Can you believe it? We heard about the many businesses being forced to close their doors as a result of the COVID-19 pandemic and lockdown restrictions. But would you imagine that the number of online business registrations would grow during these challenging times? FNB says their data shows that monthly online business registrations grew by a whopping 400% during the lockdown period. That's an enormous growth. We're unpacking this statistic to find out why there was such an eruption, and what this means for small business owners in SA...
Why did online business registrations soar during lockdown?
What was the economic climate like?
Well, according to several sources, not very good. The latest GDP figures were worse than expected and showed a significant shrink in the economy. There was a 16.4% shrink between the first and second quarters in 2020. With the mining and manufacturing sectors suffering a 70% decrease in output for the three months of our local lockdown. This was, perhaps, to be expected. But, what we didn't expect was how small business owners and entrepreneurs would react to these financial and economic pressures.
How many new businesses were registered?
The numbers are based on figures from the government-supported initiative and online registration platform called BizPortal. It was developed by the Companies and Intellectual Property Commission (CIPC) to encourage online business registration and make the process more streamlined and efficient for the small business owner.
Lauren Deva, head of sales for transactional products at FNB Business told Business Insider SA that they saw a notable increase in BizPortal registrations. As well as through the normal CIPC interactions. According to her figures, there were approximately 2 800 new company registrations each month between April and end August. This shows a massive 400% increase from when the portal was first launched and there were only 700 registrations a month. They had a whopping 14 000 registrations during the lockdown period. Of this, the majority of the registrations were in Gauteng (44%), followed by KZN, Mpumalanga and the Western Cape.
Why did we see this exponential growth?
There are several possible reasons for this. The people at FNB suggested that due to the challenging financial situation during lockdown, many businesses had to adapt and change their strategies in order to survive in the new economic climate. This led to several business owners registering new businesses online, either for the purposes of formalising their own personal services. Or to make existing businesses more official in order to qualify for COVID-related relief funding and to obtain operating permits.
Lauren Deva said that, 'more and more entrepreneurs want to formalise their businesses in order take advantage of new opportunities presented as a result of COVID, and further benefit from financial support provided by both the private and public sector.'
How else have businesses changed since lockdown?
It's common knowledge that since the start of the COVID-19 pandemic, small, medium and even large businesses have had to adjust their strategies. And change the way they've always done things. Firstly, they needed to get used to the idea of employees working from home. And adopt the necessary software development solutions to facilitate this.
Then, we saw several companies switch from brick and mortar premises to online platforms. And thousands of businesses increased their online presence by launching innovative business- or service-related apps. According to Statista, in August 2020 alone, 111 000 mobile apps were released worldwide on Google Play. If that doesn't show how companies are embracing technology and adapting to COVID-19, we don't know what does.