Challenges faced by SME's within the Emfuleni Municipality
Abstract
Small and medium enterprises (SMEs) play an important role in the growth of countries' economies. They function as leading sources of employment in both growing and advanced countries. SMEs play an important role in countries like South Africa, as they contribute significantly to higher production rates that lead to greater export capabilities; they continually drive innovation and economic diversification. SMEs in South Africa are unable to stay in business, as many newly established small businesses close their doors within the first three years of operation. This is due to SMEs facing many challenges and lots of them are difficult to overcome. The challenges that influence SMEs' ability to grow and operate sustainably, include lack of management and entrepreneurial skills, lack of sufficient operations management practices, lack of planning, limited knowledge, access to business information, inadequate financial management practices, insufficient location choices, lack of access to capital, insufficient institutional support, regulatory hurdles, deficient SME management education, poor customer service and poor business networking. The primary objective of this study was to investigate the challenges faced by SMEs within the Emfuleni Municipality. The study made use of a descriptive research design by implementing a quantitative research method to describe how SMEs within Emfuleni Municipality perceive the challenges identified from literature. The primary data for this study was collected, using a self-administered questionnaire that focussed on determining SME owners'/managers' perception of challenges faced by SMEs, how they experience the challenges themselves and the level of support obtained from their demographic area. A convenience sampling methodology was chosen and implemented for this study. A total of 1500 potential participants were selected for this study. This study showed that SME owners have a moderately positive level of agreement regarding their perception on challenges faced by SMEs in general, indicating that the challenges enquired on are indeed challenges to SMEs in general. They have a moderately negative level of agreement on their perception of challenges faced by themselves in their own businesses, indicating that participants feel confident that they are managing the challenges well. However, participants have a strongly negative perception on the contribution that their demographic area have on their business sustainability, indicating that SME owners do not have confidence that their businesses can flourish in the Emfuleni Municipality. Recommendations for this study focussed on SME owners assuring that they are well prepared to start businesses prior to starting their business. SME owners who feel confident in their abilities must continuously and truthfully assess their businesses' status in relation to challenges faced and aim to mitigate the challenges that they are facing. It was also recommended that the Emfuleni Municipality assess their policies related to small businesses, making it more conducive to SME growth and to address their infrastructure maintenance to avoid unnecessary interruptions of business operations.