Latest Press Releases

Thursday, 30 July 2015

SME Survey: Tangible SME uptake of cloud services

The uptake of cloud services in the small and medium enterprise (SME) sector has been growing steadily, but 2015 sees businesses finally beginning to wake up to the benefits offered by services like online storage and backups.


Thursday, 30 July 2015

SME Survey: Tangible SME uptake of cloud services

The uptake of cloud services in the small and medium enterprise (SME) sector has been growing steadily, but 2015 sees businesses finally beginning to wake up to the benefits offered by services like online storage and backups.

The number of SMEs using cloud services in 2015 jumped by 10% - up to 39% - from 2014, according to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey 2015.

"For the first time, we are seeing a real take-up of cloud services, which indicates that more and more SMEs are overcoming their natural apprehensions around the cloud and are instead starting to realise the benefits this can offer," he says.

"Of those surveyed, although only an additional 4.5% said they would definitely be using the cloud by next year, there are obvious clues that we can expect an even bigger jump in the numbers. In particular, a fifth of SMEs (19%) said their use of cloud next year will depend on business needs, and another third (35%) say they are currently unsure. We anticipate that at least a portion of these businesses will discover they either need or want the cloud. It is therefore logical to extrapolate a figure that suggests more than 50% of SMEs will be using the cloud by 2016."

Furthermore, adds Goldstuck, there are many SMEs that are already using cloud services, without even knowing it. He points out that when the survey questioned SMEs about whether they were using particular services, such as online e-mail, some 83% stated that they were doing so.

"Services like this could be referred to as the Invisible Cloud; online e-mail is obviously a cloud-based service, yet the majority of SMEs clearly don't see it as such."

A further 47% of SMEs said that they made use of online backups, while 37% utilised online accounting, 27% used an online project management service and 25% had an online customer relationship management (CRM) solution. This, says Goldstuck, is a clear indication that there is massive uptake and yet a lack of understanding among SMEs as to what constitutes the cloud.

"The disconnect in the figures between what SMEs consider to be cloud services and the actual cloud-based services that many of them are already using demonstrates that there is a lack of education about what the cloud really is and what services actually form part of it."

Clearly, discovering that many of the solutions they already use, such as Gmail and Microsoft OneDrive are part of the cloud, is a key aspect of the migration process. This is because, upon realising this, most SMEs are then prepared to go deeper into the cloud.

"While it is obvious that SMEs are becoming more technology-savvy and mature in the use of cloud – even when they don't know it is part of the cloud – for more significant uptake to occur, the cloud service providers need to play a role in educating SMEs more effectively around the topic."

"Ultimately, of course, the real driver will come not from whether they know certain solutions are cloud services or not. Instead, real uptake of cloud will be driven, as implied by the survey results, by selling specific applications to SMEs. If service providers are able to convince more SMEs to utilise specific solutions – like online backup, to protect against the increasing dangers posed by power failures, for example – it won't be long before they realise the benefits. This, in turn, will make them more predisposed to adopting other cloud services that could be equally beneficial," says Goldstuck. "The key is to market the applications within the cloud, not the cloud itself."

Ethel Nyembe, Head of Small Enterprise at Standard Bank, agrees with this approach: "Cloud-based products can provide small and medium business owners with efficient, simple and cost-effective business management solutions, thus saving the enterprise time and money, which is vital for prosperity. For example, cloud-based HR applications are more economical than tailored in-house systems, as they involve no upfront costs and are adaptable, thus giving the entrepreneur the time needed to focus on innovation."

Elaine Wang, Microsoft Business Unit Manager at Rectron, says: "While it is incredible to watch the uptake of cloud services skyrocketing due to the inherent benefits that it offers to SMEs, they should still consider all possible alternatives in deciding which solutions to implement as well as how to get it done. The results of the research indicates that there is a fuzzy line between consumer and commercial solutions. Therefore, SMEs need to ensure that they are taking full advantage of the security and features behind the commercial solutions, and are choosing the right partner to take them forward."

SME Survey is the original and largest representative survey of SMEs in South Africa and, since 2003, has contributed ground-breaking research into the forces shaping SME competitiveness.

SME Survey 2015 is sponsored by Standard Bank and Forest Technologies powered by Rectron

Thursday, 30 July 2015

SME Survey 2015: shows that load shedding is the biggest threat to SMEs

If you were to ask the owners of small and medium enterprises (SMEs) what keeps them awake at night, chances are that you would be inundated with shared concerns. Based on the findings of the SME Survey this year, finance, competition and crime are some of the most pressing issues. However, crime no longer claims first place. Instead, frequent and prolonged power failures rank as the most concerning issue for SMEs.


Thursday, 30 July 2015

SME Survey 2015 shows that load shedding is the biggest threat to SMEs

If you were to ask the owners of small and medium enterprises (SMEs) what keeps them awake at night, chances are that you would be inundated with shared concerns. Based on the findings of the SME Survey this year, finance, competition and crime are some of the most pressing issues. However, crime no longer claims first place. Instead, frequent and prolonged power failures rank as the most concerning issue for SMEs.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, this year has seen a dramatic shift in what SMEs consider to be the biggest external threats to their businesses.

"With power failures cited by 71% of respondents, the issue rates at almost exactly double the importance of crime, which came in a distant second, at 36%. This category is obviously driven to a large extent by those concerns that are highest in the public mind – SMEs have in the past attributed their sleepless nights to crime, the high cost of fuel, or even interest rates. These results came even when power failures were featured in the survey during the first load shedding several years ago, but load shedding still came well below crime at the time," he says.

"The reason we have seen such a massive jump for this category is due to the cumulative effects of ongoing load shedding. While load shedding has been punted as a temporary problem, it is clear that business fears that it is going to be with us for the foreseeable future."

