Small to medium businesses in South Africa view the availability and accessibility of finance as important factors which will enable them to compete effectively in this country, while the availability of information and communications technology is less important. Notably, black economic empowerment, while a factor, is not yet perceived to be an enabling factor.Sponsored by Standard Bank and Oracle Corporation South Africa, SME Survey is a unique barometer tracking the needs of the SME market in South Africa. Researchers examine factors behind the competitiveness of small, medium and micro enterprises by polling some 6 000 companies across vertical markets countrywide.

According to principal researcher Arthur Goldstuck, the perception of the availability of finance as a key contributor to competitiveness may be indicative of the ambition of small businesses to take advantage of positive economic conditions. “Our research has shown that companies are looking for money and looking for skills. Companies need these fundamental resources in order to grow their operations – a likely scenario with the consumer boom that has swept the country this year,” he says.

Goldstuck explains that 91% of companies polled indicated that Access to Skills and Expertise was important; the same number rated Access to Finance as important. “The finding that SMEs need expertise further underlines why many Government initiatives fail, in that they expect expertise from SMEs in terms of the complexities of qualifying for grant funding, rather than offering them that expertise,” he adds.

Andrew Krause, Oracle applications director, notes that ICT usage tends to fall into two widely divergent camps in the SME environment: Those that use it as a core business enabler, and those that have little use for ICT solutions. “This is reflected in the fact that just 46% rate access [to ICT and Internet infrastructure] as highly important. Those that need technology, really need technology. The finding is also perhaps significant, since it leaves the door open for the channel to target non-ICT using businesses and introduce the undeniable benefits that technology has for almost any business.”

Nikki Kearns, director of business banking at Standard Bank, warns that with rising interest rates, businesses across the board may find themselves targeting consumers who are no longer able to fully service their debt. “There has been an upturn in the prolonged low interest rates; Tito Mboweni has publicly stated that it is necessary to curb consumer spending. This can potentially leave SMEs exposed to the possibility of bad debt,” she explains.

She therefore recommends that SMEs eager for finance should focus on the basics – a good business plan and sound fiscal policy – which in turn will enable them to obtain the necessary funding from recognised institutions. “There is no getting away from the key success factors for starting a small business: Passion for the business, knowing the market, a sound business plan, the ability to turn ideas into actions, planning for good times and bad and the ability to over come adversity,” she says.

Interestingly, access to BEE status was rated by just 38% of SMEs as very important; however, companies which did find BEE status an important enabler of their ability to compete found it difficult to locate the right partners. Says Goldstuck: “In terms of a rating of the satisfaction of companies in accessing this resource, just 23% reported contentment. This is an indication, perhaps, of the dearth of appropriately skilled and available individuals in South Africa – a situation which may take some years to resolve.”

These findings will be discussed in more detail at the SME Survey 2006 seminars to be hosted in Johannesburg, Durban and Cape Town in October.

* Distributed by Coolcumba Communications on behalf of SME Survey. Media Contact Details: Melissa Padia, Coolcumba Communications, (011) 467 2836

Obtaining the report

The full report is available at a cost of R9800 (single site license) excluding VAT from World Wide Worx. To place an order, either request an order form to be mailed electronically, or send company name and address, VAT registration number, and name and e-mail address of person ordering and person who should be billed, to World Wide Worx by e-mail on info@theworx.biz or by fax on (011) 782 7063. Please include a purchase order number where required.

SME Survey 2006 : Many SMEs don’t consider ICT critical

21 September 2006: all to medium businesses are increasingly satisfied with the availability of information and communications technology but still wrestle with the challenge of securing the skills and expertise necessary for sustained performance.

This is among the key findings of SME Survey 2006, in which 6000 owners of South African small to medium businesses were polled on the factors which affect their enabling environment. Sponsored by Standard Bank and Oracle Corporation South Africa the Survey has, since 2003, provided key insights into this valuable business sector.

According to principal researcher Arthur Goldstuck, the introduction of more options for connectivity as well as increased competition in the telecommunications environment appears to be having a positive effect on the SME market. “Interestingly, respondents rating access to General IT infrastructure – which for the first time has been separated from Access to Internet Infrastructure – as important has declined from last year to this year with 71% of respondents rating it important [2005: 78%], 9% saying it is unimportant [2005: 7%] and 19% neutral [2005: 14%],” he says.
The reduction in the percentage of respondents rating IT infrastructure as important may indicate that as technology becomes a standard resource for doing business, it is not considered as an opportunity for competitive advantage.

The Internet is also not yet considered a ‘must have’ for many SME businesses; Goldstuck says 68% rated Access to Internet infrastructure as important, 9% unimportant while 21% were neutral.

Respondents were also asked how satisfied they were with their access to resources, hence providing a Satisfaction Index (SI) for access to the resources they regarded as most important,” he says. Access to General IT Infrastructure as well as Internet Infrastructure both returned an SI of 69, where 100 is fully satisfied.

Access to skills and staff remained one of the bigger bugbears for the SME; these categories returned SI figures of 56 and 60 respectively.

Andrew Krause, applications director at Oracle South Africa, notes that the SI indicates that while SMEs are able to access ICT resources fairly reliably, there is work to be done. “Given the dispersed nature of the SME environment, with businesses obviously located anywhere and everywhere in the country, the availability of effective channels to market which are able to reach these businesses is clearly of critical importance,” he says.

Meanwhile, Krause adds that the increasing competition in the telecommunications and Internet connectivity markets are playing into the hands of the SME. “Bandwidth, in particular, is a key resource for many applications. While it is somewhat surprising that some businesses do not yet see the Internet as having value for them, Oracle is of the view that with further development, more SMEs are likely to appreciate the value that automation [through business applications] and computerisation can bring to any business,” he says.

As such, Krause believes SME Survey 2006 has provided insight not only into the enabling environment for the SME, but also insight into the opportunity that this market represents for resellers capable of delivering solutions appropriate for their needs.

These and other findings will be discussed in more detail at the SME Survey 2006 seminars to be hosted in Johannesburg, Durban and Cape Town in October. Come and find out about the latest SME information from the largest survey ever conducted in SA, network with fellow entrepreneurs and listen to guest speakers Kobus Wiese, Robert Dennison, Dave Kirkby, Mr. Bikitsha and Johanna McDowell, as they share their business experiences.

* Distributed by Coolcumba Communications on behalf of SME Survey. Media Contact Details: Melissa Padia, Coolcumba Communications, (011) 467 2836

Obtaining the report

The full report is available at a cost of R9800 (single site license) excluding VAT from World Wide Worx. To place an order, either request an order form to be mailed electronically, or send company name and address, VAT registration number, and name and e-mail address of person ordering and person who should be billed, to World Wide Worx by e-mail on info@theworx.biz or by fax on (011) 782 7063. Please include a purchase order number where required.