Entrepreneurs are confident about growing their businesses but are concerned about the economy and that not enough is being done to assist small businesses.
This is a key finding of the recent Business Partners Limited SME Index (BPLSI), which shows that the average confidence levels for growth in business are up by 2% compared to the previous quarter.
According to Nazeem Martin, managing director at Business Partners, people generally have more confidence in areas they can control.
“Entrepreneurs are human beings and feel more confident that they can control their businesses because they have survived so many difficult things in the past,” says Martin.
However, as they do not have control over the economy, confidence levels were rated under 50%, which means that they are moderately confident in the economy.
“Entrepreneurs are confident in their own ability to grow their businesses and confidence levels are therefore at 73%,” says Martin.
He says South Africans need to be more positive and optimistic and that in the last few years since 1994 growth has been between 3% to 5% compared to the 1% to 1.5% growth prior to 1994.
“We are not doing badly. Of course we can do better, like China and India, who are growting at 8% and more, but we need to recognise that we are not doing too bad and that we are growing more since 1994,” says Martin.
He pointed out that the biggest challenge was that South Africans were supercritical and that this leads to a negative spiral.
“Business is all about confidence. If you undermine yourself by being negative, you will be reluctant to buy, start or grow a business.
I am not saying we should be blind, but we need to recognise the positive things and not undermine investment by being negative,” says Martin.
There was some concern regarding the levels of bureaucracy, which could make compliance more onerous for small business.
On being questioned regarding which type of assistance from government would be more beneficial, 30% of respondents ranked direct funding as top of their list, 25% advised that cutting red tape would be more useful, while 20% put tax breaks at the top of their list.
However, Martin says that a step in the right direction might be the recently established guidelines by the Department of Trade and Industry (DTI) to reduce municipal red tape for small businesses.
Business owners were also expecting the ease of access to finance to improve over the next twelve months, with confidence levels at 48% compared to 44% in the previous quarter.