The significance of an operating model for SMME's requesting funding from the Gauteng Government

Abstract

The South African economy is experiencing significant impact and contribution from the SMMEs sector with regards to economic activity stimulation and the creation of employment. The creation of employment and stimulation of economic activity contributes towards the effective eradication of poverty. The distinctive factor about Small Medium and Micro Enterprises (SMMEs) is their innovative approach and self determined manner of approaching business as it culminates in the creation of a conducive market as SMMEs tend to stimulate the economy through reduction of poverty, creation of employment and economic emancipation. Most SMMEs operations are normally undertaken outside mainstream economic hubs this becomes an added advantage as SMMEs have a tendency to service an untapped market and also employs inhabitants from within the areas they operate in. As part of governmental strategic objectives in relation to economic stimulation and growth, the Gauteng Provincial Government (GPG) has undertaken to develop SMMEs through the provision of business related financial and non-financial support that will ensure the growth and sustainability of the SMMEs. It is imperative for SMMEs operating models to be developed and strengthened, this will in turn yield effective, profitable and fully fledged business that can also operate in the mainstream economy as efficient as they are operating in the other sectors of the economy. The performance of SMMEs is hindered by various business obstacles and the inexistence of an operating model tends to be one of the pivotal obstacles for SMMEs. An effective operating model is fundamental for any business especially for SMMEs as it integrates the strategic direction and objectives that align the management and other business processes. This study aims to explore the importance and significance of an operating model for SMMEs that are requesting funding from the Gauteng Provincial Government. The study undertook the interviewing of SMMEs registered on the Gauteng Department of Economic Development database to obtain empirical data and information pertaining to their operating models and the effectiveness thereof.