Red tape the enemy for SMEs

ANC secretary-general Gwede Mantashe recently put forward a proposal for the establishment of a small business ministry. A move that has received a mixed response with some raising concerns that the move will only increase bureaucracy, while other believe that the increased support will aid growth in the sector.

Ahead of the release of the results of the 2014 SME Survey, World Wide Worx MD Arthur Goldstuck outlined that government has been refining its support structures for small business and exploring new avenues to assist these businesses.

Evidence of this was seen in finance minister Pravin Gordhan's recent budget speech, during which he announced a R6.5 billion boost in support for small and medium-sized enterprises (SMEs) over the next three years, as well as an easing of tax compliance requirements for these businesses, Goldstuck points out.

While he acknowledges that the support is there, and it is improving all the time, Goldstuck stresses that these structures have many limitations. "However, it does not seem to be able to address the issue of red tape and complexity of doing business. In fact, trade and industry minister Rob Davies has proposed even more red tape and complexity."

Goldstuck believes that small businesses need to complete too much paperwork to fully take advantage of the support structures that are currently in place, which places an administrative burden on them.

"While the level of support is encouraging entrepreneurship, the level of red tape and the complexity of labour legislation is a deterrent," he states.

He describes the Department of Communications' mooted establishment of an e-commerce platform bringing together the business profiles of small and medium-sized businesses, as "largely irrelevant". At least until it is heavily marketed and more specific and tangible benefits are offered, he notes. "It is a start, and indicates a changing mindset, which can only bode well for the future."

Despite all of these hurdles, Goldstuck asserts that it is still easier to start a small business than a large corporation. While small businesses are creating work, big business is heavily focused on cost-cutting, which includes reducing staff numbers, he says, adding that this is especially true across Africa, where the number of large corporations remains low and SMEs are driving growth.

For Goldstuck, the solution is a humble one - keep it simple. "Vigorously attack the big enemy, namely red tape."

Sponsored by the Small Enterprise Development Agency (SEDA), Business Connexion and Microsoft, the results of the SME Survey are due mid-2014.

For more information, visit www.smesurvey.co.za.