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Business Survival: The Constraints Experienced by South African SMEs in the Financial Sector

Author

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  • Michael C. Cant
  • Cindy Erdis
  • Catherine M. Sephapo

Abstract

In developed countries, SMEs have historically played a vital role in creating jobs, spurring innovations and creating new products, and thus contributed to economic growth (Kim, 2011). South Africa, as a developing country, should not overlook the importance of promoting, nurturing and supporting small businesses. In South Africa five out of seven new small businesses will fail within their first year of operation (Entrepreneur, 2014). It can therefore be seen that these small businesses experience challenges that limit their success. The purpose of this study was to establish the business constraints experienced by SMEs in South Africa. The study found that the main constraint that SMEs encountered is the lack of financial support. The findings showed that only 56.9 per cent of the respondents had received financial support from banks by means of a loan. Only 1.7 per cent of the respondents indicated that they received financial support from government.

Suggested Citation

  • Michael C. Cant & Cindy Erdis & Catherine M. Sephapo, 2014. "Business Survival: The Constraints Experienced by South African SMEs in the Financial Sector," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(10), pages 565-579, October.
    • Handle: RePEc:hur:ijarbs:v:4:y:2014:i:10:p:565-579
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    Citations

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    Cited by:

    1. Juan-Pierrà Bruwer & Judith Smith, 2018. "The Role of Basic Business Skills Development and Their Influence on South African Small, Medium and Micro Enterprise Sustainability," Journal of Economics and Behavioral Studies, AMH International, vol. 10(2), pages 48-62.
    2. Stanley Sachikonye & Mabutho Sibanda, 2016. "An Assessment of SMEs’ Financing by Commercial Banks in Zimbabwe," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(6), pages 213-224, DECEMBER.
    3. Zwane, Bonginkosi Keith & Nyide, Celani John, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(3).
    4. Bonginkosi Keith Zwane, & Celani John Nyide, 2017. "SMME attitudes towards financial bootstrapping: A perspective from a developing economy," Business and Economic Horizons (BEH), Prague Development Center, vol. 13(3), pages 347-356, July.
    5. Bonginkosi Zwane & Celani Nyide, 2017. "SMME attitudes towards Financial Bootstrapping: A perspective from a developing economy," Proceedings of Business and Management Conferences 5607468, International Institute of Social and Economic Sciences.
    6. Juan-Pierré BRUWER & Judith SMITH & Suzaan LE ROUX, 2019. "Critical Innovation Skills Required of Sole Trader Small, Medium and Micro Enterprise (SMME) Management and Its Influence on Perceived Business Profitability: A South African Perspective," Expert Journal of Business and Management, Sprint Investify, vol. 7(2), pages 256-262.
    7. Airlangga Hartarto & Jenri MP Panjaitan & Sumiyana Sumiyana, 2020. "A new method to empower organizational readiness for change in Indonesian SMEs," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 230-252, December.

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