SMEs are in need of a lifeline, survey finds
JOHANNESBURG - According to the Retail Capital Roll With The Punches survey, released this week, the government wants 90percent of all formal jobs to be created by small and medium enterprises (SMEs), but it found that small businesses need a lifeline.
“This as business is only good for 10percent of them. The rest are being knocked by a financially stressed customer who has pulled back on purchasing (55percent), unreliable and expensive utilities (47percent), rising operating costs (58percent) and late payments, affecting their ability to trade,” it said. The survey found that some SMEs were also experiencing issues with labour and unions as strikes had resulted in staff taking days off work, while others raised the issue of getting funding and the challenges in getting tenders without political connections.
Waheed Adam from Entrepreneurs’ Organisation said: “I think the common denominator is the reduction in the economy and this is due to multiple reasons. One is governmental and as a result we’ve been through torrid times bringing on negative growth. That has jolted and halted the economy and brought down the general confidence of SMEs and the corporate sector.”
It said help was not always at hand, especially from the banks: 58percent ranked banks among the least likely to support them, while 33percent said the same of the government. Anni Wilhelmi from The Women President’s Organisation said: “When you consider the SME ecosystem, funding is the most important part of growth. We have a solid financial sector, yet banking and banking sector support of entrepreneurs isn’t there. Bankers are missing an opportunity due to a gap between funder expectation and SME ability. Small entrepreneurs - which 80percent of our SMEs are - lack financial readiness. They bootstrap their business and access loans at exorbitant interest rates - all because they are not financially ready for what a bank demands of them.”