An investigation of residential-based business as an alternative for small- and medium-sized enterprises
Ntshingila, Molebaleso Lydia
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Home-based and residential-based businesses have become a visible feature on some main road arteries in and out of most suburbs and big cities in South Africa. Previous residential zoned properties are being used for business purposes, to such an extent, that certain main routes into cities have virtually lost their residential character. The home-based business concept is not new to South Africa. Approximately 1,8 million people run some form of business from home. However, the purchase or rental of a residential property to be re-zoned for business use in some specific areas, seem to be a new phenomenon. Preliminary interviews with entrepreneurs and small business owners of these residential-based businesses, would indicate that it is an alternative location to shopping centers/malls and office parks. They are often harassed by landlords and/or cannot afford the rentals charged or cannot comply with certain aspects of the lease agreement. The study is an exploratory research into this phenomenon and is supported by a proper literature study, as well as by an empirical study. The literature reviews the concepts of entrepreneurship and small, medium and micro enterprises (SMME's) as a starting point for this study. This sector is a vital contributing factor to any economy and one of the most important strategic decisions that must be made by these small business ventures is the location-decision. All the theories and factors of location in literature reveal this important decision and the different types of location for SMME's are explored, with emphasis on the newest phenomenon of residential-based businesses. The empirical part of the study consists of a questionnaire that was completed by means of personal interviews on a sample in the greater Pretoria metropolitan region. The objective of this study was to find the reasons for this visible development in suburbs and to investigate whether this is an effective alternative location for SMME's. The research findings indicated the reasons and advantages of residential-based businesses, as well as the possible problems and disadvantages of this location decision. The three factors identified as advantages, are the location and growth advantages, the cost advantages and the personal advantages. The three disadvantage factors are various personal drawbacks, local authorities' rules and regulations and several management disadvantages. Specific recommendations are made on how to run and manage such a residential-based business and the thesis will therefore, be of value not only to entrepreneurs and SMME's wanting to make this important location-decision, but also to town planners at city councils i.r.0. future strategic planning.