30 May 2006
Twenty percent of South Africa’s companies fall in the “super growth” category of firms which have grown considerably more than the average – up from 16% in 2005 and 12% in 2004 – according to consultancy Grant Thornton International.
The result places South Africa in the top 10 on Grant Thornton’s Super Growth Index, which ranks countries by proportion of super growth companies, for the third year running – a reflection on the country’s consistent economic growth over this period.
The Super Growth Index research project is part of Grant Thornton’s International Business Owners Survey, conducted among 7 000 owners of medium-sized businesses in 30 countries worldwide.
More SA firms export
The survey also found that the number of mid-sized South African companies that are exporting has increased to 37%, from 35% in 2005.
Super growth companies, Grant Thornton said in a statement this week, are 23% more likely to export than ordinary companies – and far less constrained by their ability to finance expansion of their business.
“For example, cost of finance was an issue for 50% more ordinary companies than super growth companies globally, as was shortage of working capital (47%) and shortage of long term finance (58%),” Grant Thornton said.
“While access to finance and a shortage of long-term finance did feature as a constraint to South African mid-sized business owners, only 11% and 12% respectively viewed these issues as major constraints to business growth.”
Super growth companies, according to the survey, are also “very positive” about prospects for their business in 2006, specifically around such issues as increasing the selling price of their goods and services, growing exports and making greater investments in new buildings, plant and machinery.
Of the SA business owners surveyed, 36% said they planned to increase their investment in new buildings, while 52% said they were looking to invest in new plant and machinery.
The United States topped Grant Thornton’s Super Growth Index for the second consecutive year, despite its proportion of super growth companies falling from 48% to 39% this year.
Other strong super growth performers included Sweden (31%), Ireland (26%), the United Kingdom (23%) and Canada (23%). Greece fell most sharply in the rankings, from 9th to 21st position. Italy, Russia and Turkey jointly share bottom position with 4%.
Mainland China, included in the index for the first time this year, came in 14th position with 14% of its companies classified as super growth.
To count as a super growth company, a firm must have grown “considerably more than the average, measured against key indicators including the number of employees, current turnover, percentage growth in employment in the past year and percentage growth in turnover in the past three years”.
Grant Thornton’s International Business Owners Survey, first conducted in 2002, builds on the European Business Survey which Grant Thornton ran from 1993 to 2001.
The research was conducted by Experian Business Strategies Limited and Wirthlin Worldwide. In South Africa, research was conducted by Research Surveys among 300 business owners employing between 50 and 250 staff.