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Factors that hinder the growth of small businesses in South African townships

Factors that hinder the growth of small businesses in South African townships Purpose – The purpose of this paper is to examine factors that hinder the growth of small businesses in South African townships, to create awareness of these factors and to develop guidelines for small business owners to promote successful business enterprises. Design/methodology/approach – The study was exploratory, descriptive and qualitative in nature. Semi‐structured interviews were used to gather data. A response rate of 93 per cent was obtained from a sample of 30 businesses. Findings – The slow growth rate can be attributed partly to the lack of support that small, medium and micro‐enterprises receive from support institutions, and partly to their own internal weaknesses. The findings furthermore revealed that the most common causes impeding business growth are a lack of legal knowledge, a lack of funding and a general lack of business acumen. Research limitations/implications – The study was limited to the micro‐, very small and small sectors of small businesses. Medium‐sized businesses were not included in the sample. The research could be replicated in other similar townships to determine whether similar results could be obtained. Originality/value – The study adds to the knowledge of challenges that small businesses face in Black townships and how these challenges could be minimised. Strategies recommended for ensuring the growth of small businesses are that government intensify information campaigns of their support services and encourage business owners to affiliate with local business chambers for business support purposes. Business owners and their staff should also prioritise business training. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Business Review Emerald Publishing

Factors that hinder the growth of small businesses in South African townships

Boysana Mbonyane; Watson Ladzani
European Business Review , Volume 23 (6): 11 – Oct 18, 2011
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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
0955-534X
DOI
10.1108/09555341111175390
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to examine factors that hinder the growth of small businesses in South African townships, to create awareness of these factors and to develop guidelines for small business owners to promote successful business enterprises. Design/methodology/approach – The study was exploratory, descriptive and qualitative in nature. Semi‐structured interviews were used to gather data. A response rate of 93 per cent was obtained from a sample of 30 businesses. Findings – The slow growth rate can be attributed partly to the lack of support that small, medium and micro‐enterprises receive from support institutions, and partly to their own internal weaknesses. The findings furthermore revealed that the most common causes impeding business growth are a lack of legal knowledge, a lack of funding and a general lack of business acumen. Research limitations/implications – The study was limited to the micro‐, very small and small sectors of small businesses. Medium‐sized businesses were not included in the sample. The research could be replicated in other similar townships to determine whether similar results could be obtained. Originality/value – The study adds to the knowledge of challenges that small businesses face in Black townships and how these challenges could be minimised. Strategies recommended for ensuring the growth of small businesses are that government intensify information campaigns of their support services and encourage business owners to affiliate with local business chambers for business support purposes. Business owners and their staff should also prioritise business training.

Journal

European Business Review – Emerald Publishing

Published: Oct 18, 2011

Keywords: South Africa; Small enterprises; Business development; South African townships; Growth rate; Business support services

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