Factors that hinder the growth of small businesses in South African townships

Abstract

Purpose

The purpose of this paper is to examine factors that hinder the growth of small businesses in South African townships, to create awareness of these factors and to develop guidelines for small business owners to promote successful business enterprises.

Design/methodology/approach

The study was exploratory, descriptive and qualitative in nature. Semi‐structured interviews were used to gather data. A response rate of 93 per cent was obtained from a sample of 30 businesses.

Findings

The slow growth rate can be attributed partly to the lack of support that small, medium and micro‐enterprises receive from support institutions, and partly to their own internal weaknesses. The findings furthermore revealed that the most common causes impeding business growth are a lack of legal knowledge, a lack of funding and a general lack of business acumen.

Research limitations/implications

The study was limited to the micro‐, very small and small sectors of small businesses. Medium‐sized businesses were not included in the sample. The research could be replicated in other similar townships to determine whether similar results could be obtained.

Originality/value

The study adds to the knowledge of challenges that small businesses face in Black townships and how these challenges could be minimised. Strategies recommended for ensuring the growth of small businesses are that government intensify information campaigns of their support services and encourage business owners to affiliate with local business chambers for business support purposes. Business owners and their staff should also prioritise business training.

Citation

Mbonyane, B. and Ladzani, W. (2011), "Factors that hinder the growth of small businesses in South African townships", European Business Review, Vol. 23 No. 6, pp. 550-560. https://doi.org/10.1108/09555341111175390