Small business misses out

THERE are more than six million small businesses in South Africa but only 17percent are registered because their owners do not know the benefits of doing so, a national survey has revealed.

The Department of Trade and Industry (DTI) conceded that government development agencies need to review the way they communicate with small business.

The Finscope SA Small Business Survey 2010, conducted between April and May, was presented last week. The survey was conducted by TNS Surveys for Finmark Trust with the DTI, Business Trust, Absa, Standard Bank, Tourism Enterprise Partnership and Swiss Confederation as partners.

A sample of 5676 entrepreneurs were interviewed from all provinces.

According to the survey, of the 5,6million business owners in the country 58percent are women. Africans make up the majority of small business owners at 84percent.

"The main reasons given by entrepreneurs for not registering was they did not know or were not sure of the benefits of registering their business," said Rob Powell, director of client services at TNS.

The small business sector employs about nine million people. Owners of the businesses (67percent) said they did not have any other source of income, while eight percent also received a child grant and six percent a government pension.

The survey also revealed that 41percent started their business because they could not find a job, while 31percent said they saw an opportunity and 26percent wanted to make more money.

Entrepreneurs work about 63 hours a week. A median of entrepreneurs interviewed said they needed R900 to get their business started.

Almost half of small businesses (49percent) buy stock and resell it without adding any value to it. Only 11percent add value to the product with five percent growing to sell and another five percent making a product to sell.

Only 21percent provide services "because of the level of skill which is required in doing it", said Powell.

Most entrepreneurs work for themselves (67percent) while 27percent employ one to four employees. A shocking 74percent said they did not know of any support available, with only 46,9percent having a bank account.

Powell said, surprisingly, 30percent of businesses said that space was their main obstacle to expansion.

DTI director general Tshedimo Matona said: "It's clear that we have to review the method we use to disseminate information."

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