Management of Small and Medium Enterprise (SME) development: an analysis of stumbling blocks in a developing region

13 June 2018

Globally, small and medium enterprises (SMEs) contribute significantly to economic growth and development. Yet, various stumbling blocks exist that hinder SMEs growth and development. South Africa is no different and with the current level of economic and political instability, local SMEs are struggling to achieve their full potential. The aim of this study is to identify and analyse the stumbling blocks preventing business success in a developing region in South Africa taking into account the local developmental environment and management factors. The study region selected is the Vaal-Triangle region, which is located south of Johannesburg in the Gauteng Province, South Africa. This study followed a quantitative descriptive cross-sectional research design using two scales namely the SME stumbling block scale and the Enabling Developmental Environment Scale (EDES). A non-probability convenience sample of 386 small business owners were included. Data analysis included descriptive frequencies, Principal Component Analysis (PCA) and Pearson's correlation analysis. Results from the PCA returned five factors. Results indicated the three main stumbling blocks restricting business growth were recession and slow growth conditions, weak and volatile exchange rate and high inflation rates. The correlation results indicated several significant relationships between the various factors. For SME growth, an integrated multiple-sectoral approach is required.