Ethel Nyembe, Head of Small Enterprise at Standard Bank, says: "While big companies have the infrastructure, client bases and capital to cope with the challenges highlighted in the survey, many small businesses, which have the potential to be active players in the South African economy, do not have the financial muscle and resources to overcome these challenges."

Elaine Wang, Microsoft Business Unit Manager at Rectron, adds: "With the ever-looming possibility of load shedding, there is no better time for SMEs to consider a cloud solution for their businesses. Given limited capital for expensive infrastructure, public cloud offerings are a great way to ensure that SMEs are protected against loss of data and downtime. These solutions also ensure that they are able to stay up to date with the latest in technology offerings while paying on a per user or usage basis."

Goldstuck concurs: "The impact of even short periods without power is greater on SMEs than it would be on larger companies that likely have generators and other fall-back options."

"The rising concern regarding load shedding is probably also due to the fact that its effects seem more severe now than they did in 2008 and, at the same time, the lights are off for longer periods now. On top of this, there seems to be additional challenges, such as blown transformers that occur when the power comes back on, increasing concerns for the safety of home appliances. All of this, combined, paints a very bleak picture for SMEs," he adds.

It is also essential for SMEs to play a role in mitigating the effects of load shedding, such as backing up data on their computers, which is integrally tied to a sudden loss of power. "Backing up any less than on a daily basis can prove to be disastrous for an SME, yet the figures demonstrate that the proportion of SMEs doing exactly this has risen from only 30.5% in 2014 to a still-low 40% in 2015," he says.

There is no doubt that, by failing to improve their policies on backing up, SMEs are flirting with disaster, he says. In an era when electronic information is the lifeblood of a business, it is almost inconceivable that more than one out of every three SMEs only backs up on a weekly or monthly basis.

"Part of the problem is that few SMEs associate power failures with the need to back up data, and yet unexpected load shedding is one of the events most likely to lead to a loss of data," says Goldstuck. "However, with load shedding expected to be with us for the foreseeable future, I anticipate that backing up will become far more of a priority for SMEs as we move forward. After all, there are already more than enough worries SMEs face, so the thought that one might lose vital business data to an unexpected power failure should be cause for concern for small businesses."

Ms Nyembe says that big organisations are no longer the primary focus for growth and job creation. The biggest emerging economies today are driven by SMEs as key drivers for economic growth, innovation and sustainable employment. She is of the view that if South Africa is to join their ranks, SMEs need the necessary backing, namely financial assistance, access to markets, corporate and government support, business and skills development, and mentorship.

The SME Survey is the original and largest representative survey of SMEs in South Africa and, since 2003, has contributed ground-breaking research into the forces shaping SME competitiveness.

SME Survey 2015 is sponsored by Standard Bank and Forest Technologies powered by Rectron

Monday, 1 June 2015

SME Survey 2015: More SME-friendly banking services needed

Finances and funding are among the most important services required by small and medium enterprises (SMEs), both to start and maintain a business. However, this is a sector that seldom obtains financing from the banking industry. This clearly indicates that the financial services sector is not providing the services that SMEs actually require.


Monday, 1 June 2015

SME Survey 2015: More SME-friendly banking services needed

Finances and funding are among the most important services required by small and medium enterprises (SMEs), both to start and maintain a business. However, this is a sector that seldom obtains financing from the banking industry. This clearly indicates that the financial services sector is not providing the services that SMEs actually require.

Perhaps more worryingly, early findings from SME Survey 2015 indicate that not much has changed in SMEs' experiences of the services provided by financial institutions.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, it is obvious from the results that SMEs are not obtaining the services they need most from banks. However, he adds that even the SMEs themselves have difficulty in articulating what they require from the financial services sector.

"In this year's Survey, when we asked respondents a question around which of their needs were not being met by the banks, we left it open-ended," he says. "Respondents weren't given a choice of options, but were expected to come up with their own answers. The answers were quite intriguing, as few SMEs were able to be specific about what services they felt the banks were not providing."

"The majority of responses said they were happy with the services they were offered. However, once we got to the question of where these SMEs actually obtained their funding for starting and running their businesses, banks were missing in action."

The research showed that banks were the least likely place for an SME to go for financial help. SMEs, says Goldstuck, clearly do not see banks as a source of funding for their business.

"In fact, the single most likely source of funding – as indicated by 57% of respondents - was their own capital, suggesting that the majority of SMEs tend to be used to pulling themselves up by their own bootstraps."

"The next most likely source of funding, indicated by 28% of those questioned, was from business partners, while 10% claimed to obtain funding from family members. Only 2% said that they rely on banks for funding. It is obvious then, that there is a huge disconnect between the banking services used by SMEs and the kind of support that the financial institutions could be providing."

This is an issue that has been of concern to the financial services sector for some time too, according to Ethel Nyembe, Head of Small Enterprise at Standard Bank.

"The large banks are well aware of the size of the SME sector and the potential market it opens up for us. What we need to be clearer on is what types of services are most in demand from SMEs. SME Survey 2015 will certainly help us to determine how to better develop and position products and services that will suit this market," she says.

Goldstuck adds that one interesting result from the Survey was that a number of SMEs make use of overdraft facilities that form part of their current account.

"So in effect, some SMEs are using the bank to fund their business, but crucially, they do not see it that way."

"The results of SME Survey 2015 clearly demonstrate that banks need to become more SME-friendly and, in particular, need to be more funding-friendly. The current scenario for SMEs to obtain funding requires significant organisational resources just to comply with the rules, legislation and red tape involved. This is obviously a huge issue for an SME, so it is obvious that banks need to look to develop and market more SME-friendly offerings in this space."

SME Survey is the original and largest representative survey of SMEs in South Africa and has contributed ground-breaking research into the forces shaping SME competitiveness and sustainability since 2003.

