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This page will focus solely on South Africa's Small Medium and Micro enterprises/companies. From which industries they are most active in, to industries they contribute the most to total income earned, their financial ratios you name it.
The page will be updated regularly as new information becomes available. |
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28 June 2019: Income earned my small enterprises declined by over 5% year on year
In the latest Quarterly Financial Statistics (QFS) as published by Statistics South Africa it shows that income earned by small firms declined by 5.17% for the first quarter of 2019 compared to the first quarter of 2018.
Income Categories:
The following summary shows the income earned during the first quarter of 2019 by small firms in South Africa:
So total income earned by smaller firms amounted to R705.3 billion in the first quarter of 2019, compared to R747.76 billion in income earned during the first quarter of 2018. A clear indication of the tough economic environment in South Africa and in which small firms operating in South Africa finds themselves in, with total income as well as turnover declining by around 5% over the last year.
Income Categories:
- Turnover: -4.95%
- Interest :15.98%
- Dividends: -39.14%
- Royalties, franchise fees, copyright, trade names and trade and patent rights: 212.00%
- Rental/leasing of land, buildings and other structures received: 68.96%
- Hiring/leasing of plant, machinery, vehicles and other equipment received: -32.53%
- Profit on assets/investment sold or revalued :-28.30%
- Other income : -12.02%
- Total income: -5.17%
The following summary shows the income earned during the first quarter of 2019 by small firms in South Africa:
- Turnover: R 682 592 000 000
- Interest: R 2 264 000 000
- Dividends: R 325 000 000
- Royalties, franchise fees, copyright, trade names and trade and patent rights: R 156 000 000
- Rental/leasing of land, buildings and other structures received: R 1 671 000 000
- Hiring/leasing of plant, machinery, vehicles and other equipment received: R 307 000 000
- Profit on assets/investment sold or revalued: R 4 485 000 000
- Other income: R 13 531 000 000
- Total income: R 705 331 000 000
So total income earned by smaller firms amounted to R705.3 billion in the first quarter of 2019, compared to R747.76 billion in income earned during the first quarter of 2018. A clear indication of the tough economic environment in South Africa and in which small firms operating in South Africa finds themselves in, with total income as well as turnover declining by around 5% over the last year.
10 June 2019: Employee costs as a percentage of total income for small firms
Often called the killer of smaller companies, we take a look at the employee costs of smaller firms and express the costs of smaller firms employee costs as a percentage of total income earned by smaller firms. What percentage of income generated by smaller firms are spent on employees? And what does this percentage look like across various economic sectors. The summary below shows the employee costs expressed as a percentage of total income earned per industry in South Africa for the 4th quarter of 2018 (ranked from highest percentage to lowest percentage).
So for small finance and real estate firms, their employees cost the R38.43 for every R100 income they earn. Thus employee costs makes up a significant chunk of their overall expenses. On the other end of the spectrum, small firms active in the wholesale, retail and motor trade industries pay only R8.02 for every R100 in income earned, which means the employee costs for small firms in the trade industry is not significant, especially when compared to the other sectors and the average across all sectors in which employee costs came in at 19.68% of total income. Basically across South Africa's economy employees cost smaller firms R1 for every R5 in income earned
- Finance and Real Estate: 38.43%
- Community services: 37.61%
- Mining: 25.70%
- Manufacturing: 22.27%
- Construction:19.87%
- All small firms in South Africa: 19.68%
- Transport: 19.20%
- Electricity, gas and water: 14.45%
- Trade (Wholesale, retail and motor trade): 8.02%
So for small finance and real estate firms, their employees cost the R38.43 for every R100 income they earn. Thus employee costs makes up a significant chunk of their overall expenses. On the other end of the spectrum, small firms active in the wholesale, retail and motor trade industries pay only R8.02 for every R100 in income earned, which means the employee costs for small firms in the trade industry is not significant, especially when compared to the other sectors and the average across all sectors in which employee costs came in at 19.68% of total income. Basically across South Africa's economy employees cost smaller firms R1 for every R5 in income earned
2 April 2019: Total income per industry for small firms
The summary below shows the total income earned by small firms per sector of the South African economy (excl agriculture), based on the 4th quarter 2018 QFS survey results as published by Statistics South Africa. The results are sorted from highest to lowest
- Trade (includes wholesale, retail and motor trade sales) : R 326 257 000 000
- Manufacturing: R 163 499 000 000
- Finance and business services: R 156 329 000 000
- Transport: R 52 333 000 000
- Construction: R 24 448 000 000
- Personal care and community services: R 24 135 000 000
- Mining and quarrying: R 7 151 000 000
- Electricity, water and gas: R 1 460 000 000
2 April 2019: Breakdown of Income, Inventories and Expenses of small firms
This update will focus in the income, inventories and expenses of smaller firms earned for the last quarter of 2018 (thus from October 2018 to December 2018), as obtained from Statistics South Africa's Quarterly Financial Statistics (QFS) Survey. From this we will then calculate a few financial ratios for smaller firms operating in South Africa.
