Festive Season creates headaches for small businesses

Holidays weigh heavily on decision-makers at small and medium enterprises, as they rush to meet deadlines before the working world closes its offices for the festive season.

This was an unexpected finding from the interim results of SME Survey 2018, in partnership with Intuit QuickBooks. The project reached the halfway mark of its targeted 1 400 interviews shortly before the break, providing a rare opportunity to compare pre- and post-holiday stresses.

The data collection for SME Survey 2018 is complete and the results will be released at the end of March. A key question, in which small business owners are asked what gives them sleepless nights, has revealed the extent to which deadlines rise to the top of their concerns as the holidays approach.

More than a quarter (28%) of SME decision-makers said that meeting deadlines was an issue they considered to be a major headache. In previous surveys, typically conducted earlier in the year, the issue featured far less strongly.

“Obviously, with everyone gearing down for the holidays, the threat of failing to meet deadlines hangs heavy over the heads of these companies,” says Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey. “At the same time, it not only demonstrates that there is still a lot of work to be done by SMEs during the holiday period, but also that there is inevitably gearing down by employees. This in turn creates pressure on the business owner, who is obviously worried about getting everything finished in time.”

“We do, however, anticipate that during the second half of the Survey, the importance of this issue will drop off dramatically, along with the third biggest concern raised, which is finding the right staff. Some 23% of SMEs felt that finding the right employees was cause for concern. This is a situation also likely driven – at least in part – by the time of year. After all, people often seek new challenges in the new year, while others may head into retirement. Thus, December is a time when many small businesses find themselves needing to replace staff.”

The biggest SME concern raised in the interim results was that of cash flow (40% of respondent). Goldstuck expects this to feature strongly in the final Survey, although not necessarily as the number one challenge. He says that cash flow worries are to be expected in a sluggish economy, and would also be exacerbated during the festive season, when employee bonuses need to be paid, along with all the additional expenses that inevitably come with the December holidays.

“What makes these result more interesting is a comparison with another question, around strength of cash flow – with the vast majority (88%) claiming to have a positive cash flow. Despite this, nearly half of the Survey respondents are still kept awake by cash flow concerns.”

However, the correlation becomes clearer when looking at profitability. Only 61% of those surveyed consider themselves to be profitable, which creates an almost perfect correlation with the 40% that are worried about cash flow problems.

“Cash flow is a worry for many SMEs no matter what stage of business or season it is. Understandably, it’s no surprise that when it comes to the festive season these concerns are exacerbated,” says Wendy Walker, Head of Marketing for Intuit QuickBooks. “It is our mission to ensure these types of reservations are diminished completely by providing solutions that allow SMEs to be prepared and confident around areas such as cash flow and understanding where your business finances stands, no matter what the time of year.”

“There are two clear lessons SMEs can draw from these results,” says Goldstuck. “Firstly, it is obvious that these businesses need to prepare for the festive season downtime from the beginning of the year, as this period creates a massive financial crunch and thus requires extra effort to get through.

“Secondly, 86% of SMEs expect to be profitable in 2018, correlating almost perfectly with the 88% who claim to have a positive cash flow. This indicates that having a positive cash flow – even if one is just above breakeven – makes an SME more confident in its business dealings, although such confidence is attained at great cost in stress and sleeplessness.”

SME Survey is the original and largest representative survey since 2003 to measure the forces shaping SME competitiveness in South Africa.

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