Establishing The Challenges Affecting th African SMEs

Abstract

Cant and Ligthelm (2003) estimate that 70-80 percent of SMEs fail. A number of elements and challenges have been identified as contributing factors to the high failure rate of SMEs in South Africa. The research investigates the extent to which the identified variables affect South African SMEs. The objective of this paper is to determine to what extent SMEs experience selected challenges or issues that negatively influence the success of the business. Challenges and issues include exogenous macro environmental variables and endogenous environmental variables, namely marketing. A questionnaire was constructed and judgement sampling was used to gather the responses of 81 SMEs. The research identified inflation and interest rates, crime and unemployment, low demand for products, the wrong pricing strategies implemented and the location of the business to be the major problems experienced by SMEs. The challenge now is to improve the skills and capabilities of SMEs to ensure their success as they play a vital role in the South African economy.