Environmental factors and strategies that impact on the success and failures of SMMEs in Maseru.
Masupha, Liako Priscilla.
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In most, if not all, economies SMMEs operate in both the micro and macro environments, and are subject to intense internal and external forces. For the continued success of and in order for failure rates of SMMEs to decrease, all internal and external factors, as well as vital strategies employed by SMMEs, must be carefully monitored and analysed by the owner-managers of these small businesses including all relevant stakeholders such as the government and supporting institutions. The aim of this study was to analyse the environmental factors and strategies that result in a low rate of success and unfortunately a high failure rate of small, medium and micro enterprises in the city of Maseru. This study aimed to determine the extent to which SMMEs depend on assistance from financial institutions, with regard to the extent to which the Government of Lesotho’s intervention supports or hampers SMMEs’ endeavours to obtain financial assistance. The study also aimed to determine whether SMMEs have adequate training and development, and the extent to which these enterprises develop and practise strategic plans. A further aim was to determine the advertising strategies used by SMMEs for continued success, as well as the extent to which competition impacts on their success, leading to the short lifespans of these SMMEs. Primary data for this study was collected through questionnaires which were distributed to a sample of 250 SMMEs in Maseru. The sample was derived from the table for determining sample sizes from a given population by past scholars. Of the 250 questionnaires that were distributed, 180 respondents completed and returned questionnaires, which were thus used for data analysis. A quantitative approach was used for data collection and the data was analysed using the Statistical Package for Social Science (SPSS21). Data was presented in tabular form, followed by the researcher’s interpretation and observations regarding the findings. The findings revealed that there still persists inadequacy in financial assistance and lack of training and development for these small businesses. The findings reveal that SMMEs are indeed dependent on assistance from financial institutions as there seems to be high rates of self-funding and limited use of available financial institutions. The results also reveal the significance, awareness and extensive need of training and development activities and workshops for these enterprises. However, a vast majority of these workshops are in high favour of and usually target registered and formal SMMEs. SMME owner-managers engage in strategic planning even though the frequency in business planning is rather low, as well as advertising efforts which are regarded as cost-bearing routines due to insufficient funds, therefore resulting to a loss of customers to foreign-owned SMMEs, thus resulting to escalating competitive environment in the SMME sector. Of all the recommendations put forward, the most crucial one is with regard to the government’s intervention for financial support, to further encourage growth and development of these enterprises as they are key to sustained job creation and poverty reduction.
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