Assessing the causal failures of emerging manufacturing SMEs in Johannesburg
Date
2015
Authors
Mthabela, Thabani Eddison
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Abstract
This report provides an examination of reasons that may be responsible for the
failure of start-up manufacturing small to medium enterprises (SMEs) or
businesses in Johannesburg, South Africa. The high failure rate of
manufacturing SMEs can be, to some extent ascribed, to the following factors:
The lack of support that the small, medium and micro-enterprises receive from
Government and its policies, lack of sponsorship from well-established
organisations that could provide SMEs with commercial advantages such as
legitimacy of the brand, and also their own internal processes that are weak in
organisational design and execution of strategies. While it is well-known that the
SME sector is regarded as the major contributor to any economy, it can be
highlighted that the failure of most businesses could also be as a result of
common causes such as lack of entrepreneurial mindset and financing, due to
lack of up-skilling, inability to meet customer requirements and international
standards certification. This research study was exploratory in nature,
descriptive and employed a qualitative and quantitative analysis. A research
instrument was presented by email and also physically sent to the respondents
by the researcher and delegates and semi-structured interviews were also
conducted.
The results of the study indicated that the most common causes of SMME
failure are lack of Government funding, lack of coaching and mentorship and
high interest rates and taxes. Based on the findings of the study,
recommendations were developed to try and minimise the failure rate currently
crippling SMMEs. The study recommends that the South African Government
should review its SMME governing policies and make them more flexible
towards SMME establishment. Government should also create transparent
communication channels between start-up SMEs and bigger organisations
within the same field of interest and also sponsorship for additional studies to be
conducted based on SMME failure. Should these recommendations be properly
implemented, the failure levels of SMMEs could be reduced, not only in
Johannesburg but across South Africa as a whole.
Description
Thesis (M.M. (Entrepreneurship and New Venture Creation))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Graduate School of Business Administration, 2015.