Income items
Inventories
Expenditure items
Capital expenditure on new buildings, machinery, furniture, vehicles and other equipment
Financial ratios of small companies:
Income items
- Turnover: R 727 692 000 000
- Interest: R 2 363 000 000
- Dividends: R 243 000 000
- Royalties, franchise fees, copyright, trade names and trade and patent rights: R 176 000 000
- Rental/leasing of land, buildings and other structures received: R 1 279 000 000
- Hiring/leasing of plant, machinery, vehicles and other equipment received: R 362 000 000
- Profit on assets/investment sold or revalued: R 11 253 000 000
- Other income: R 12 244 000 000
- Total income: R 755 612 000 000
Inventories
- Opening value of raw materials: R 26 481 000 000
- Opening value of work in progress: R 15 477 000 000
- Opening value of finished goods: R 143 735 000 000
- Total opening values: R 185 693 000 000
- Closing value of raw materials: R 27 058 000 000
- Closing value of work in progress: R 15 618 000 000
- Closing value of finished goods: R 141 878 000 000
- Total closing values: R 184 554 000 000
Expenditure items
- Purchases: R 393 695 000 000
- Employment costs: R 148 689 000 000
- Interest paid: R 14 678 000 000
- Royalties, franchise fees, copyright, trade names and patent rights paid: R 1 553 000 000
- Rental/leasing of land, buildings and other structures paid: R 26 417 000 000
- Hiring/leasing for plant, machinery, vehicles and other equipment paid: R 3 667 000 000
- Depreciation: R 9 347 000 000
- Loss on assets/investments sold or revalued: R 4 459 000 000
- Other expenditure: R 101 002 000 000
- Total expenditure: R 703 507 000 000
Capital expenditure on new buildings, machinery, furniture, vehicles and other equipment
- Buildings, improvement and construction works: R 12 971 000 000
- Plant, machinery, furniture, fittings and other equipment: R 71 909 000 000
- Vehicles: R 11 261 000 000
- Total capital expenditure: R 96 141 000 000
Financial ratios of small companies:
- Net profit of small companies in South Africa: R52.1 billion for the quarter
- Net profit margin of small companies in South Africa: 6.9%
- Employee costs as percentage of total expenditure: 21.14% (so one fifth of small companies expenses are employee costs)
- Interest payments (on business and other loans): 2.1%
- Capex as percentage of total expenditure: 13.67%
1 April 2019: Contribution of smaller enterprises to total income earned in SA
In this article we will focus in the income earned by the following major industries in South Africa:
The bar chart below shows the income earned for the 4th quarter of 2018 per industry per firm size.
- Mining and quarrying
- Manufacturing
- Construction
- Trade (includes retail, wholesale and motor trade)
- Transport
- Real estate and other business services
The bar chart below shows the income earned for the 4th quarter of 2018 per industry per firm size.
The summary below shows the total income earned (all firm sizes) per industry in the graphic above:
So the Trade industry earned the most, with the manufacturing a relatively close second. And the Real estate and business services industry a distant 3rd position. The summary below shows the percentage contribution of the various firms to total income earned by the selected industries
So lets focus on the contribution of the various firm sizes to overall income earned. Just how much is smaller firms contributing to the total income earned by companies in South Africa?
So 62.32% of all income earned by these industries is earned by firms that are classified as being large, 27.95% of total income earned in these industries is earned by firms classified as small and only 9.73% earned by firms seen as medium. The medium sized firms might be seen as the missing middle. Larger firms have greater buying power and more financial muscle to grow, and current government policies are set up to favour smaller companies, leaving middle sized firms stuck in the middle.
Within specific industries, smaller firms contributes the most to the total income earned by the Real estate and business services industry, with smaller companies making up 48.9% of the income earned in this industry. Smaller firms also contributes significantly to total income earned in the Trade industry with it making up 36.4% of total income earned in the Trade industry as at the 4th quarter of 2018
- Trade: R 895 279 000 000
- Manufacturing: R 817 252 000 000
- Real estate and other business services: R 319 967 000 000
- Transport:: R 253 556 000 000
- Mining and quarrying: R 194 245 000 000
- Construction: R 93 386 000 000
So the Trade industry earned the most, with the manufacturing a relatively close second. And the Real estate and business services industry a distant 3rd position. The summary below shows the percentage contribution of the various firms to total income earned by the selected industries
- Trade: 34.79%
- Manufacturing: 31.75%
- Real estate and other business services: 12.43%
- Transport: 9.85%
- Mining and quarrying: 7.55%
- Construction: 3.63%
So lets focus on the contribution of the various firm sizes to overall income earned. Just how much is smaller firms contributing to the total income earned by companies in South Africa?
- Large: 62.32%
- Medium: 9.73%
- Small: 27.95%
So 62.32% of all income earned by these industries is earned by firms that are classified as being large, 27.95% of total income earned in these industries is earned by firms classified as small and only 9.73% earned by firms seen as medium. The medium sized firms might be seen as the missing middle. Larger firms have greater buying power and more financial muscle to grow, and current government policies are set up to favour smaller companies, leaving middle sized firms stuck in the middle.
Within specific industries, smaller firms contributes the most to the total income earned by the Real estate and business services industry, with smaller companies making up 48.9% of the income earned in this industry. Smaller firms also contributes significantly to total income earned in the Trade industry with it making up 36.4% of total income earned in the Trade industry as at the 4th quarter of 2018