16 February 2010

Looking towards the upturn

Privately held businesses in South Africa are hopeful that the worst of the recession is behind them. This is one of the key findings in the 2010 Grant Thornton International Business Report (IBR). The global optimism / pessimism index indicates an optimism balance of +60% compared to +35% this time last year – the optimism balance being the proportion of businesses reporting they are optimistic less those reporting they are pessimistic.

“South African business owners are certainly looking towards the coming 2010 FIFA World Cup year  and its associated rewards with renewed optimism,” says Leonard Brehm, national chairman of Grant Thornton South Africa.

 

The IBR survey, now in its 8^th year, covers 7 400 privately held businesses across 36 economies and 10 industry sectors. Privately held businesses include entrepreneurial businesses, family businesses and non-listed entities, which account for over 98% of businesses worldwide and 81% of global GDP. The survey indicates that 26% of South African business owners expect an upturn during the first half of 2010 and 33% are looking to the second half of the year. In comparison, global statistics indicate a turnaround in the second half of 2010 (34%) or during 2011 (23%).

In South Africa, business owners still see the lack of availability of a skilled workforce as the major constraint (34%) on business growth, as has been the case for four consecutive years. Although this figure is lower than 2009’s 41% Brehm notes that this is probably due to the recession causing a slightly reduced demand for skills.

By contrast, globally, this factor is considered far less of a constraint (21%). In the global view, the biggest constraint on business is seen to be reduced demand and a shortage of orders.

Where the South African and global trends concur is in the view that overregulation and red tape is the second biggest restrictor to business expansion (all at 32%).

Despite these concerns, the IBR 2010 data indicates that businesses worldwide are more optimistic and feeling less constrained than they were 12 months ago. “Business owners focus for the year ahead will shift to long-term growth and stability,” says Brehm.