SME Survey 2015 is sponsored by Forest Technologies powered by Rectron and Standard Bank.

Tuesday, 26 May 2015

SME Survey 2015: SMEs flirting with disaster by not backing up often enough

Small and medium enterprises (SMEs) in South Africa are flirting with disaster by failing to improve their policies on backing up data, which is often critical to the very survival of their businesses.


Tuesday, 26 May 2015

SME Survey 2015: SMEs flirting with disaster by not backing up often enough

Small and medium enterprises (SMEs) in South Africa are flirting with disaster by failing to improve their policies on backing up data, which is often critical to the very survival of their businesses.

This is one of the key findings to emerge from SME Survey 2015, the latest edition of the original and largest representative survey of SMEs in SA which, since 2003, has been assessing the forces shaping SME competitiveness.

It has long been accepted that despite the size of its individual businesses, the SME sector as a whole is of critical importance to the South African economy. Of course, if SMEs are to play the significant role envisioned for them, it is critical they make the best possible use of the technology options available to them.

It may seem counterintuitive for SMEs – which by their very nature as small operations can ill-afford to lose all their important data – to fail to back up properly, but that is what seems to be happening, according to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey.

"Our research turned up a dramatic evolution in the manner in which most SMEs back up their data. This is partly because the 2015 Survey altered the sample concept slightly from that of the previous year."

Initially, explains Goldstuck, the Survey tried to obtain a similar sized sample across the different bands of SMEs – in other words, the smaller and larger entities within this market space.

"The trouble is that there are far smaller SMEs than there are larger ones, and once we decided to normalise the sample this year and reflect the true size of each segment, we noticed that considerably fewer organisations were backing up continually. The percentage changed from 15% in 2014 to just 2.6% this year. This tells us that the bigger the business, the more likely it is to continually backup," he says.

It is now clear, he says, that many of the smaller SMEs are genuinely flirting with disaster.

"In the 2014 sample, some 17.7% of SMEs claimed to do their backing up on a weekly basis, while this figure has increased to 21.4% in 2015. Furthermore, the 2014 Survey indicated that 13% of SMEs only backed up monthly, but this figure is up to 19% in 2015."

"Backing up any less than on a daily basis can prove to be disastrous for an SME, yet the figures demonstrate that those SMEs doing exactly this have risen from 30.5% in 2014 to 40% in 2015," he says.

It is clear that something needs to be done to educate these businesses around the dangers of not backing up enough, says Spencer Chen, Products Director, at Rectron. "Service providers and technology suppliers have a role to play here too, and I believe that the results of SME Survey 2015 will enable us to provide better information and technology to those businesses that are currently running such risks by not backing up enough."

Goldstuck suggests that in an era where electronic information is the lifeblood of a business, it is almost absurd to consider that more than one out of every three SMEs only backs up on a weekly or monthly basis. It is particularly concerning at a time when load-shedding and regular power outages mean that unsaved work could be lost in a moment. Such a lax attitude to business information, he states, can only be regarded as reckless.

"The Survey also indicates that while power failures and crime are considered major issues for SMEs and they have clearly recognised the challenges raised by these matters, they have not realised the same with regard to protecting their data. SMEs need to understand that in these times, when everyone is so dependent on the information stored on their computers, no business can afford to back up on a less than daily basis," he concludes.

SME Survey is the original and largest representative survey of SMEs in South Africa and has contributed ground-breaking research into the forces shaping SME competitiveness and sustainability since 2003.

SME Survey 2015 is sponsored by Forest Technologies powered by Rectron and Standard Bank.

Tuesday, 19 May 2015

SME Survey 2015: The greening of the SME sector

Latest results indicate a massive growth in environmental awareness amongst SMEs.

The small and medium enterprise (SME) market is not only considered a vitally important business segment as far as South Africa's economy goes, it is also the sector that often astonishes the most. In the current, green-focused business environment, it would not shock anyone to hear that large enterprises are motivated to operate in a sustainable fashion, but to hear the same of SMEs comes as far more of a surprise.


Tuesday, 19 May 2015

SME Survey 2015: The greening of the SME sector

Latest results indicate a massive growth in environmental awareness amongst SMEs.

The small and medium enterprise (SME) market is not only considered a vitally important business segment as far as South Africa's economy goes, it is also the sector that often astonishes the most In the current, green-focused business environment, it would not shock anyone to hear that large enterprises are motivated to operate in a sustainable fashion, but to hear the same of SMEs comes as far more of a surprise.

However, this is exactly what early findings of SME Survey 2015 have determined. The complete survey results are due out mid-year, and it is expected that these will confirm that there is a growing maturity in the SME sector in its approach to green issues.

SME Survey is the original and largest representative survey of SMEs in South Africa and, since 2003, has contributed ground-breaking research into the forces shaping SME competitiveness.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the last time SMEs were asked whether sustainability was important to their businesses, the responses were extremely non-committal.

"Around nine years ago, the Survey asked SMEs how important environmental sustainability was to them. The responses were so disinterested that we were unable to even provide a measurement in proportional terms. This indicated that, at that time, SMEs felt they had many concerns more important than green issues," says Goldstuck.

"In the past, then, SMEs obviously viewed sustainability as more of a nice-to-have, rather than a necessity. However, since then, things have changed somewhat. This year, when asked whether green issues were important and whether they believed their businesses must operate in a sustainable fashion, an overwhelming majority said yes."

A total of 86% of SMEs either agreed or strongly agreed on the importance of sustainability. In total, he adds, only 12% disagreed.

"This indicates a massive swing towards environmentally friendly approaches and is very encouraging news, coming from this sector. It demonstrates a growing awareness from SMEs of the fact that they do not live in a bubble. These entities are clearly beginning to consider the bigger picture and understand that their organisations need to play a part in driving environmental sustainability."

