A study of challenges that small black electrical contractors in Durban and Pietermaritzburg areas are faced with that could lead to their failure.
The South African government is faced with tremendous pressure to address the high unemployment and poverty rate in the country. One of the strategies that have been adopted by the government for job creation is promoting start-up of new small businesses and supporting the existing small businesses to ensure their sustainability. Small businesses are perceived as an instrument for job creation and will contribute to the economic growth and development of the country. Due to a high failure rate of small businesses in the business sector it was necessary to carryout this study, to explore and understand all the key factors that affect the growth of small businesses with the objective of analysing findings and providing possible recommendations. This research study used data extracted from eThekwini electricity and PMB municipality electrical contractors' databases. A survey was conducted on a sample of small black electrical contractors in the vicinity of Durban and Pietermaritzburg areas, with the use of questionnaires. The quantitative data was captured and analyzed using the statistical Package for Social Sciences (SPSS). The study was able to identify problems or challenges encountered by small black electrical contractors. According to the survey the root cause of failure to acquire finance by small businesses was that they lack skills drafting and providing financial plans, financial statements, financial projections and the required collaterals and securities. The results received from the questionnaire survey were presented and analyzed. The analysis included an examination of the overall profile of the sample and a determination of whether or not there was any significant lack of transparency. It looked at participation aspects of small black electrical contractors, which account for differences in responses to the questionnaires. The study recommended that Government should provide a legal framework with a specified focus on regulating the extent South African Revenues Services (SARS) practises its powers on small businesses. Instead of closing down the small business that fails to pay tax in time, SARS should provide assistance to ensure the sustainability of those small businesses. SARS' penalties and interest on tax owed should be reduced and there should be a limit on accumulating interests and penal ties, or small business may fail to ever settle debt.