By Pheladi Kunutu
After the dip taken during the pandemic years, the South African economy has faced a number of headwinds on its road to recovery. The current economic downturn has been characterised by high levels of inflation, the rising cost of credit, fuel hikes and a cost-of-living crisis.
These realities have placed millions of small businesses across the country under immense strain. Despite these challenges, many of these businesses continue to demonstrate a “heritage of resilience” and maintain an optimistic outlook heading to 2024.
Local business owners have demonstrated their courage and ongoing perseverance in the face of overwhelming odds this Heritage Day.
Our own research through the Business Partners Limited SME Confidence Index, in addition to surveys conducted by other industry stakeholders, are indicative of a steady rise in confidence on several fronts, including the belief that small businesses will be able to grow their ventures in the months ahead.
Additionally, the confidence that small businesses have that the South African economy is conducive for business growth has remained stable, despite an onslaught of difficulties and economic barriers.
Most recently, business leaders such as chief economist Azar Jammine have attested to the resilience of South African businesses – a trait that has aided in keeping the economy afloat.
As a specialist small and medium-sized enterprises (SME) financier, we also continue to see outstanding examples of how, by leveraging innovation and applying creative thinking, local entrepreneurs are overcoming obstacles and fighting their way through to a brighter future
Growing confidence that growth is on the horizon
According to the most recent Small Business, Big Opportunity survey conducted by Sage, more than 80% of business decision-makers are confident that their company will be successful over the next 12 months. Similar results were seen in the quarterly SME Confidence Index conducted by us at Business Partners Limited, which saw overall business confidence increase to 71% in the first quarter of 2023 – a 7% rise over the previous quarter.
This sustained confidence has resulted in tangible results, with 74% of South African small businesses reporting growth over the past year, according to a report conducted by Xero.
In light of the extreme and mounting financial pressures being faced by small businesses, these results herald positive prospects and prove – yet again – that the local SME sector is as resilient as it has always been believed to be and ready to face the South African challenges head on.
Efficiency the key to getting through tough times
Touching on the specific factors that make South African entrepreneurs resilient, the will and ability of entrepreneurs to up the ante in terms of running efficient operations is a key contributor. The study conducted by Sage found that over a third of business owners attribute higher levels of business confidence to the ability to work more efficiently.
These greater levels of efficiency can be attributed to the wider availability and accessibility of technological tools that can automate processes and build more effective workflows.
Tasks involving aspects such as financial management and accounting, tax administration, team communication and project management have been made more efficient by software and tools, many of which are freely available or relatively cost-effective because of competition in the market.
Agility and adaptability to change
Many local small businesses have also proven themselves to be extremely agile, both during the pandemic years and in the post-pandemic period. The ability to adapt quickly to market fluctuations and changing socio-economic conditions is one of the hallmarks of resilient businesses.
We’ve seen extraordinary examples of agility in the sector, particularly in response to the electricity supply crisis with more businesses adopting alternative energy.
In response to the series of petrol and diesel hikes, some local small businesses have switched to more fuel-efficient modes of transport such as e-bikes. Pioneers in this sector include Green Riders, an e-bike delivery and logistics service that is bringing “greenification” to the last-mile delivery industry.
In examples such as these, we see not only solutions to beating price hikes but also solutions to social empowerment, job creation and upliftment. The agility of these kinds of small businesses rests on their ability to see challenges as opportunities.
Hopeful prospects ahead
Small businesses should continue to persevere this Heritage Day, with the South African SMEs’ heritage of resilience.
This amid indicators that positive prospects lie ahead for several key sectors. Recent forecasts predict the recovery of the livestock and poultry industries and future gains in terms of the forthcoming domestic harvest. Data published by Statistica also points to a thriving e-commerce industry, expected to expand at an annual growth rate of 24.7% by 2024.
Small business owners can draw hope from these positive indicators and keep up their determination in weathering the economic downturn.
As South Africans, we face a unique set of challenges, but we’ve also proven ourselves highly capable of taking ownership of our journeys as businesspeople and when opportunities don’t arise on their own – we create them.
Pheladi Kunutu is the Area Manager at Business Partners Limited.
BUSINESS REPORT