Impact of Crime on Small Businesses Report 2008 - Gauteng Online

7 OPPORTUNITY COSTSTHE STUDY FOUND clear evidence that the impact <strong>of</strong> crime on small businessesgoes beyond monetary costs. Perceptions <strong>of</strong> high levels <strong>of</strong> violent crime, togetherwith businesses’ actual experience <strong>of</strong> serious crimes such as robbery and burglary,create considerable opportunity costs for individual enterprises and the broader economy.Because <strong>of</strong> crime, many businesses limit their operations, and are reluctant toexpand. Analysis <strong>of</strong> the survey data shows that businesses that have been directlyaffected by crime are less likely to increase their employment. In addition, businesseshave to contend with the effects <strong>of</strong> fear <strong>of</strong> crime among customers/clients and suppliers,which can result in a loss <strong>of</strong> passing trade and in difficulties accessing stock.Studies in various countries have demonstrated the negative impact <strong>of</strong> crime onsmall business development. A 2002 study assessing the impact <strong>of</strong> crime on firm performancein Latin America, for example, found that 67 percent <strong>of</strong> firms cited crime asan obstacle to doing business - substantially reducing the overall economic performance<strong>of</strong> private enterprises, and sales growth in particular. 23Businesses may decide to put expansion plans on hold because <strong>of</strong> concern aboutcrime. A July 2006 study conducted in transition economies in Europe and Asia,for example, reported that increases in crime-related enterprise costs had divertedresources from business expansion and other improvements. 24 Twenty-three percent<strong>of</strong> US firms surveyed stated that they had postponed or cancelled expansionplans because <strong>of</strong> concerns about crime. 25 Among firms in Jamaica, 37 percentstated that crime had curtailed expansion plans, and 37 percent reported that crimehad constrained investments to improve productivity. 26Respondents in our survey were asked whether general levels <strong>of</strong> crime (actualrather than perceived) in their area <strong>of</strong> operation had impacted on the way they didbusiness. A third <strong>of</strong> businesses reported that crime had made an impact. The figurein areas characterised as high crime was just under half, compared to less than 20percent in areas <strong>of</strong> low crime. Forty percent <strong>of</strong> retail businesses, across the turnoverscale, reported changes to their business operations as a result <strong>of</strong> crime in their area<strong>of</strong> operation.Over half <strong>of</strong> the respondents who indicated that crime had impacted on their ways<strong>of</strong> working referred to increased levels <strong>of</strong> personal vigilance and caution. A third <strong>of</strong>these noted various changes in their patterns <strong>of</strong> operation to try to reduce the risk <strong>of</strong>crime, including keeping lower levels <strong>of</strong> expensive equipment and stock on thepremises, and avoidance <strong>of</strong> cash transactions. A quarter had increased their spendingon security as a result <strong>of</strong> crime in the area.