Ethel Nyembe, Head of Small Enterprise at Standard Bank says, "It is encouraging to see quite a number of SMEs being open-minded about adopting sustainable practices into their business operations. Now that SMEs understand the importance of sustainability and environmental responsibility, more needs to be done to help them incorporate these sustainable practices into their core business processes, regardless of their sector."

"Furthermore, implementing sustainable business practices will give SMEs competitive advantages when dealing with larger corporates which now prefer suppliers that complement their sustainability objectives," says Ms Nyembe.

Goldstuck adds that part of the reason is the B-BBEE scorecard having the unexpected knock-on effect of driving businesses to become more aware of their responsibilities in terms of the environment.

"The B-BBEE legislation has forced many companies to look at their activities from a much broader perspective, and to think about the role and responsibilities of the business within their community and environment. They are realising that they can no longer just be in it for themselves."

"Associated with this, there is also a much greater awareness among SMEs of climate change and its environmental impact. SMEs are becoming more conscious of their place in the world and are realising that, even if their own role in the larger sustainability picture is a tiny one, it remains important."

SME Survey 2015 is sponsored by Forest Technologies powered by Rectron and Standard Bank.

20 May 2015

SME Survey 2015: The greening of the SME sector

Latest results indicate a massive growth in environmental awareness amongst SMEs.

The small and medium enterprise (SME) market is not only considered a vitally important business segment as far as South Africa’s economy goes, it is also the sector that often astonishes the most. In the current, green-focused business environment, it would not shock anyone to hear that large enterprises are motivated to operate in a sustainable fashion, but to hear the same of SMEs comes as far more of a surprise.


Standard Bank BizConnect articles

Support from family and friends linked to entrepreneurial success

Entrepreneurs are a rare breed of people who do not just discuss good ideas, but put them into action without the fear of confronting several risks that are associated with starting a business. Even with their courage, enthusiasm and determination, entrepreneurs still need some form of support and inspiration from a spouse, family or friends to succeed. http://bizconnect.standardbank.co.za/start/introduction-to-entrepreneurship/support-from-family-and-friends-linked-to-entrepreneurial-success.aspx

20 May 2015

SME Survey 2015: The greening of the SME sector

Latest results indicate a massive growth in environmental awareness amongst SMEs.

The small and medium enterprise (SME) market is not only considered a vitally important business segment as far as South Africa’s economy goes, it is also the sector that often astonishes the most. In the current, green-focused business environment, it would not shock anyone to hear that large enterprises are motivated to operate in a sustainable fashion, but to hear the same of SMEs comes as far more of a surprise.

However, this is exactly what early findings of SME Survey 2015 have determined. The complete survey results are due out mid-year, and it is expected that these will confirm that there is a growing maturity in the SME sector in its approach to green issues.

SME Survey is the original and largest representative survey of SMEs in South Africa and, since 2003, has contributed ground-breaking research into the forces shaping SME competitiveness.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the last time SMEs were asked whether sustainability was important to their businesses, the responses were extremely non-committal.

“Around nine years ago, the Survey asked SMEs how important environmental sustainability was to them. The responses were so disinterested that we were unable to even provide a measurement in proportional terms. This indicated that, at that time, SMEs felt they had many concerns more important than green issues,” says Goldstuck.

“In the past, then, SMEs obviously viewed sustainability as more of a nice-to-have, rather than a necessity. However, since then, things have changed somewhat. This year, when asked whether green issues were important and whether they believed their businesses must operate in a sustainable fashion, an overwhelming majority said yes.”

A total of 86% of SMEs either agreed or strongly agreed on the importance of sustainability. In total, he adds, only 12% disagreed.

“This indicates a massive swing towards environmentally friendly approaches and is very encouraging news, coming from this sector. It demonstrates a growing awareness from SMEs of the fact that they do not live in a bubble. These entities are clearly beginning to consider the bigger picture and understand that their organisations need to play a part in driving environmental sustainability.”

Ethel Nyembe, Head of Small Enterprise at Standard Bank says, “It is encouraging to see quite a number of SMEs being open-minded about adopting sustainable practices into their business operations. Now that SMEs understand the importance of sustainability and environmental responsibility, more needs to be done to help them incorporate these sustainable practices into their core business processes, regardless of their sector.”

“Furthermore, implementing sustainable business practices will give SMEs competitive advantages when dealing with larger corporates which now prefer suppliers that complement their sustainability objectives,” says Ms Nyembe.

Goldstuck adds that part of the reason is the B-BBEE scorecard having the unexpected knock-on effect of driving businesses to become more aware of their responsibilities in terms of the environment.

“The B-BBEE legislation has forced many companies to look at their activities from a much broader perspective, and to think about the role and responsibilities of the business within their community and environment. They are realising that they can no longer just be in it for themselves.”

“Associated with this, there is also a much greater awareness among SMEs of climate change and its environmental impact. SMEs are becoming more conscious of their place in the world and are realising that, even if their own role in the larger sustainability picture is a tiny one, it remains important.”

SME Survey 2015 is sponsored by Forest Technologies powered by Rectron and Standard Bank.


