Determining the enterprise success factors within a select group of retailing micro enterprises in Site C Khayelitsha
The research identified Site C area of Khayelitsha, a township in the Western Cape province of South Africa, as the case study. Khayelitsha has an estimated population of 1.2 million people, and has about 22 sub-sections or areas. Khayelitsha is made up of old formal areas and new informal/formal areas. Site C, is an area which was built up around one of the old formal areas, and contains a high number of informal settlements, RDP houses, and informal backyard dwellers. The study’s primary objective is to identify what factors the business owners themselves regard as being critical for their own personal success, as well as that of the business they own. The secondary objectives were to determine what the make-up of these identified success factors were, and what their respective contribution was to the overall success of the business, as well as what interventions (if any) could make these identified success factors more effective. Qualitative data was requested from each of the participants over the various questionnaire development phases, to obtain a basic and detailed picture of each owner and their business, and to enable a detailed descriptive analysis of each participant. During the literature reviews of the Small Medium and Micro Enterprise (SMME) sector in South Africa, many sources identified the possible failure factors. These failure factors had extensive references to studies which focused primarily on the small and medium enterprises versus the micro enterprises component. The level of data available on micro enterprises indicated a significantly lower level of relevant data, than the data available on the small and medium enterprises component. The identification of the success factors is equally important as a valuable contributor to understanding the significant failure rate of start-up businesses within the SMME sector in South Africa. This thesis will consult literature studies that discuss these challenges. It will have an emphasis on the micro enterprise sub-sector within the broader SMME sector. The inequitable number of data between the micro enterprises and the small to medium enterprises is confirmed by the literature review. The core focus of the research is to hear from the established micro entrepreneurs themselves and what they identified over the course of their business existence, as being the key factors that enabled their success to date, as well as moving toward the future. The findings indicated that success factors are indeed identifiable from the entrepreneurs themselves. These factors included the education and training level of the entrepreneur, the entrepreneurial capacity of the entrepreneur, the access to financial resources, the specific business retail mix and the uniqueness of the specific business within its immediate locality. Whilst the owners’ success (and by default the business as well) is the priority of this research, the equally important failure rate of small business initiatives in South Africa is of concern, and are the proverbial other side of the coin. Small businesses are playing a vital part in our global economy and in particular in terms of job creation and poverty alleviation. The two pillars of the governments micro enterprise rollout is through the Department of Social Development via poverty alleviation programs which have at their core, essentially micro enterprise formation. The other pillar is via the Department of Trade and Industry in respect of job creation and empowerment as objectives. In South Africa much emphasis throughout the Integrated Small Business Strategy is placed by national, provincial and local governments on Small, Medium and Micro enterprises (SMMEs), to drive job creation and poverty alleviation. Therefore, an investigation into the factors contributing to the success of SMMEs is of vital importance. Recent changes in statistical data gathering methodologies have enabled greater understanding of the contribution of especially the smaller enterprises in the informal sector. The extensive literature consulted, put this figure as high as 80% of economic activity in developing countries. This by itself makes it critically important as an employment option for the retrenched, school leavers, graduates and the unemployed in general. Only willing participants were interviewed and were randomly selected based on the criterion of being in business continuously, for at least 5 years. This target population’s value is unique because they fall into the 20% category of small businesses who survive the first 3.5 years of business, as well as being in the even more elite and valuable niche of 2.10% of South Africans who are running firms older than 3.5 years. These two features are both exceptional and generates’ a unique further study opportunity. The opportunity is to identify why the other 80% of start-ups failed over the initial 12 - 48 month period since start-up. The specific focus area of this research is to identify the success factors of retail micro enterprises located within the case study area, being Site C Khayelitsha. The broad findings of the study of successful retail micro-enterprise owners in Site C Khayelitsha, indicate that their prior quality of education, the presence of role models in their social circle influenced their motivational aspect to start a business, their personal management skills levels were a significant feature in their success as well their exposure to, and understanding of business and how it works; were all crucial to their success.