2013 to favour SA’s innovative and specialised SMEs
The year ahead will favour South Africa’s innovative and specialised small businesses, as well as owners who can keep themselves motivated in tough economic times. This is according to Nazeem Martin, Managing Director of Business Partners Limited, who predicts that consumer spending will remain lacklustre throughout 2013 and says that small and medium enterprises (SMEs) will therefore need to be creative in order to continue servicing their target audiences.
Martin says that 2013 is probably going to be another tough year in which business owners will have to work as hard as ever to create their own luck. “It seems that global recovery will remain sluggish and vulnerable to shocks for the foreseeable future. And, even if it starts picking up sharply, it may still be a while before the positive effect is felt by most business owners on the ground.”
He says that run-of-the-mill businesses offering ordinary products and services to the South African consumer are therefore in for a tough year. “Local consumers’ spending habits remain characterised by extremely worrying trends such as unsecured personal loans. Many consumers are borrowing to spend on daily expenses, which predicts a difficult and problematic recovery.”
According to Martin this scenario is bad news for any business relying on consumers’ discretionary spend. “Luxury products, or even relatively minor purchases, will remain under intense pressure. Martin says that because of these challenges, it is now the time for business owners to carefully consider the relevance of their products and services, and consider where they are able to make adjustments.
“Specialist businesses within fast-changing industries such as IT and communications will have many opportunities to pursue in 2013 as the dynamism in these industries ensures constant growth for innovative players.”
He also predicts that installers of alarm systems, guarding services, fences, gates and security lighting can expect the usual solid stream of customers in 2013, as security purchases are traditionally based on emotional decisions rather than economic considerations.
“In order to create luck in 2013 business owners need to ensure that they look out for the positive. This does not only mean keeping faith that the economy will eventually turn – it certainly will. It also means looking out for the positive aspects that are with us right now.”
He says that examples of these positive aspects include the fact that South Africa still possesses an estimated $2,5 trillion worth of minerals – still one of the most richly endowed countries in the world, despite all the talk of a decline in our mining sector. “South Africa also received record numbers of tourists throughout 2012. In the second quarter of 2012, tourists brought in no less than R83.5 billion into the economy, more than the levels recorded during the World Cup.
“Another positive is that Africa, with its consistent growth of more than 5% over the last few years, is still opening up to South African businesses like never before.”
Martin says that it is with all these positives in mind Business Partners have embarked on 2013 with a major focus on its latest development – a venture capital fund for entrepreneurs with businesses, concepts, products or services with high-growth potential. “Our R400 million Venture Fund launched late last year is testimony to our belief in the potential of the South African community of entrepreneurs, despite the difficult times we may be facing.
“There is a lot to be said for all entrepreneurs who are braving the economic slump, whatever industry they are in. SMEs that have survived this period are good solid businesses and should be commended; they will realise the most benefits when the economy recovers,” he concludes.