Standard Bank BizConnect articles

Support from family and friends linked to entrepreneurial success

Entrepreneurs are a rare breed of people who do not just discuss good ideas, but put them into action without

the fear of confronting several risks that are associated with starting a business. Even with their courage, enthusiasm and determination, entrepreneurs still need some form of support and inspiration from a spouse, family or friends to succeed. http://bizconnect.standardbank.co.za/start/introduction-to-entrepreneurship/support-from-family-and-friends-linked-to-entrepreneurial-success.aspx

Outsourcing for small business - one size does not fit all

Outsourcing is a necessity, not a luxury for small businesses. An expression often heard in businesses, especially those facing challenges, is that in order to regain financial health, the enterprise will need to re-focus on its 'core business'. Many SME owners who find themselves having to cope with a dozen different tasks a day, probably relate to this, grin ruefully and wish that they could afford the luxury of only concentrating on core business functions. The irony is that small business success is most often linked to remaining focused on delivering the products and services that are core to the business' sustainability and growth. http://bizconnect.standardbank.co.za/start/introduction-to-entrepreneurship/outsourcing-for-small-business-one-size-does-not-fit-all.aspx

6 common mistakes of managing personal and business finances

Managing a business profitably is not a lot different from managing your personal finances. There are more similarities than you think. The key to running a successful business is your ability to manage cash flow. Even the best business ideas can fail if capital and revenue are not carefully monitored. Similarly, if you overspend or mismanage cash on a personal level, you may find yourself with insufficient funds to retire on or have an unacceptable exposure to debt. http://bizconnect.standardbank.co.za/manage/financial-management-solutions/6-common-mistakes-of-managing-personal-and-business-finances.aspx

Pricing your product correctly is key to competitiveness

When considering all the reasons you became an entrepreneur, you simply can't get away from the fact that your primary aim was to make money. Making money, however, depends on being able to accurately calculate the correct price for your product or service on the open market. Although this may seem simple, the reality is that markets are competitive and there is usually someone selling something similar, better or even cheaper than your offering. http://bizconnect.standardbank.co.za/manage/financial-management-solutions/pricing-your-product-correctly-is-key-to-competitiveness.aspx

Balance business costs with income and prosper

Business owners who achieve success understand that staying prosperous in challenging times is a delicate balancing act. Those who pay attention to the basics are the most likely to survive, and even increase their market share when times are tough. http://bizconnect.standardbank.co.za/grow/financial-growth-solutions/balance-business-costs-with-income-and-prosper.aspx

Common reasons why businesses fail in South Africa

While small businesses are recognised as key drivers of economic growth and employment in South Africa, the reality is that for every success story there are several businesses that do not make it through the first two years of existence. http://bizconnect.standardbank.co.za/start/business-planning/common-reasons-why-businesses-fail-in-south-africa.aspx

14 July 2014

SME Survey 2014: Location, location, location – it still matters

Johannesburg, 14 July 2014: City slickers really do have it better than country folk, at least where the profitability of their businesses is concerned. That's one of the surprise findings of SME Survey 2014, which has revealed that businesses in cities, or headquartered in cities, are more likely to be profitable than those located in smaller towns or rural areas.


14 July 2014

SME Survey 2014: Location, location, location – it still matters

Johannesburg, 14 July 2014: City slickers really do have it better than country folk, at least where the profitability of their businesses is concerned. That's one of the surprise findings of SME Survey 2014, which has revealed that businesses in cities, or headquartered in cities, are more likely to be profitable than those located in smaller towns or rural areas.

SME Survey is the annual study of factors behind the success of small and medium enterprises (SMEs).

The finding goes some way in confirming the old principle that the three most important factors for property (or by extension, the position of a business) are location, location and location, agrees principal researcher and MD of World Wide Worx Arthur Goldstuck. "Despite the increasing availability of telecommunications and Internet services which in theory allow people to work from anywhere, successful SME offices are still best placed in urban areas," he says.

Of businesses located in a city:

  • 26% are strongly profitable
  • 44% are just profitable

Of businesses located in towns:

  • 11% are strongly profitable
  • 47% are just profitable.

The widest gap is that between strongly profitable city businesses and strongly profitable SMEs in towns. The disparity points to a degree of opportunity being present in towns, but a greater challenge in translating that into a profitable business.

A picture has also emerged of where most South African SMEs are located: 43% are headquartered in cities and 55% in towns; the balance is located in villages or rural areas where, Goldstuck points out there simply isn't much opportunity to run a big business. "Cities provide better access to resources and customers; this drops off for towns and more so in rural areas."

There is a further implication that telecommunications and technology tools, which provide the theoretical ability to locate offices and people anywhere, have their limitations. "Of course, it depends on what any given business is doing; however, this finding implies that necessity for the personal touch is still a component of a successful business. It's also something many SME owners will instinctively understand," Goldstuck says.

The findings provide a glimpse into the reasons behind urbanisation: more people means more commerce.

"The tools we have today, including smartphones, tablets, laptops and the many services they carry, provide a greater degree of independence and freedom of movement," says Goldstuck. "However, better resources and greater markets are available in cities. On the other hand, the fact that some businesses in towns are still highly profitable shows that the gaps left by large business do translate into opportunity."

Lusapho Njenge, Chief Strategy and Information Officer at the Small Enterprise Development Agency (Seda), says the organisation has established a network which is equitably spread between urban and rural areas. "This network is particularly well positioned to assist rural small businesses to close the apparent gap. Key to the success of rural enterprises is their ability to harness local opportunities that are unique to a particular area, rather than competing with big businesses that have more a favourable environment, such as closer proximity to markets and suppliers."

SME Survey is the original and largest representative survey of SMEs in South Africa and has contributed ground-breaking research into the forces shaping SME competitiveness and sustainability since 2003.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (SEDA), Business Connexion and Microsoft.

3 July 2014

SME Survey 2014: A minority, but women SME owners more successful

A small business owned by a women has a better chance of being profitable than one run by a man. That is one of the startling findings of SME Survey 2014, the annual study of factors behind the success of small and medium enterprises (SMEs) in South Africa.


3 July 2014

SME Survey 2014: A minority, but women SME owners more successful

A small business owned by a women has a better chance of being profitable than one run by a man. That is one of the startling findings of SME Survey 2014, the annual study of factors behind the success of small and medium enterprises (SMEs) in South Africa.

Equally surprising is that those companies owned by couples or a mix of genders are substantially less likely to be profitable than those operated by either male or female-owners.

