Joblessness the main reason for starting a business – Stats SA

2010-10-19 14:12

Unemployment is the main reason for starting a business, according to a survey released by Statistics SA today.

“Almost two out of three people mentioned unemployment as the main reason for starting a business,” said the agency.

The Employers and the Self-Employed 2009 survey found that the number of individuals running businesses that were not registered for VAT declined from 2.2 million in 2001 to 1.1 million in 2009.

More than 95% of owners of non-VAT-registered businesses had only one business.

“For instance, in 2009, of the 1.1 million owners, 98.1% had one business, 0.7% had two businesses and 1.1% had three businesses.”

Stats SA said 8.3% of the working-age population operated at least one non-VAT-registered business in 2001.

“However, there was a decline of 2.7 percentage points to 5.6% between 2001 and 2005, and a further 2.1 percentage points decline to 3.5% in 2009.”

The agency said that among women of the working age population, 9.5% operated non-VAT-registered businesses in 2001 compared with 6.9% of men.

In 2005, again more women than men operated such businesses, but in 2009, this was reversed as 3.6% of men of working age operated non-VAT-registered businesses compared with 3.3% of women.

Stats SA found that trade contributed 57.1% of the non-VAT business in 2009.

“This is a decline from 69.6% in 2001.”

Services contributed 10.7% in 2009, an increase of 3.9 percentage points compared with the 6.8% in 2001.

Stats SA said 64.9% of individuals who operated non-VAT-registered businesses had required money to start their businesses and among those who needed money, 74.4% had used their own money.

Of those who needed money to start a business, 81.3% had borrowed money from friends and relatives compared with 8.4% who borrowed from commercial banks.

Stats SA said one of the aims of the survey had been to collect reliable data about people running businesses that were not registered for VAT.

According to the agency, unregistered businesses were usually small, often involving only the owner, some family members and, at most, one or two paid employees.

“They usually lack formality in terms of business licences, VAT registration, formal business premises, operating permits and accounting procedures.”

Most of businesses had a limited capital base and only rudimentary technical or business skills among their operators.

“However, there is potential that small businesses could advance into viable small businesses.”

Earning levels of micro enterprises differed widely, Stats SA said, depending on the particular sector, the growth phase of the business and access to relevant support.

“Taking into account the very large micro enterprise segment of the small business sector, as well as those struggling in survivalist activities, it should be clear that the small business sector plays a crucial role in people’s efforts to meet basic needs and help marginalised groups to survive during the current phase of fundamental structural changes.”

Currently, the formal economy was unable to absorb the increasing labour supply, and social support systems were grossly inadequate.

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