Divesting and investing as strategic decisions in small business entrepreneurship.
Ngcobo, Kosie Howard.
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With many studies on small business entrepreneurship indicating high failure rates, South Africa is no exception. However, the small business is a critical sector of the South African economy, as it contributes significantly to the country's job creation, innovation, empowerment, economic growth and development. The government has also identified the SME sector as the pinnacle for its important national development strategies. As failure seems to be higher at the entry level, it becomes important that all business opportunities are properly investigated. This study first looks into the divesture of a poor performing business, K.H. Foods Services CC trading as Steers. The aim is to assess entrepreneurally whether the business indeed needs to be divested. As the funds from the divesture were to be re-invested, an investigation of a new business opportunity is undertaken. A Chicken Licken franchise is chosen as a better mode of entry into the Richmond market. A cost-benefit analysis was done for both cases. The results of the analysis reinforced the decision to divest and invest. The analysis also gave an indication that the new business was a better investment option when compared to other investment alternatives such as a financial institution investment and an insurance lump-sum investment. The new business venture showed better returns on capital invested, and its payback period was shorter than other investment options. These analyses were supported by a consumer survey. The purpose of the survey was to test whether a need existed in Richmond for a Chicken Licken franchise, and most importantly, to establish whether this franchise will enjoy the support of Richmond consumers. To achieve this aim, a questionnaire was used to collect a relevant data from a representative sample of all adult resident population of Richmond who visit public places. The quantitative data was captured and analysed using the 'Statistical Package for Social Science (SPSS). Additionally, a multiple regression model was formulated and tested to examine the demand for Chicken Licken in the Richmond region. The results suggested an overwhelming support for a Chicken Licken franchise business in Richmond. Based on this survey and other strategic analyses, the decision was taken to open a Chicken Licken outlet in Richmond.