The inaugural SME Landscape Report, just released by SME South Africa, shows that agricultural opportunities abound for small and medium enterprises. The survey, commissioned by the Adclick Africa Media Group, was conducted with 1 157 South African SME (small-to-medium enterprise) owners and the study was led by independent research consulting firm, In On Africa.
The report offers a complete assessment of the state of small and medium enterprises in South Africa, with a focus on the key challenges, opportunities, risks and proposed next steps.
It further indicates that the search for new business opportunities is the primary driver for expansion across industries. A total of 44,3% SME owners gave “business opportunities available” as the reason for going into a certain sector, 26% of SME owners said “growth prospects”, 23,1% stated “entrepreneurial drive” and only 4% of SME owners said it’s because of their education and training.
When asked which industry SME owners might expand into, they were most drawn to agriculture and manufacturing, followed by education, technology and real estate.
According to the report, the majority of South African small businesses generate revenue of less than R200 000 annually and nearly half of SMEs employ between two and five employees.
Out of the 1 157 SME owners surveyed, 33% indicated that they have been refused funding. These findings demonstrate that SME owners are not aware of what is required to qualify for funding, such as good operating history and adequate cash flow, according to the report.
The results of the report illustrates that the SME landscape is made up of relatively young businesses, with around 60% of owners being in operation for less than three years. For the most part, SME owners were operating their first business (70%).
The small business sector in South Africa is a critical part of the national economy with the government’s National Development Plan 2030 looking to SMEs to be major sources of employment and drivers of growth in our economy.