RESULTS from the 2016 national small business survey are nothing short of an eye-opener, showing that only a small percentage of entrepreneurs manage to keep their businesses open for up to a decade.
The annual survey, conducted by the National Small Business Chamber (NSBC) which canvassed more than 17 950 participants throughout the country, indicated that 77% shut shop before reaching the five-year mark.
Of the 23% that survived for more than five years, only 9% stayed in business for more than 10 years.
Most of the businesses are very small, with 52% employing one to five people, 29% employing six to 10 people, 14% employing 11 to 25 people, 3% employing 26 to 50 people and 2% employing 51 to 100 people.
Annual turnovers were calculated at less than R5-million for 66% of businesses, between R5-million and R20-million for 32%, and more than R20-million for 2%.
When asked if there had been any consideration to take their businesses into Africa and beyond, 56% responded yes, 19% said they were not interested and 25% answered ‘maybe in the future’.
Their biggest obstacles were noted as lack of funding, competition from large businesses, growth and scaling to meet clients’ needs and poor sales or not having the right technology.
Most believed the area where assistance is most important is ‘sales and marketing’, with 39% highlighting the need for skills training or development in the field.
Credit scores
Interestingly, the survey also found a significant number of entrepreneurs (46%) do not check their business or personal credit scores, and 15% only did so just before applying for credit.
Only 31% said their business assets are insured, but all respondents agreed insurance is important.
The reason for the 69% not insured were ‘poor understanding of solutions’ (44%), ‘too few assets’ (29%), ‘too expensive’ (23%) and ‘self-insured’ (3%).
NSBC founder and CEO Mike Anderson said despite their challenges, 92% of small businesses in SA actively plan to increase their customer base and generate more sales over the next 12 months.
‘Results from the survey show the continued resilience of South African SMMEs in the face of economic challenges.
‘It shows small businesses remain committed to marketing themselves more effectively, with most businesses citing a failure to do so as their biggest mistake to date.’
He added support for small businesses is vital for the betterment of the SA economy.
‘SMMEs are key to unlocking greater employment opportunities and the potential to make a positive and lasting impact on South Africa in general.’
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