4 problems keeping South African small business owners up at night

The 2007 Small and Medium Enterprises (SME) Survey reports that South African small business owners are not working aggressively to increase their market share and stay ahead of the competition. Instead, they tend to focus more on the operational issues of their companies.

Here are the 4 most troubling issues facing small business owners, in order of importance:

1. Crime

Arthur Goldstuck, lead researcher on the survey and CEO of World Wide Worx, says 27% of respondents cited crime as the most worrying factor. “This was a surprise,” he says.

2. Cash flow

19% of respondents worry about cash flow. “This is both the scourge and the beauty of smaller businesses. If you don’t care about cash flow, who will?” says Melt Van der Spuy, director of commercial banking at Standard Bank, one of the country’s largest banks.

3. Debtors

Debtors, which is related to cash flow, was next with 13% of respondents rating it as important.

4. Competition

The competition came in a humble fourth place, with just 12% of those surveyed deeply concerned about what their rivals were doing. “When the competition is keeping you awake, what you worry about is market share. This doesn’t seem to be a focus for South African entrepreneurs and tends to be a bigger factor in the corporate environment,” he says.

Where SMEs look for help

The survey also looked at the places SMEs were most likely to go for help with their most pressing concerns. The investigation found that:

1. Accountants were the most favored – The research found that 72% of respondents use an accountant.

2. The bank – 59% of those surveyed say they seek help from the bank.

3. Legal advisors – Legal advisers were the most favored third-party providers of assistance and advice, with 53% saying that SMEs trust legal advisers.

4. Consulting – About 33% of respondents said they trust consultants to provide the help they need.

5. Mentors and coaches– The survey found that only a small number of respondents (9%) use a mentor or coach. However, 50% of those who use these services consider themselves highly competitive compared to those who do not use mentoring or coaching.

Why SMEs have some resistance to mentors

Van der Spuy says that the accountant is a good option for independent business advice. “While the business owner may go to the bank for advice, the accountant is likely to have the clearest picture of that particular business, certainly from a financial standpoint,” he says.

He also strongly believes in the value of such mentoring and coaching services. “A mentor can add the same value as a non-executive director to a corporation, providing independent advice and guidance.

However, mentoring is not well understood or trusted by small business owners, he says. Also, the costs associated with finding the right coach can be challenging for the owner, she adds.

The 2007 SME Survey, now in its fifth year, was conducted by World Wide Worx, a local ICT research house. It was sponsored by banking giant Standard Bank and Fujitsu Siemens Computers.

This year, more than 5,000 decision makers from small and medium-sized companies were surveyed. The survey aims to explore the factors that impact the competitiveness of South African SMEs.