"While this result may seem like a big win for women, it comes with an immediate qualifier: the level of female ownership is exceptionally low," says Arthur Goldstuck, SME Survey principal researcher and MD of World Wide Worx.

To provide perspective on profitability and gender differences, the overall picture of South African small business shows that they are doing reasonably well, although only a small proportion – less than one in five – is thriving: 17% of SMEs surveyed are 'strongly profitable' while 45% are 'just profitable'. However, this does leave a significant percentage under some distress: 38% are not making a profit.

Against the overall result, it emerges that of the male-owned SMEs:

  • 20% are strongly profitable
  • 49% are just profitable

While of the jointly-owned SMEs:

  • 16% are strongly profitable
  • 37% are just profitable

And of the female-owned SMEs

  • 15% are strongly profitable
  • 63% just profitable

This equates to a total of 78% of women-owned businesses being profitable, well ahead of the 70% for men.

But the most considerable difference is recorded in jointly-owned organisations, where just 53% are profitable. "This arguably shows that there are additional challenges which come with owning a business together with your spouse or partner, or where joint owners have different personal agendas or management styles," Goldstuck says.

In terms of overall ownership, men dominate, with 48% owning SMEs, while jointly-owned businesses account for 44%. Just 8% of South African SMEs are female-owned businesses.

Women entrepreneurs and company owners going it on their own are therefore in a small minority in the SME environment.

"There is a massive gender imbalance in entrepreneurship," says Goldstuck. "This tells us that women are not given enough encouragement or support to become entrepreneurs."

Previous editions of SME Survey provide another clue for the imbalance.

"We've seen in the past that best training for entrepreneurship and business ownership is on the job experience. There is a further implication, therefore, that not enough women get opportunities in the workplace to start with."

Government is the exception that proves this rule, he continues. "Parliament is the one place where we've seen gender equality implemented, but the approach certainly hasn't been filtering through to rest of the economy."

The Small Enterprise Development Agency (Seda) says, while government has recognised and acted to correct gender imbalances inherited from patriarchal societal conventions, it is clear that more needs to be done in the private sector.

"Women continue to be marginalised as far as small business ownership is concerned," agrees Lusapho Njenge, Chief Strategy and Information Officer at Seda. "The problem appears systemic; it therefore has to be addressed at a systemic level, starting at school and extending through the workforce to give women not only the skills, but the confidence to start their own businesses."

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (Seda), Business Connexion and Microsoft.

SME Survey is the original and largest representative survey of SMEs in South Africa and has contributed ground-breaking research into the forces shaping SME competitiveness and sustainability since 2003.

26 June 2014

SME Survey 2014: Cloud grows, government does better

Johannesburg, 26 June 2014: South African small to medium enterprises (SMEs) are steadily moving to the cloud, and have a generally positive perception of government services. These are the headline results of SME Survey 2014, which tracks the perceptions and concerns of small business owners in this country.


26 June 2014

SME Survey 2014: Cloud grows, government does better

Johannesburg, 26 June 2014: South African small to medium enterprises (SMEs) are steadily moving to the cloud, and have a generally positive perception of government services. These are the headline results of SME Survey 2014, which tracks the perceptions and concerns of small business owners in this country.

The proportion of SMEs using the cloud is 27% overall, says principal researcher Arthur Goldstuck, substantially up from 9% in 2012. This compared to 24% who were using social media as an online business service.

"What's surprising is not that one in four are using social media, but that three in four aren't. Given the hype around it, you might expect more to be using social media than the cloud – but it demonstrates once again that SMEs also need a clear value proposition before they invest in new services," he says.

Of those not yet using cloud, asked if they expect to take it up, just 2% gave a definite 'yes', but the potential usage was far higher: another 20% said it depended on business needs. A further 30% are unsure.

"If the business case can be clearly demonstrated to these potential users, adoption will move closer to 50%," says Goldstuck. "There is a possibility that cloud adoption could double in the next 12-24 months. It is all about a clear and obvious value proposition."

Charles Lalieu at Business Connexion says despite the benefits, cloud adoption by SMEs is far from a foregone conclusion. "There is no doubt of the advantages and the cloud model is internationally proven. However, transitioning to cloud still requires a mindset change and in many instances, some guidance. That said, the progression by SMEs to the cloud is accelerating and is likely to continue gaining momentum."

In terms of perceptions of government relations, SME Survey 2014 throws up a surprise: business owners are more positive than might be expected. 38% of respondents said they had used government support services for SMEs in the last 12 months, while 17% had done so more than three times in this period. Exactly half report being very happy with those services, with a further 34% somewhat happy.

Furthermore, 44% of all respondents expressed high confidence in using government support services for SMEs. This compared to 34% in 2007 and just 12% in 2004. Shortly after the 2004 SME Survey findings were released, a major overhaul of Government support services occurred, and again after the 2007 findings.

"We've seen dramatic improvement in perceptions of government services over the past decade," says Goldstuck. "Such improvements tended to follow restructuring of the services, showing that the evolution of such services has had positive outcomes."

As an agency of the Department of Trade and Industry, the Small Enterprise Development Agency (Seda) says government acknowledges the contribution made by SMEs to the economy. As such, it is committed to easing all necessary interactions, including those with the South African Revenue Services (SARS) and the Companies and Intellectual Property Offices. "When administration is straightforward and convenient, such as with SARS eFiling, doing business is faster and more satisfying. The advances in perceptions recorded by SME Survey over the years are noteworthy and confirm that government is on the right track," says Lusapho Njenge, Chief Strategy and Information Officer at Seda.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (SEDA), Business Connexion and Microsoft.

SME Survey is the original representative survey of small, medium and micro enterprises in South Africa. For more information, visit www.smesurvey.co.za

13 May 2014

SME Survey 2014: Cloud uptake amongst SMEs is ‘slow and steady’

Although cloud uptake by small and medium enterprises (SMEs) remains reasonably slow, the growth in usage is not only steady, but is, in fact, almost exactly as predicted by SME Survey 2012.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the interim results of the 2014 edition indicate that the level of usage today is almost exactly where it was forecast it would be, two years ago.


