The success of SME and it's importance.

SME success in South Africa after COVID-19

Small and medium-sized businesses (SMEs) in Africa are being destroyed by the COVID-19 pandemic, which is also causing a lot of human suffering.

Even though they run most of the economies on the continent and employ about 80% of the workers in both the formal and informal sectors, these companies are often the least able to handle a crisis.

This is so because smaller businesses often have a smaller clientele, fewer cash reserves, and less ability to handle commercial demands than larger businesses.

Because of lockdown measures, many SMEs have seen their income drop sharply, and most of them say they have had to cut their spending to stay in business.

SMEs need to be protected and given more power during this time of economic turmoil because they are so important to job creation and growth.

Their survival and recovery may also be a good indicator of how the economy is doing as a whole.

Exhibit 1: SMEs provide jobs and enable inclusive economic growth.

Small and medium-sized businesses (SMEs) make up 98% of South Africa's businesses.

They employ 50–60% of the country's workers and account for a quarter of the growth in private sector jobs.

SMEs make up 39% of South Africa's GDP, compared to 57% in the EU. However, they are an important economic engine.

Even though these are some of the fastest-growing SME sectors in the country, most businesses in them couldn't work during the 35-day shutdown and still have to deal with level 3 and level 4 restrictions.

Exhibit: -2 SMEs can't get money from the public sector because they don't know what opportunities are out there.

Entrepreneurs who were not aware of the chances or were unable to locate the information necessary to apply were the top two reasons for not utilizing such support, in addition to not qualifying.

The capital needed for the expansion plan was roughly 50% greater than the revenue every year.

Exhibit: -3 In response to the crisis, between 40 and 60 percent of SMEs expect to lose more than 5% of their revenue.

According to our research, between 40 and 60 percent of small business owners expect a loss of more than 5% for the current fiscal year as a result of the crisis.

An SME in the recycling sector was examining its medium-term business strategies and outlooks.

This SME received 50% of its revenue from processed recycled resale.

Exhibit: -4 Despite government efforts, employee layoffs are the biggest area of cost reduction for SMEs, with 70% reporting that they have already done so.

Finding suitable markets to sell items in is a difficult task.

One method of overcoming this difficulty is the development of online marketplaces and micro-sales platforms that enable producers to access new markets.

Owners and founders struggle to enable personnel to take charge of the company and run it.

Many small and medium-sized enterprises (SMEs) find it hard to get out of their owners' minds and take on a more strategic role because they don't have the right performance management systems, day-to-day operating models, and management structures with clearly defined roles and responsibilities, key performance indicators (KPIs), and decision-making.

Thoughts?

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