Developing a framework to enable small business enterprises to be sustainable
Dikgwatlhe, Amos Kutlwano
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The South African government, in its attempt to curb unemployment, continues to promote and facilitate the establishment of small businesses. The promotion of businesses is evident through the development of policies, establishment of supporting agencies and the formation of the new ministry, Department of Small Business Development. The government acknowledges the contribution of small businesses in relation to job creation, poverty alleviation and having an inclusive economy. There are different types of businesses in the South African context, such as registered and unregistered businesses, operating in both informal and formal sectors. This study focuses on registered businesses in the main economic sectors such as retail, mining, agriculture, manufacturing, services, construction and transport. Its main objective is to develop a framework that will enable small businesses to operate sustainably irrespective of the challenges experienced in these economic sectors. Areas of focus in the research study are in the City of Matlosana that falls within the Dr Kenneth Kaunda District in the North West province. The City of Matlosana comprises of Klerksdorp, Orkney, Stilfontein and Hartbeesfontein (KOSH). The areas consist of many small businesses in different sectors of the economy. It is an area known to have been dependent mainly on mining activities for its economic sustainability. However, the mining activities have declined due to depletion of mining reserves and the focus is mainly on alternative potential economic sectors such as manufacturing, services, retail, agriculture and construction. A quantitative research approach was applied for the study. Data analysis and interpretation were conducted by using statistical methods such as frequencies, reliability with reference to the mean, standard deviation and Cronbach’s Alpha coefficient as well as Spearman’s Rank Order Correlations. Internal and external factors such as management skills, inability to access funding, the lack of proper business planning, economic conditions and industry changes influence the failure rate of businesses. The study investigates the extent of such factors that influence sustainability opportunity. Previous research on this topic indicates that most businesses fail within three years of their start-up. Some newly formed businesses are a result of the reasons such as unemployment or inability to be employable, that result into survival type of small business. Businesses operating in a survival mode do not employ as many people as possible and are easily susceptible to challenges due to changes in economic conditions. They typically have a small impact on the economic growth of the area. Conclusions of the study show that most owners do not necessarily empower themselves by short training courses or study business as a career choice to enhance their knowledge and skills. The level of education is as low as below matriculation (grade 12) with three to five years of experience in a particular business sector. There is a low level of prior knowledge of business but a high level of prior working experience in the same sector of the economy. Small business owners are mostly involved at operational and management level in their businesses indicating that administration and strategic planning are lacking which affects long-term plans of most businesses. The framework developed focused on many different aspects that influence the success and failure of small businesses. It is evident that there are factors that are influential to any business operating in a particular sector. There are instances where some factors have a major bearing on particular businesses as compared to others. In cases where the owner is strategic, experienced, qualified and skilled, the businesses have all-important competitive advantage to stand the challenges. Business characteristics such as location, years of operation, its responsiveness to its customer needs and business planning contributes advantageously to its sustainability. In various economic conditions, some sectors are affected in different ways depending on its financial strength. There is no single aspect that is identified as a stand-alone factor to enable a small business to be sustainable.