13 May 2014

SME Survey 2014: Cloud uptake amongst SMEs is ‘slow and steady’

Although cloud uptake by small and medium enterprises (SMEs) remains reasonably slow, the growth in usage is not only steady, but is, in fact, almost exactly as predicted by SME Survey 2012.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the interim results of the 2014 edition indicate that the level of usage today is almost exactly where it was forecast it would be, two years ago.

“In 2012, just 9% of SMEs were using cloud services. Our forecast was that it would rise to 18% by the end of last year. Once you add another four months to this – taking us to the point the interim results were analysed - and the forecast should have reached about 21%. The number revealed by the survey is in fact 22%,” he says.

“Clearly, we are delighted not only that our research has proved to be sound, but also that SMEs remain on track for steady growth, even if it is not going to transform the market suddenly or dramatically.”

Sound research has been a hallmark of SME Survey since it first began in 2003. Today, it is the largest representative survey of SMEs in South Africa and has contributed ground-breaking insight around the forces shaping SME competitiveness.

Ironically, adds Goldstuck, those SMEs that choose not to embrace the cloud give virtually the same reasons as those large enterprises that avoid it, namely that they don't see the benefit; they don't understand it; and they are nervous about it. This nervousness stems both from the fear of failure and the fear of the unknown.

It is important that cloud providers understand the reasons behind certain SMEs unwillingness to embrace the cloud, says small and mid-size business Director at Microsoft South Africa, Tracey Newman.

“Now that the issues above have been highlighted and clarified, it becomes that much easier for organisations like ours to take the steps necessary to address these quite understandable fears that SMEs have with regard to the cloud.”

Goldstuck suggests that the Survey has already highlighted some of the most important incentives that would make the cloud a more attractive proposition.

“The single most important incentive for SMEs is having a guarantee of 24/7 real-time support, with more than a third of respondents (36%) citing this. That is actually more than double the next most critical factors, which were recommendations from other users (16%), a localised provider (15%), and price (15%). All else being equal, price will certainly play a major role, but it is interesting to note that it is not even one of the first three things on the minds of SME decision-makers,” he says.

The current level of uptake indicates that SMEs on the whole are still reluctant to wholly embrace the cloud, he adds, pointing out that he feels this is actually a challenge to vendors, rather than SMEs themselves.

According to Charles Lalieu at Business Connexion, SME Survey has re-emphasised the challenges that small business, in-fact all businesses, face when selecting the correct cloud solution.

“This research confirms Business Connexion’s approach to providing core IT cloud services for all South African business from our local, highly available datacentres that are running ICT services for South Africa’s largest enterprise business 24/7 globally. We have embraced the findings and will continue to simplify our innovative programmes for all businesses to procure through their trusted channel, while clearly communicating the value proposition by addressing their business requirements.”

“While this is a challenge to cloud providers and demonstrates the importance of better communication with potential customers, it is equally an opportunity that an organisation like ours will relish tackling.”

Goldstuck is quick to point out that over the years SME Survey has repeatedly confirmed that SME decision-makers will not invest in a technology if the benefits and value proposition are unclear.

“While a part of the reason for slow uptake may be attributed to many SMEs being less sophisticated in their use of technology, the industry has certainly not taken to heart the message it sends to this sector. Hopefully, the results of SME Survey 2014 will play a role in helping to change its approach towards SMEs in highlighting the genuine benefits cloud offers,” he concludes.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (Seda), Business Connexion and Microsoft.
9 May 2014

SMEs express growing confidence in government support programmes

Government support programmes for small and medium enterprises (SMEs) appear to be finding resonance with many organisations in their target audience. According to SME Survey 2014, more than half of the SMEs polled expressed satisfaction with the quality of these services.

SME Survey has contributed ground-breaking research into the forces shaping SME competitiveness since 2003. It is recognised as the largest representative survey of SMEs in South Africa and the final 2014 survey results are scheduled for release in June.


9 May 2014

SMEs express growing confidence in government support programmes

Government support programmes for small and medium enterprises (SMEs) appear to be finding resonance with many organisations in their target audience. According to SME Survey 2014, more than half of the SMEs polled expressed satisfaction with the quality of these services.

SME Survey has contributed ground-breaking research into the forces shaping SME competitiveness since 2003. It is recognised as the largest representative survey of SMEs in South Africa and the final 2014 survey results are scheduled for release in June.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the satisfaction expressed by SMEs in the government support programmes is welcome news.

“We are seeing the most positive response in a decade to these support programmes. Ten years ago, the proportion of SMEs expressing satisfaction with these programmes was a mere 12%. By 2007, it had increased to 34%, but this still meant that only one third of SMEs were happy with such programmes,” he says.

“The 2014 interim results show that of those respondents who had used government support services, more than half (53%) claimed to be pleased with the overall quality of these services.”

Moreover, adds Goldstuck, sentiment is beginning to improve even amongst those entities that do not use these services. He points out that some 44% of all respondents said that they were confident about the use of government support services to grow their business, while only 39% of respondents had actually used such services.

Asked which government services were deemed to be the most effective in terms of business support, Goldstuck says that he was quite surprised to discover that the SA Revenue Service (SARS) is rated positively by 58% of those who have used these services.

“In addition to SARS, the Small Enterprise Development Agency (Seda) also offered a strong showing in the awareness of SMEs, with exactly a quarter of the SMEs rating it positive.”

According to Lusapho Njenge, Chief Strategy and Information Officer at Seda, the survey results indicate that the agency’s role in assisting SMEs to grow their businesses is becoming more widely known.

