An analysis of business–related factors on small businesses

Abstract

The study was based on the evaluation of specific business–related factors concerning small businesses in the formal sector. The purpose of this study was to gain a clear understanding of the current education level of employees in the small business industry. Income and business related costs applicable to small businesses and formal business support was also evaluated in terms of its availability to small businesses. By means of investigation it was possible to conclude to what extent small businesses contribute towards economic growth in South Africa. The South African government is definitely aware of the important role which small businesses play in economic growth and poverty reduction. Small businesses were analysed to determine the education level of both employees and business owners. The contribution which business owners made to training and development of their employees was also investigated. The income over a period of five years were analysed to determine the financial sustainability of the businesses. The impact of business related costs and the global economic recession were also investigated to determine the future sustainability of small businesses. The empirical research was conducted at a financial institution in Klerksdorp to assess the contribution which small businesses made towards economic growth and development. Small businesses' contribution towards education and training must be reconsidered as limited opportunities exist within small business for training. Small business owners cannot afford to send their employees away to obtain training and mainly make use of on–the–job training. SETAS must focus more on small businesses when it comes to training and alternative training methods must be reconsidered. The implementation of complex labour legislation and the minimum wages law make unskilled labour very expensive for small business owners. This must be reconsidered as small businesses cannot afford to employ additional employees. Formal business support available to small business owners were perceived not to be marketed very well although the lack of internet access may contribute to the limited knowledge in this regard. The South African government must reconsider its strategy to utilize small businesses to create jobs and to develop skills.