The South African Chamber of Commerce and Industry (Sacci) has announced that it will launch South Africa’s first, and perhaps Africa’s first, Small Business Growth Index (SBGI), which is expected to serve as a leading indicator of small business’ performance, concerns and prospects for growth.

Sacci, in partnership with the Bureau for Market Research (BMR), which is a subsidiary of the University of South Africa, will start collating information through a questionnaire or survey in February and publish the first report in March.

The SBGI will be published on a bi-monthly basis.

Sacci and BMR believe the index can help provide key insights towards achieving greater economic growth and increased job creation in the country, and particularly serve as a guide for government on the necessary support it should provide.

In addition to providing key information on the state of small businesses in South Africa, Sacci services manager Danny Vengadasamy says the SBGI will create an exclusive community from where small businesses are able to access information and share best practice.

Sacci plans to also create a forum and more opportunities for small businesses to participate and contribute information.

BMR has made available R25 000 as an award for the Small Business Ambassador of the Year to help incentivise businesses to fill in the SBGI questionnaire six times a year and participate in the online forum. The winner of the award will be announced when Sacci hosts its next yearly conference towards the end of 2023.

BMR head Deon Tustin explains the organisation chose the Harrod-Domar Growth Model to apply to the theoretical research behind the SBGI and in developing the SBGIs questionnaire, which determines key drivers that need measuring when considering growth potential or growth opportunities.

He says the organisation and Sacci deemed it best to ask small businesses about the challenges they experience in doing business, about changes in the cost of doing business and the state of their finances, among other questions.

BMR and Sacci conducted a pilot study to test the effectiveness of the methodology behind the SBGI survey. The pilot involved a self-administered online survey sent to businesses, using a platform that BMR designed, for submission within a week or two of receiving.

Thirty-nine businesses, mainly operating in the manufacturing sector, participated in the pilot round of the SBGI survey. BMR garnered information about the businesses years of operation, the number of people employed, location, turnover, business structure and business classification.

The pilot survey found that 33% of the 39 businesses are trading with difficulty, while 10% are at risk of closure. Only 15% of the 39 participants cited they are “growing strongly”.

The survey also notes the highest costs impacting on small businesses relate to taxes, wages and transportation at the moment.

Most of the pilot participants foresee increasing their prices moderately, owing to rising input and operating costs, in the next two months.

When asked how long the business would survive given inflation cost pressures and assuming they implement/receive no intervention support, 30% of the pilot survey participants said they would survive between zero and six months, another 20% between 7 and 12 months, and, for 23%, cost inflation pressure is not an issue determining survival.

BMR and Sacci find the top five current small business challenges to be management of cash flow, inadequate capital, macroeconomic development, supply chain slowdowns and an unconducive regulatory environment.

In particular, most participants asked for government intervention in the country’s energy crisis, as electricity outages, or loadshedding, was the topmost cited future concern, alongside the increased cost of goods, increased energy costs and not getting paid by debtors.

About 61% of the pilot participants have weak or critical cash positions. About 25% have concerning or unmanageable debt, which is often a result of government or government departments not paying them on time.

Most of the pilot businesses (60%) have indicated they will need more funding in the coming two months, particularly grant funding. Of those that need funding, 40% of participants say the chances of them receiving such funding are poor.