“Obviously, our aim is to grow the awareness of our role within the SME sector, and in so doing, also improve on the numbers of such organisations that view us in a positive light. To do this, we need to learn from the areas of dissatisfaction highlighted by SMEs in the survey, in order to continue to improve the services we offer to this sector.”

According to Goldstuck, SMEs expressed strong dissatisfaction with four particular areas of government support programmes.

“Turnaround time was the single biggest bugbear, with 46% complaining about it. Three other issues that cropped up were all cited by fewer than one in five SMEs, but nonetheless should be of interest to the programme providers. Accessibility was an issue for 19%; Communications for 15%; and Feedback for 10%. In combination, all of these suggest that support programmes clearly need to be more responsive to their users.”

Finally, Goldstuck suggests that there have also been some interesting sentiments expressed towards red tape and legal compliance.

“The most positive response was to the Basic Conditions of Employment Act, with 77% of companies approving. This suggests an acknowledgement of the importance of looking after employees. Just behind this was SETA (Sector Education and Training Authorities) and the Skills Development Levy which has long been the most positively received Government incentive, with a 75% approval rating.”

“Bottom of the list, however, is the Registration of Entities, with only 54% of SMEs voicing their approval of this area of legislation. This emphasises the frustration SMEs often have with the most fundamental aspect of starting a business, namely the registration thereof. This, then, is clearly an area where government needs to pay a lot more attention, if it is serious about oiling the wheels of the economy,” he concludes.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (Seda), Business Connexion and Microsoft.

19 February 2014

SMEs brace for change

Johannesburg, 19 February 2014: Small and medium enterprises (SMEs) in South Africa face a dramatic shift in technology use as the triple impact of social media, Cloud computing and the “bring your own device” trend transforms the competitive landscape.

Are they ready for the coming change?

19 February 2014

SMEs brace for change

Johannesburg, 19 February 2014: Small and medium enterprises (SMEs) in South Africa face a dramatic shift in technology use as the triple impact of social media, Cloud computing and the “bring your own device” trend transforms the competitive landscape.

Are they ready for the coming change?

That is a key question that will be addressed by SME Survey 2014, the latest edition of the original and largest representative survey of SMEs in South Africa. It has contributed ground-breaking research into the forces shaping SME competitiveness since 2003.

The survey, which kicked off this week, will also examine the impact of Government’s business support programmes. It will benchmark this year’s findings against those of the 2004, 2007 and 2010 surveys, which addressed a similar theme.

The SME sector plays a vital role in the South Africa economy, but can only continue to do so if these entities make the best possible use of various opportunities available to them. These include not only a wide range of technology options, but perhaps more critically, the numerous business support programmes offered by Government.

Due to be released mid-year, it is anticipated that the 2014 survey results will point to a significant uptake of Cloud applications by SMEs in South Africa.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the 2012 survey indicated that only 9% of SMEs were using the Cloud. The expectation among SMEs in 2012 indicated that use of the Cloud to have at least doubled by now.

“In fact, World Wide Worx expects that the figure will be higher than predicted, since the value proposition of the Cloud is so much clearer now. If, however, the figure is lower, we will be able to use the data to understand why take-up is slow and to determine what factors will ultimately persuade more SMEs to use the Cloud,” he says.

Microsoft points out that the large number of SMEs in South Africa and tight economic conditions mean it is important to enhance understanding of the tools available to help SMEs become more competitive and efficient.

“Knowing how far along the cloud journey the SME market is will make it easier for us to meet their future demands,” suggests Tracey Newman, Small and Mid-Size Business Lead at Microsoft South Africa.

Goldstuck says that additional research World Wide Worx conducted last year showed that the biggest factor inhibiting the uptake of Cloud in the enterprise market was simply lack of awareness of its benefits and a lack of understanding of its full value proposition.

“This enterprise attitude is obviously mirrored in the SMEs’ stance, and added to this is the ‘fear factor’, where small businesses are nervous about making a wrong decision during technological change. After all, in the SME space, a wrong decision of this nature has the potential to wipe out the business,” he states.

Business Connexion adds that it is for such reasons that the research is so important. “The survey will provide a better understanding of the benefits of, and approach to, the Cloud, which should make such critical decisions that much easier for SMEs,” says Charles Lalieu, Managing Executive Cloud Service Brokerage at Business Connexion.

Goldstuck suggests that Cloud uptake will continue to be a critical element of the research, as it is obvious that it is becoming an increasingly important part of the business landscape. “The goal is to discover both how it has grown since the last survey, and what is holding it back from more rapid growth.”

SME Survey 2014 will explore the impact that government support programmes has had on the sector. This is critical, since despite improvements and changes having been made to such programmes over the years, they appear to still be falling short of the desired intentions. Goldstuck says that the aim will therefore be to measure what the trajectory of improvement has been with regards to such programmes, and what can be done to improve them.

The Small Enterprise Development Agency (SEDA) is eager to analyse the results of the survey, as it explores new approaches to boosting SME growth.

“It will provide us with invaluable knowledge, particularly with regards to how small and medium sized businesses are receiving support from government programmes, and how they could be better served. This is in an effort to create a small enterprise sector that is able to make increasing contributions to the country’s productivity and employment creation,” says Lusapho Njenge, the Chief Strategy and Information Officer at SEDA.

Goldstuck adds that other significant business drivers – including BYOD, Internet adoption and the use of various online resources, including websites and social media – will also be considered during this year’s survey.

“The goal will be to get a sense of whether SMEs have evolved technologically from where they were in 2012, when their use of the Internet was fairly limited. The aim is to see if SMEs are maturing in their use of technology, and understand what is driving that maturation, along with other factors that affect SME competitiveness and business sustainability,” he says.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (SEDA), Business Connexion and Microsoft.

For more information, visit www.smesurvey.co.za


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