The cash crisis has become the biggest cause for concern amougn South African SMEs, overtaking crime, interest rates, fuel costs and blackouts and the leading challenge facing them.
This is one of the interim findings of the annual SME Survey 2008, due for final release in October.
According to principal researcher Arthur Goldstuck, a central question posed to more than 5 000 SME owners is "What keeps you awake at night?".
"This provides a profile of the issues facing small businesses which they see as serious challenges," he says. "In 2007, crime was way above everything else, with 27% saying this was an issue for them; 19% said cash flow. Back then power failures were a problem for a mere 9%."
This year, he says a dramatic transformation has occurred in SME owners' experience of the environment – although the impact of crime has not been reduced at all.
"Crime remains a steady concern at 27%, but what leaps to the top is the cost of petrol, with 34% of SME decision-makers saying it is giving them sleepless nights, and rising interest rates, at 30%. These are issues which have come from nowhere, barely featuring on the radar last year at below 12%."
Goldstuck says that, until just two years ago, the financial environment was relatively benign for small businesses.
"The cost of money and fuel were not high; however, many companies have now been caught out by the sudden and relentless rate of both elevation of interest rates and fuel prices," he says.
With the cost of living going up dramatically, exacerbated by the interest rate, Goldstuck points out that it is not just the cost of capital that is increasing.
"The SMEs' customers are under pressure too. People suddenly have to think much more carefully about spending, especially on credit. The retail cycle is turning and that affects the SME first."
Thys Buitendag, director of business banking at Standard Bank, says: "The huge interest rate hikes, fuel and food prices have had an effect on SME's cash flow. These effects would certainly give them sleepless nights considering the increase in their operating expenses, debtors and bad debts.
"Standard Bank is committed to supporting SMEs and wherever possible, assisting them through these tough times. Our advice to them is to take heed of the effects of defaulting on their repayments and the implications it would have on their future credit rating."
It is in the interest of SMEs to talk to their banks in the event that they are unable to meet their financial obligations, he says.
"As SMEs come under increased pressure and as they slow down on spending, they also become far more discerning in their purchasing decisions," says Fred Saayman, channel director of Fujitsu Siemens Computers. "We have noticed that SMEs are far more constrained when purchasing hardware and they are looking to get increased bang for their buck when they consider purchasing.
"One of the key issues that SMEs need to understand in considering IT procurement is the Total Cost of Ownership (TCO) of the equipment that they are buying. After all, it's no use having a system that fails on reliability, or that requires substantial maintenance and support. We assist customers by taking a holistic look at their requirements and then providing best-in-class solutions to address the very specific requirements of each customer."
The SME Survey 2008 is sponsored by Standard Bank and Fujitsu Siemens Computers.