The FinScope 2010 South Africa Small Business Survey is the first comprehensive publicly available nationally representative survey of small businesses in South Africa which provides baseline information on a host of areas in small businesses.

Small business landscape in South Africa

The study sample of 5676 represents the small business owner in South Africa who owns a business with less than 200 employees based on the respondents self reported figures.  There are close to six million small businesses in South Africa and nearly 5.6 million small business owners. Overall around one in six people in South Africa aged 16 years and over own a small business employing less than 200 people.  Half (49%) of all small business owners resell products in the form bought, with 21%  rendering a service while 30% add value. Two thirds of small business owners do not provide any employment opportunities except for themselves.

Small business owner profile

Nearly 60% of small business owners are aged between 35 and 59 with 11% estimated to be between 16 and 24 years of age. Of the total estimated population of South Africa, seven percent are small business owners. Although females make up 60% of small business owners, the type of business, employment opportunities and relative success differ considerably amongst both genders. Men on average provide more employment opportunities (1.6%) than women (0.7%). Forty two percent of small business owners in South Africa are estimated to be male, versus 47% estimated to be male. Of the total estimated population of South Africa, 15% of males are small business owners. Sixty seven percent of small business owners claim that their business is their only source of income. Most are dependant on this small business income or on others (namely, people or government) while only one in twelve (8%) have access to other forms of personal income.

Problems when starting a small business

The survey indicated that over eight in ten small business owners started their business by themselves. Finance was cited as the key problem experienced by owners (39%) when starting their business which includes sourcing money and cash flow. While start-up problems are diverse and widespread, this could be alleviated through better training and improved access to microfinance and business support. Respondents indicated that to start their businesses, a funding amount of approximately R900 is required.

Source of start-up funding

Of the 65% small business owners in South Africa, 35% used their savings as the money source to start their businesses. Thirty seven percent of business owners obtained loans and money from others for business start-up while three percent claimed a formal source with 34% using an informal source and five percent not knowing the source.

Credit and loans

Both formal and informal credit and loan access is low suggesting that the perceived risks are high. Only five percent of small business owners claim to be currently repaying or to have borrowed in the past 12 months, including getting goods on credit. The majority of loans are for day to day business needs or stock.  Fifty two percent of business owners who had borrowing of some form claimed to have done so from friends, family and colleagues and 49% claimed this as their largest source of borrowing.


Savings access among business owners is positive with 53% having some from of savings product. Fifty three percent of business owners agreed that they would use their personal savings for the business with 39% claiming to have some sort of savings for business purposes. Of those claiming to save for their business, 82%  save at a bank with one in ten saving amongst informal societies. Those who belong to an informal savings group (63%) believe that this form of saving holds advantages for their business such as networking, marketing and business support.

Banking and transactions

Small business owners are less likely to be banked for their business than the total population. Of the 47% of the small business owners who are formally banked, 45% have a transaction product. Transaction products are key to making and accepting payments, safe cash handling and lower banking costs, all of which impact small business cash management. Only 53% of banked business owners actually deposit cash at the bank with the majority of business transactions taking place outside the formal bank networks. Cash flow is managed by the vast majority on a day-to-day cash basis and payment to employees is also mostly cash based.


Only one in five small business owners has an insurance product that could be used for business purposes. Overall penetration is dominated by funeral cover with 73% of those with any insurance having some form of funeral cover. Over a third of business owners claimed that they have no insurance in place for the majority of risks and around a third claimed they would rely on their savings for theft/crime, damage or loss. With the majority (98%) of business owners being paid in cash by customers and half making cash deposits, there are significant cash in transit risks.  It is evident that most small businesses are not protected from their perceived risks, which increases their vulnerability.


 There is significant opportunity for innovation in the banking sector to meet the needs of the small business owner in terms of accessibility through understanding the purchase decision and leveraging the channels they have access to, such as mobile phones. Another area is basic business banking similar to the Mzansi type account which allows for multiple deposits. Affordability is a key barrier to take up of insurance with over 50% of small business owners saying that they cannot afford insurance. Forty five percent say that insurance is not important for their business, suggesting that business owners don’t really see a need for insurance products. Awareness of support to small business owners is extremely low with 76% of business owners unable to name any organization that gives help and advice to small businesses while 94% have never used any support. The survey did indicate that 11% of business owners who requested help from an organization did not receive any, often due to support criteria from some organizations such as gender and age. Business owners tend to rely on friends and family for business advice (50%), with 11% using external professionals and 30% rely on themselves. Since 55% of business owners belong to some sort of informal organization, this network could be leveraged in driving awareness of available support. Increased awareness and communication about services offered is required together with ensuring that the services offered are provided efficiently.