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08 Jun 2009Business: SME Survey: the Recession and the South African SME
Recent Gauteng Business News
Principal researcher Arthur Goldstuck, “The essential issue faced by all SMEs – indeed, all businesses – is the recession. We will seek to gauge the ability of SMEs to deal with a dramatically different operating environment from that of 2008. The economy is heading for a recession for the first time in 17 years, trading conditions have swung from boom times to bust with stunning rapidity.” he says.
“SME Survey will establish how this change is affecting SMEs, their readiness to deal with it and the strategies they may have in place,” adds Goldstuck.
Amrei Botha, Head of SME Propositions at Standard Bank, says, “Global economic turmoil hasn’t left the South African economy untouched and as the effects are felt locally, many SMEs are battening down the hatches and strategising smart survival strategies.”
Despite the challenges that come with an economic slowdown, SMEs have an advantage over larger companies – they are more likely to be able to adapt, innovate and cut costs quickly, particularly when compared to larger companies that are often weighed down by onerous processes and larger operating costs. It is this advantage that will enable small businesses to cope better.
The hypothesis says Goldstuck, is that SMEs are weathering the storm, but are anxious about the impact and the possibility of an extended period of depressed markets. “When times are hard, the old saying is that cash is king. We will therefore be exploring the extent to which SMEs are dealing with the cash flow issue, with credit far more difficult to secure and the possibility of increased bad debt.”
The SME Survey Roadshow in October forms a component of the Survey and will provide practical advice for SME business decision makers on how to address this and other issues.
Simultaneously – and almost paradoxically – there continues to be opportunity in adversity. “Some sectors are carrying the boom through, such as telecommunications and some elements of construction,” Goldstuck notes.
However, these are industries which can be difficult for the SME to break into; for example, construction is centred on large, government-driven infrastructure projects, while telecommunications brings the challenges of shifting legislative and regulatory requirements.
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