Now in its fourth year, the Sage Business Index serves as a sort of economic barometer, measuring the overall way that local SMEs view their prospects within the country. Pooling information from more than 1 200 business decision-makers across the country, it certainly provides a comprehensive view of South Africa's economic landscape.

Cause for optimism

This Business Index details an optimistic outlook from local SMEs, who are defined as being entrepreneurially aggressive by CEO of Sage AAMEA, Ivan Epstein. “These results demonstrate the resilience of South Africa’s business sector, even in a year that has tested its tenacity. This year, businesses have been put to the test by labour unrest, a volatile currency, growing red-tape and regulatory pressure, and many other challenges,” he notes.

In spite of a local economic environment that can be categorised as unstable, local SMEs have still indicated their expectation of yielding growth from their endeavours and efforts, a trademark that Epstein views as being unique to South African culture. One of the key findings found that 65% of South African businesses expect their turnover to grow by at least 4.9% over the next year.

Added to this, Sage's Business Index discovered that the vast majority of this optimism is driven by the emergence of technologies such as far more robust and agile mobile applications and platforms, as well as businesses adopting highly scalable cloud solutions to become more efficient in their business practices. "They remain committed to growing their businesses and playing a positive role in the economy. It’s especially interesting to note how technologies such as mobility are creating new efficiencies and opportunities for them," says Epstein. As a result, South African SME confidence in this latest survey is the highest it has been since its inception in 2011.

Greater government input

In order to ensure this state of optimism, Epstein advocates a collaborative relationship between SMEs and governments, as government bureaucracy ranked highest as the biggest challenge facing their potential growth. “Since respondents indicated that Government bureaucracy and its handling of the current economic situation are their biggest challenges, we believe there is more the government could do to build business confidence in the short to medium term,” he adds.

This finding was further supported by the fact that confidence in the national economy dropped by 5.38 points to the 34.54 mark (out of a possible 100). This too bucks the global trend, with the majority of countries surveyed showing an increase in government confidence, which again places South Africa's government into even sharper focus from an SME perspective.   

Although confidence took a hit in this most recent Business Index, it surprisingly showed an increase on the job creation prospects front, with 51% of businesses forecasting a growth in their headcount over the next twelve months. Furthermore, only 12% of organisations stated that they would be reducing their staff numbers. "We believe that the vibrant SME sector will lead the charge in creating new jobs which are required to stimulate the South African economy in the years to come,” Epstein added.

Risk takers welcome

Business attitudes to risk also appears to be changing, with half of local business decision makers describing themselves as risk-takers, growing by 2% from the 48% mark recorded during the 2013 Business Index. Added to this, almost 40% of decision-makers have become more risk-averse in the past seven years. Businesses’ more cautious approach is understandable given the local economic uncertainty says Epstein. "But it’s encouraging that many still have the appetite for calculated risk for the sake of growing their businesses,” he concluded.

For a better idea of the 2014 Sage Business Index findings, peruse the infographic below.

Image courtesy of Sage.