Increasing liquidations point to a crisis in the small to medium enterprise (SME) market - but this is only the tip of the iceberg, says Economist.co.za.
According to Mike Schussler, chief economist at Economist.co.za, SMEs are under "tremendous pressure" and many are facing closure. He states that liquidation figures are worrying but - because of the lengthy nature of processes - the situation could be a lot worse than it appears.
The figures indicate the crisis is playing out in SMEs servicing industries such as mining and construction - which are hit hardest by the economic downturn, Schussler says. The result is an increase in companies which are either closing down, holding back on pay increases or short-timing staff.
He notes that the "crux of the crisis is being fought in the SME arena" - but attention is still focused on the larger, multinational companies.
"When an SME closes there are no big announcements. By its nature, the SME has no media office, so nothing is relayed. And their workers are not unionised - so there`s no outcry from union bodies," Schussler explains.
SMEs are also unlikely to get loans from the banks and tax breaks have not been supported by the finance ministry before - so solutions are scarce for these smaller companies.
Tech solutions
The solution for SMEs feeling the pinch lies in cheaper, alternative technologies, says Ryan Smit, research analyst at BMI-TechKnowledge. "Technologies, such as VOIP and LCR, which can save SMEs a fair portion in terms of voice costs, may experience an increase in demand," he states.
According to him, SMEs will carefully consider all expenditure on IT products and services to make sure it meets their specific requirements. This means companies will have to shop around for solutions, he says.
"Newer, cost-reducing technologies could experience an increase in spend by SMEs as those users - who could be classified as laggards - may have to move out of their comfort zone to investigate other options to lower their costs and avoid feeling the squeeze too tightly."
These businesses would also have to consider solutions which they would have previously rejected, says Smit.
"Free services, such as Google Apps, which offer businesses hosted e-mail, shared calendaring and an online suite of office applications, may become more attractive because of the cost savings - whereas before SMEs may have been reluctant to lose out on the greater functionality of more expensive suites such as Microsoft Office," he states.
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