A major problem that exists in South Africa, is simply that no one knows how many SME's exist! Current estimates vary from 1.2 million to 3 million. The margin of variance is too vast to make any meaningful contribution to the debate regarding SME development in South Africa.
Legislation that forces the use of incorporated entities such as closed corporations, cooperatives and various forms of companies, when tendering for government business, has seen a massive increase in the number of legal business entities registered. This has skewed the data massively, and therefore no true assessment of the growth in the SME establishment rate can be made.
The problem is further skewed by the fact that no one tracks the establishment of sole proprietors and partnerships, and often partnerships such as law practices often make use of legal entities for the trading component of their partnership. This leads to increased duplicate numbers of businesses being counted if at all.
Previously all businesses had to be registered with their local municipality. This has largely fallen away and is longer a requirement in most towns and cities. As a result overtrading is common in many towns. Examples include IT suppliers, tyre fitment and signwriting businesses.
It is imperative that a database of SME's in South Africa be established which is accurate, so that interventions and their impact can be correctly assessed. Only once we have established a means to evaluate our interventions can we measure their success and change them if necessary to be meaningful. Like any good business, market research and intelligence is critical in our decision making.
It would also help in establishing sustainable businesses, by providing guidance to businesses to reduce overtrading.
Rob Smorfitt
To learn more about this author, visit Rob Smorfitt's Website.
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Rob Smorfitt
(Visit Rob's Website)
Based in Pietermaritzburg, South Africa.
Married with 3 children (22, 21 and 14).
Have an MBA and am currently doing a PhD
in entrepreneurial success. I have been
self employed since 1982. I have started
26 and bought 5 businesses since then.
Most were sold again and a few were shut
down because of a lack of profitability.
Many were run by staff or family while I
worked in full time employment in my
bigger businesses. 6 books written in SME
and Project Management educational field.
Written articles for various magazines,
newspapers and websites.
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