SME business owners are rising above the gloom

2013-09-20 00:00

THE economy may be weak, but small and medium-sized (SME) business owners are upbeat about various business-related indicators.

This is according to the second-quarter Business Partners Limited SME index (BPLSI), which measures local attitudes and confidence levels in the SME sector.

Nazeem Martin, MD of Business Partners, said business owners remain confident that their businesses will grow in the next year, with average confidence levels of 73%, an increase of two percent, compared with the previous quarter. He said confidence levels on growth have been high over the past 15 months.

Investment Solutions economist Chris Hart said the economy is in a weak shape, but there are many opportunities for small business, and this is likely being reflected in the index.

Other business confidence index levels are at 10-year lows, so an improvement in the small-business index may indicate a better future, he said.

“SME business owners have an intimate knowledge of their businesses and are confident in their ability to shape, control and grow their businesses.” Martin said business owners are rising above the “gloomy atmosphere” of rising fuel and electricity costs, and above-inflation wage settlements.

Business owners remain moderately confident the SA economy will be conducive to business growth in the 12 months (53%, compared with the 51% of the previous quarter).

They are moderately confident of finding employees with the right skills (53%, compared with 49% of the previous quarter).

Confidence about easing access to finance improved to 48%, from 44% in the first quarter.

This may be an indication of an increase in competition among traditional lenders (banks) and non-traditional financiers (such as development-finance institutions and venture-capital investors), for SME business.

SME business owners are not confident about labour laws (36%), and whether the government is doing enough to foster SME development (32%), Martin said.

At the 26th annual Labour Law Conference in August, Reserve Bank governor Gill Marcus said that SMEs have not grown as one would expect from a developing country, largely due to an inflexible labour regime.

When asked what form of assistance from government would benefit most, 30% of respondents said direct funding, while 25% opted for cutting red tape, and 20% said that tax breaks would help. When asked about the biggest challenges, economic conditions were on top of business owners’ lists, followed by cash flow and funding.

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