Business owners in SA. Who, where, how big, what they do, and a few other facts.

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1 Business owners in SA. Who, where, how big, what they do, and a few other facts. Mike Schüssler 14 September 2012

2 Agenda for ABSA SME index Business owners Fact sheet Where Business are. How many years they have operated. How old are business owners? Race of business owners, Sector and size of business. Main Occupations. THE ABSA SME INDEX. Sources of the data. 2

3 Business owners by province % 9% 8% 32% 9% 1% 5% 19% Western Cape Eastern Cape Northern Cape Free State KwaZulu-Natal North West Gauteng Mpumalanga Limpopo 5% 3

4 How many years have you been in business? 16% 14% 14% 12% 11% 10% 9% 10% 8% 7% 8% 6% 4% 2% 2% 2% 1% 3% 2% 5% 3% 3% 2% 3% 5% 5% 5% 0% 18 plus less than a year Years 4

5 Cumulative percentage of businesses by year started. 120% 100% 92% 100% 80% 69% 78% 60% 40% 20% 11% 13% 15% 16% 19% 21% 26% 29% 32% 34% 37% 42% 47% 53% 60% 0% 5

6 The age of the Business. Less than 12% of businesses operating today were in business in 1994! 10% of all businesses are less than a year old and 53% are less than five years old. The typical or median age is therefore about 5 years. The average age of a business in South Africa is 7,64 years as there are a few very old businesses that push up the average age. 6

7 Age Group of Business owners. 18% 16% 14% 14% 15% 14% 13% 12% 12% 10% 10% 9% 8% 6% 4% 5% 4% 3% 2% 0% 1%

8 Age and sex of Business owners. The Average age is 43 years for all business owners, but the self employed are 38 years old while employers have an average age of 51 years. Women entrepreneurs are generally a little younger at 42 years while men are 43 years old. Men make 64% of all business owners while women make up 36%. 8

9 Business owners by race. 21% African/Black Coloured Indian/Asian White 3% 5% 70% 9

10 Percentage of adults who have a business. All 6.0% White 14.0% Indian/Asian 7.4% Coloured 3.2% African/Black 5.3% 0% 2% 4% 6% 8% 10% 12% 14% 16% 10

11 Business by number of employees. 1% 4% 3% 0 employee 6% 1 employee 14% 6% 65% between 2 and 4 employees between 5 and 9 employees between 10 and 19 employees between 20 and 49 employees 50 or more employees 11

12 Employers only-by size (Private sector). 8% 4% 17% 1 employee between 2 and 4 employees 12% between 5 and 9 employees between 10 and 19 employees 18% 41% between 20 and 49 employees 50 or more employees 12

13 Average number of employees per firm, using UIF data(dol) s 1990s 2000s 2010s 13

14 Firm or business size. The average firm size is 11,5 employees (excluding self employed). According to UIF data the average firm size is 9,9 people which is down from 12,7 in the last decade and 34,3 people in the 1980 s The Typical or median number is between 2 and 4 people according to Statistics SA. The number of employees has declined in the last few decades so most businesses are small or micro enterprises 14

15 Number of companies according to income tax brackets. 15

16 Percentage Business owners by main Industry (overall). 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2.76% 0.05% 9.43% 0.06% 13.83% 45.61% 6.01% 10.22% 11.32% 0.70% 16

17 Business size by main industry. (Micro) 60% 0 employee 1 employee 56.2% 50% 40% 30% 20% 10% 0% 2.0% 0.0% 1.0% 0.0% 9.1% 6.2% 0.0% 0.0% 25.7% 8.5% 31.4% 9.0% 9.4% 15.9% 5.3% 7.9% 10.8% 0.3% 1.1% 17

18 Percentage of Business owners by main Industry. (small) 35% 30% 25% 20% 15% 10% 5% 0% between 2 and 4 employees between 10 and 19 employees between 5 and 9 employees 18

19 Percentage of Business owners by main Industry. (medium) between 20 and 49 employees 50 or more employees 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 11.9% 7.2% 3.2% 0.0% 21.3% 13.3% 1.8% 0.0% 31.5% 17.3% 15.8% 14.0% 9.2% 2.3% 24.0% 13.7% 10.0% 3.6% 19

20 Main occupation of Business owners. 30% 27.48% 25% 20% 21.96% 20.73% 15% 13.40% 10% 5% 0% 5.13% 6.58% 0.51% 1.85% 2.30% 0.06% 20

21 How many SMEs are there? Using Tax statistics and profit estimates for South Africa we estimate that the average business had a gross profit margin of about 16%. It is estimated that less than 2500 businesses had taxable income of more than 25 million in (SARS figures) Using this and other turnover data from the Annual financial statistics we estimate that only about business have a turnover of more than R35 mil (2009 estimate). That means that about employers out of about have a turnover of less than R35 million. (2009 figures) Remember our survey is 2012 but turnover & tax data is for

22 Education Status of Business owners and non-business adults. 45% 43% 40% 35% 35% In Business 30% Not In Business 25% 24% 25% 20% 18% 15% 10% 5% 6% 5% 11% 10% 6% 6% 10% 2% 1% 0% No schooling Less than primary completed Primary completed Secondary not completed Secondary completed Tertiary Other 22

23 Likelihood to be in business by education. All 6.00% Other 10.5% Tertiary 10.9% Secondary completed Secondary not completed 5.0% 5.7% Primary completed Less than primary completed 6.5% 6.4% No schooling 4.9% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 23

24 What education do business owners have? Most business owners have not completed high school which shows that anyone can have a business. However adults with a tertiary education are more likely to start a business. Nearly 11% of people with a degree start their own business. (other includes people with courses after school and artisans) 24

25 Thousands Number of employers and Self Employed Employer Self Employed

26 ABSA SME Index

27 The ABSA SME Index. The ABSA SME index has dropped to its lowest level in 18 months as businesses feel the uncertainty that the cold winds of the world economy blow into South Africa. We see that the latest number for employers is less than employers. The number of self employed was in the second quarter of

28 Questions. Thank you. 28

29 DATA sources. QLFS Statistics SA. Survey of the Self Employed 2002 Statistics SA. SARS tax statistics. Annual Financial Statistics Stats SA. UIF annual report over the years. ABSA. We retain the copyright. 29

Mid-year population estimates. Embargoed until: 20 July 2010 14:30

Mid-year population estimates. Embargoed until: 20 July 2010 14:30 Statistical release Mid-year population estimates 2010 Embargoed until: 20 July 2010 14:30 Enquiries: Forthcoming issue: Expected release date User Information Services Tel: (012) 310 8600/4892/8390 Mid-year