SME Growth Index - Headline Results 2011

The SME Growth Index is the first and largest study of its kind to be undertaken in South Africa. It differs from previous studies in breadth, scope and intent. It is based on the experiences and perspectives of a Panel of 500 small businesses, across South Africa’s three major metropolitan areas. It delves into the wide spectrum of factors germane to the operation of a business. It also focuses on drivers behind SME survival and growth. While much of the government’s attention has been on supporting the establishment of new small businesses, the Index emphasises the enormous and sometimes unacknowledged contribution made by established enterprises with the potential to expand, generate wealth and take on additional employees.

In 2011, in the first of a series of annual surveys, the research underpinning the Index gathered over 65 000 data points – the most comprehensive picture yet assembled of the sector.

Importantly, the Index is longitudinal. It will run for an initial period of at least three years. It will establish a set of comparative analytical data at particular points in time, thereby enabling assessment of the impacts of changes in the operating and regulatory environment, identification of patterns in firm growth, and analysis of the types of internal and external variables that differentiate between firms that are creating jobs, and those that are not.

The Index also investigates the growth experiences and aspirations of firms at different points along the age continuum. In several areas, including access to finance, established firms have an advantage over younger firms. The Index tracks and compares the experiences of young firms (those operating between two and five years), established firms (six to twenty years), and mature firms (over twenty years). It looks at their different characteristics and experiences, how they started, how they access markets, how they approach innovation and competition, their access to resources such as skills, capital, finance, the extent and scale of employee growth, and their aspirations for future growth. This comparison by age of business highlights how factors influencing employee growth vary at different stages along the continuum. It also uncovers the extent to which businesses tend to employ more people as they grow older – highlighting the importance of policies to encourage business longevity, rather than focusing exclusively on support for business start-ups.

Above all, the Index aims to support evidence-based policy-making for the SME sector. Our goal is to support the types of policy and practical interventions that will best ensure that South Africa provides the soil in which a strong and durable SME economy can flourish.

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