Exploring the factors influencing the growth of Small and Medium Enterprises (SMEs) in Mangaung Municipality, Free State Province

Abstract

Small and Medium-sized Enterprises (SMEs) in South Africa inspire people to use their imaginations to develop creative answers to new societal problems that provide employment opportunities, end inequality, and advance the economy. There is a low rate of survival in SMEs, particularly in the first five years of business. Additionally, Small, and medium-sized businesses (SMEs) are crucial tools for tackling issues like job creation, sustainable economic growth, equitable income distribution, and the general picture of economic development. The failure rate of SMEs in South Africa is very high, making it critical to look at the factors that influence the growth of SMEs to promote them.

The Mangaung Municipality in the Free State was chosen as the study area. Given that SMEs throughout the municipality face various factors that impede their growth, such as access to finance, entrepreneurial abilities, access to markets and technologies infrastructure, training, and education, therefore the was a need to investigate the similarities and differences in growth and challenges SMEs face in the municipality, Hence, the study aims to investigate the factors that influence the growth of Small and Medium Enterprises (SMEs) in Mangaung Municipality, Free State.

The study adopted a qualitative research design, with a sample of 12 participants. Data was collected employing semi-structured interviews. The participants were SME owners who have been in operation for more than two years, are CIPC registered, and of legal compliance with the country’s laws. The researcher collaborated with the SEDA Mangaung branch to identify the participants. Participants information was kept private, all the information shared between the researcher and participants was kept confidential, and no participants were harmed during data collection.

The study’s findings were that SMEs are resilient and are a force if given the tools to prosper. However, because they face various challenges the most pertinent challenges faced by SMEs are access to markets, information, and technological infrastructure, Lack of access to finance, copycat businesses, and illegal immigration businesses.

Concerning the growth factors, access to finance is seen as a very critical growth factor to improve followed by education and training to remain in the known of critical information, client focus, and last strategic planning and goal setting to ensure their sustainability in the market.

Several strategies can be used to help SMEs overcome their obstacles and enhance the growth factors that support SME development. These strategies include giving SMEs access to mentors, providing opportunities for industry exposure because doing so will open new opportunities and external markets, introducing incubators, and combining government SME support agencies under one umbrella.