For the small business sector to not only survive but also thrive, it needs to access in-depth industry trends and insights, which is why Nedbank has created a comprehensive Small Business Index for all.
Costs are up, supply is down and South Africa’s economic growth slowed to an annual rate of 0.9% in the first quarter of 2013, highlighting the important role that small business has in creating employment and boosting the economy.
As a supporter of small business, Nedbank realised a need for a robust and accessible index that provides meaningful trends and insights for small businesses and stakeholders to truly understand what they are up against and how they can reach their full potential.
“We hope that this index will become the main reference point for leaders in the private and public sectors to engage on issues pertaining to small business. Notably, this can serve as an enabling tool for small business to guide their business decisions,” says Ingrid Johnson, Nedbank Group Managing Executive of Retail and Business Banking.
Quarterly surveys conducted with small business owners and decision makers in different sectors provide information on small business behaviour, their challenges, plans and overall confidence levels.
According to Prof Adré Schreuder of Consulta Research and Professor of Marketing Research at the University of Pretoria, the Small Business Index™ adheres to world class standards of scientific rigor and model-development: ”It is truly unique in that it combines a survey-based confidence index with key economic indicators.”
The research, which surveys over 1300 business owners quarterly and combines it with other economic data, will be translated into a complete index from February 2014. The first two rounds of fieldwork are, however, already providing new insights into top of mind issues for small businesses. The findings can be divided into the following three factors affecting small businesses and their stakeholders:
Confidence and outlook
Although business owners are generally pessimistic about the economy and the effect that rising costs have on their plans for growth, the average sentiment is slightly positive in terms of their future financial situation. The research found that many businesses had expansion plans with 53% of small businesses having made some form of capital expenditure in the past 12 months and a further 50% looking to make some form of capital expenditure in the coming year.
Most small businesses face similar struggles – namely rising input costs, pressurised cash flow, strict labour laws and a general lack of support from both the public and private sectors. Reasons cited for lack of support related mainly to legislation and limited business opportunities made available.
While many respondents expressed their view that obtaining finance is difficult, the majority of those who applied were successful, mostly through commercial banks.
However, many small business owners are reluctant to use credit to fund capital expenditure, opting instead to use revenue and savings to grow their businesses.
One of the major ways small businesses are growing is by expanding their operations into international markets, especially into the rest of Africa, an encouraging trend that looks set to continue.
For more trends and insights, visit www.SimplyBiz.co.za, or join the conversations on Twitter and Facebook using the hashtag #SASmallBusinessIndex.
For more information on how Nedbank Small Business can help you, click here.
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