An investigation into the causes of failure and strategies for survival and growth of small medium and micro enterprises (SMMES) in South Africa : the case of Msunduzi Local Municipality

Abstract

Motivated by the alarming rate of failure of small, medium and micro enterprises (SMMEs), despite the significance accorded to them, in the economic growth and development of economies, this study sought to investigate factors contributing to SMME failures and identify effective survival and sustainable growth strategies for SMMEs in Msunduzi Local Municipality (MLM). The significance of this study lies in its potential to identify impediments to small business growth and propose strategies to enhance their performance in MLM. Contributing to the existing knowledge on SMMEs, the research informs small business policy development and benefits businesses through the implementation of identified strategies. Utilising a quantitative method approach, the results of the study highlight challenges faced by SMMEs as limited access to finance and skilled labour, inadequate marketing and promotional strategies, and complying with regulatory requirements. Survival strategies uncovered include adapting to changing market trends, engaging in research and development, and exploring new market segments; while sustainable growth was found to be enabled by fostering positive organisational cultures and encouraging innovation, continuous improvements of products/services, and effective risk management practices. In conclusion, the study emphasised challenges like inadequate access to finance for small business and underscores that survival strategies require adapting to market trends, while sustainable growth involve cultivating positive organisational cultures. The design of financial support with low interest, especially by financiers, is, therefore, recommended to address challenges like inadequate access to finance. The SMMEs in MLM are recommended to establish robust systems for continuous monitoring of internal and external environments for survival strategies like adapting to market trends; and provide leadership training for owners for sustainable growth like fostering positive organisational culture.