Critical success factors for SMEs in the Northern Cape Province

Abstract

Research has proven that the SME sector is important to the economy of developing countries, and South Africa is no exception. This sector has contributed immensely to job creation, poverty alleviation and assisting in the prosperity of the nation. The Northern Cape province only contributes between 1.9% and 2% to the country's Gross Domestic Product (GDP); it is therefore of the utmost importance that the SMEs in the province become successful, so that they can continue operating and provide employment and contribute to the national GDP. The primary objective of the research is to identify success factors that influence the development of SMEs in the Northern Cape Province, and to examine the economic factors necessary for SMEs to thrive in the province as well as the necessary personal attributes and business skills for entrepreneurship. Through an analysis of theoretical information and empirical results it is possible to facilitate a better understanding of how SMEs in the Northern Cape succeed, thus enabling learning that contributes to the body of knowledge relating to SMEs in the Northern Cape. The literature review has pointed out that there are psychological and nonpsychological factors as well as enterprise characteristics that make a business successful. Psychological factors are the motive of the entrepreneur as well as the vision and mission for the business, while non-psychological factors are the product / service knowledge, stakeholder relations; and the enterprise characteristics are the business age, business network, and financial resources. Mixed-method research was adapted to conduct this study comprising both the quantitative and qualitative research methods. Questionnaires were distributed to SMEs to gather data from participants, and semi-structured interviews were conducted with relevant institutions. Of the questionnaires issued, 125 that were usable were obtained, and interviews were conducted with three agencies. From the analysis of the data, it was identified that one of the significant factors that can contribute to the success factors of the SMEs is the improved relationship between government agencies and SMEs in the province. Other critical success factors identified are personal attributes and business skills as well as business location.