Establishing The Challenges Affecting South African SMEs

Abstract

Cant andLigthelm (2003) estimate that 70-80 percent of SMEs fail. A number of elements and challenges have beenidentified as contributing factors to the high failure rate of SMEs in SouthAfrica. The research investigates theextent to which the identified variables affect South African SMEs. The objective of this paper is to determine towhat extent SMEs experience selected challenges or issues that negativelyinfluence the success of the business. Challengesand issues include exogenous macro environmental variables and endogenousenvironmental variables, namely marketing. A questionnaire was constructed and judgementsampling was used to gather the responses of 81 SMEs. The research identified inflation and interestrates, crime and unemployment, low demand for products, the wrong pricing strategiesimplemented and the location of the business to be the major problemsexperienced by SMEs. The challenge nowis to improve the skills and capabilities of SMEs to ensure their success asthey play a vital role in the South African economy.