Largest area of projected investment within SMEs is marketing, survey shows
The new research shows that more than two-thirds of entrepreneurs consider economic volatility to be their most significant problem
More entrepreneurs and small-and-medium-sized enterprises (SMEs) now regard marketing as a priority area, as they look to develop their consumer base.
This is according to Darren Upson, a director of small business at cloud accounting software provider Xero.
The National Development Plan (NDP), a government blueprint for eliminating poverty and reducing inequality, has ambitious goals for the SME sector — including a target of 90% of employment opportunities to be created by this sector by 2030.
Xero, in partnership with World Wide Worx, recently conducted a survey of 411 small-business owners, which showed that 35% of the country’s entrepreneurs were concerned about cash-flow issues, while 23% were worried about future sales.
The survey also highlights that 68% of entrepreneurs considered economic volatility to be their most significant challenge, and that 62% reported a decline in consumer demand.
Upson said it was no surprise then to find that the largest area of projected investment among small business owners was marketing. Thirty-six per cent of entrepreneurs indicated that they would be allocating budget towards marketing initiatives.
"This comes as little surprise. Growth necessitates new business, and it’s very hard to accumulate new business with insufficient marketing. The fact that small businesses are making efforts to develop their consumer base bodes well for the future outlook of the small business community," said Upson.
Twenty-three per cent of businesses are focussing on investing in new equipment, while 18% are looking to new technology to maintain growth, said Upson.
"If you fail to upgrade to the latest kit, it’s more likely that competitors will steal the lead. Technology plays a central role in maximising efficiency. By automating time-consuming, manual and administrative tasks, staff have more headspace to focus on revenue-generating, growth-inspiring activities.
"By keeping their fingers on the pulse when it comes to the latest equipment and technology, SA’s entrepreneurs will be in a good place to lay the foundations for the future." The survey also showed that small-business owners placed a lot of emphasis on product development.
"So it’s encouraging that 22% of small businesses intend to allocate more resources to developing their core offering," said Upson. "Upgrading, innovating, and continuously improving products or services is a good way to keep customers interested." Upson said what also did not come as much of a shock was that 18% of those surveyed identified customer service as a key investment area.
"SA’s entrepreneurs know exactly what they need to do to excite their customers, pique the interest of their prospects, and economy-proof their business. Invest wisely and 2018 will see many prosper."