A global upsurge in voluntary resignations amid the COVID-19 pandemic – otherwise known as the “Great Resignation” – witnessed almost 50 million Americans quit their jobs in 2021 alone. Another trend, however, has been developing in tandem with these mass resignations – a boom in the number of people starting new small businesses, with new business being formed increasing by 53% in 2021, when compared to the same period in 2019. These emerging trends have led some experts to conclude that the flipside of the “Great Resignation” is a small business boom.
Whether South Africa will follow suit is dependent on a number of factors that are unique to the country’s socioeconomic climate. This is according to Jeremy Lang, Executive Director at Business Partners Limited, who says that to understand how South Africa differs as a case study, we need to take a closer look at the reasons behind the mass resignation.
He says that numerous workplace studies have indicated that South Africans were compelled to work longer hours during lockdown, resulting in burnout becoming an unfortunate reality for many. Furthermore, remote working has opened the world’s borders to South Africans, who now have more options to work remotely for offshore companies.
“In South Africa, where the socioeconomic climate is characterised by record-high unemployment,” explains Lang. “The status quo is very different to other regions such as the United States. The ‘Great Resignation’ in America is arguably a white-collar phenomenon. In South Africa however, where the majority of the unemployed are blue collar workers, South Africans simply do not have the luxury of quitting their jobs and relying on the state.”
These realities therefore beg the question: will South Africa experience a small business boom as an after-effect of the pandemic and the subsequent “Great Resignation?”
“The answer is both yes and no,” says Lang.
“It is yes, in the sense that remote working culture has given rise to a new generation of digital nomads – individuals who choose to spend their time working remotely, from different geographical locations.”
This trend is most apparent among Gen Zs and Millennials, who frown upon office-bound working environments and are doing much to resist the nine-to-five mentality, which may not be the most practical solution to obtaining a work/life balance. These digital nomads may work as freelancers, consultants and workers in the emerging gig economy. As such, they may very well be the new generation of small business owners.
“The answer is also, no,” adds Lang, “in the sense that much work needs to be done in the way of refining the process that aspiring entrepreneurs must abide by in order to start their own businesses. On a positive note, the President’s establishment of a red tape committee to decrease the bureaucracy that exists within the SME space, hope is on the horizon.”
However, as the latest findings from the Business Partners Limited’s Q4 2021 SME Index indicate, cash flow problems and limited access to funding remain two of the biggest challenges that face small and medium-sized enterprise (SME) owners. Unless these challenges improve, there will be little to no impetus for the rise in small business opportunities.
“As the Q4 2021 SME Index reveals,” Lang concludes, “confidence levels are returning to their pre-COVID levels, which is indeed a good sign and may very well be a welcomed precursor to an upsurge in new and innovative small businesses.”