The government should consider channelling a large chunk of its financial and non-financial support to small businesses with a solid track record that have been operating for more than two years.
This was according to the Small, Medium and Micro Enterprises Insight Survey 2016, conducted by the South African Institute of Chartered Accountants (Saica) among 1300 small and medium enterprises.
"The survey results show unequivocally that the small and medium enterprises (SMEs) that have been in business the longest generally have the highest turnover, and employ the most people," said Ivan Epstein, the president of Sage International.
Sage International conducted the survey on behalf of Saica.
"So although the creation of new SMEs is very important, it is equally important to acknowledge that meaningful job creation only begins when SMEs are achieving an annual turnover of R2-million or more," Epstein said.
The study showed that on average businesses that were more than seven years old employed more than 41 people and generated a turnover of R30.8-million.
Businesses that were one year old generally hired just above four people and generated R600000 turnover per year.
Epstein said given that over 60% of SME start-ups failed within two years and only 20% achieved long-term stability, a two-pronged approach may be required for government to develop SMEs.
This comprised encouraging new start-ups and providing them with access to good financial services and technical support, as well as actively promoting growth in established SMEs that have survived the critical first few years.
According to the report, businesses often failed because their debtors paid them late or not at all, and they managed their cash flow badly.
"From all three top responses, it is clear that unreliable cash flow is one of the primary reasons why businesses fail," Epstein said.
"The perception that government at all levels pays late is unsurprisingly then one of the major reasons why 72% of the survey sample does no business with government at all.
"If government is to support and develop SMEs - particularly those that achieve B-BBEE compliance and are majority or wholly black-owned - by channelling its procurement spending to qualifying SMEs, it needs to create a culture of swift payment by government."
sibanyonim@sowetan.co.za
State should support older SMEs - study
The government should consider channelling a large chunk of its financial and non-financial support to small businesses with a solid track record that have been operating for more than two years.
This was according to the Small, Medium and Micro Enterprises Insight Survey 2016, conducted by the South African Institute of Chartered Accountants (Saica) among 1300 small and medium enterprises.
"The survey results show unequivocally that the small and medium enterprises (SMEs) that have been in business the longest generally have the highest turnover, and employ the most people," said Ivan Epstein, the president of Sage International.
Sage International conducted the survey on behalf of Saica.
"So although the creation of new SMEs is very important, it is equally important to acknowledge that meaningful job creation only begins when SMEs are achieving an annual turnover of R2-million or more," Epstein said.
The study showed that on average businesses that were more than seven years old employed more than 41 people and generated a turnover of R30.8-million.
Businesses that were one year old generally hired just above four people and generated R600000 turnover per year.
Epstein said given that over 60% of SME start-ups failed within two years and only 20% achieved long-term stability, a two-pronged approach may be required for government to develop SMEs.
This comprised encouraging new start-ups and providing them with access to good financial services and technical support, as well as actively promoting growth in established SMEs that have survived the critical first few years.
According to the report, businesses often failed because their debtors paid them late or not at all, and they managed their cash flow badly.
"From all three top responses, it is clear that unreliable cash flow is one of the primary reasons why businesses fail," Epstein said.
"The perception that government at all levels pays late is unsurprisingly then one of the major reasons why 72% of the survey sample does no business with government at all.
"If government is to support and develop SMEs - particularly those that achieve B-BBEE compliance and are majority or wholly black-owned - by channelling its procurement spending to qualifying SMEs, it needs to create a culture of swift payment by government."
sibanyonim@sowetan.co.za
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