Business Day: BERNARD SWANEPOEL: We need more research than just surveys to help smaller businesses

From decimated value chains and the coming social upheaval to the future of work, SA has a chance to make something of this emergency

The Small Business Institute recently received the third request in a week from a survey company asking if we would be willing to distribute a questionnaire to our members — chambers, informal business formations, small and medium enterprises (SMEs).

We were not surprised. In October 2017 we signed a memorandum of agreement with the Small Business Project (SBP), which was to be our research partner in what we believed was the single most important thing we could do as an advocacy body to help SMEs: learn everything we could about them — the things these new surveys are asking and so much more.

We wanted to initiate a baseline study of facts because we believed — and still do — that it’s essential to gather evidence before developing policy or designing interventions to unleash the innovation and dynamism of this vital, job-creating segment of the economy.

We managed to raise sufficient funding to complete the first phase, which answered how many formal employing (that is, not freelancers or self-employed) SMEs SA had and how many people micro, small, medium and large businesses employed, according to the generous access to data (not confidential information) Statistics SA, SA Revenue Service and the Treasury granted us.

We learnt that 267,959 SMEs employed 3.9-million people, while large businesses and the government employed nearly 10-million. This ratio is unusual in the world, where 60%-70% of jobs are provided by small firms, not the 28% in SA where employment is so desperately needed.

What we wanted to explore in the second phase of the research was the sectors of the economy in which SMEs operate. Where do they succeed? In which industries do they struggle, and why? How can we support them? Why do they succeed or fail in certain towns or regions and not others?

Further, we wanted to know the value and contribution that SMEs add to economic factors such as GDP; why so few opt to formalise; where the gig economy is clustered; the ages, races and genders of SME owners and employees; their turnover and profit margins; and the varying constraints they face to starting, running and growing their businesses.

If only we — and everyone — had that information now, for it was to be open-sourced and completely transparent. The Oppenheimers, Ruperts and Motsepes of the world (and the SASME Fund before them) would know where their money would be best spent. The department of small business development would be able to direct public money to the businesses in sectors most likely to survive, and nimble entrepreneurs would know where to look for opportunities while picking themselves up and dusting themselves off.

It’s not too late.  We will still need to know, when the dust clears, what is left standing, but surveys will not be sufficient. We will need real research. We will need the results of the secondary data mining and primary data collection SBP had mapped out.

We will need to ask the right questions (more than once over time) and extract the answers to let us see into our future as we move into a post-Covid-19 world. From decimated value chains and the coming social upheaval to the future of work — digital, gig, blockchained and 3-D printed, SA has a chance to make something of this emergency.

To do so we’ll need to inform our decisions to build that “enabling environment” for new business formation, competition, and growth with facts.

We will need, more than ever, to have a picture of the segment already most vulnerable to municipal dysfunction, power outages, choking red tape and whose cash flow was staunched by a government and clients that would not pay them in less than 30 days for the work or service they had rendered.

We can still serve them. SBI has been canvassing donations from corporate SA and individuals to assist in getting the second phase of his baseline study off the ground. It’s been hard, but it’s not too late. We still require this funding.

For us to better serve the SME segment of the economy, which is supposed to contribute 90% of all new jobs by 2030 (according to the National Development Plan), we must truly see them. Only research can help us see them.

• Swanepoel is a director at the Small Business Institute.

by Business Day –