability to see challenges as opportunities, says Kunutu.

She urges small business owners to draw hope from these positive indicators and keep up their determination in weathering the economic downturn. “As South Africans, we face a set of unique challenges, but we have also proven ourselves highly capable of taking ownership of our journeys as business people and when opportunities do not arise on their own, we create them.”