The viability of small to medium enterprises in the private security industry in Durban.

Abstract

Small to Medium Enterprises (SMEs) are pivotal in employment creation, poverty alleviation, wealth re-distribution and contribution towards the gross domestic product. SMEs in South Africa constitute 91% of all formal businesses, providing 60% employment and contributing 34% to the gross domestic product. Studies conducted reveal that 80% of SMEs in South Africa fail to survive beyond 42 months. Various factors have been identified as contributing to this high failure rate. This research examines factors that affect the viability of Private Security SMEs in Durban, South Africa, with the view of establishing the homogeneity of these viability factors across different industry sectors in South Africa and the pecking order thereof. In conducting this research, quantitative and qualitative methods were employed in data collection. Self-administered questionnaires with some open ended questions were used to collect primary data while interviews were conducted with a selected sample to gather data on perceptions of the regulatory authorities and customers. The research established three approaches to the factors influencing SME success, namely the customer perspective, the business owner perspective and the regulatory institutions’ perspective. Customers and regulators alluded to internal factors such as lack of financial management competencies and lack of infrastructure as key to this high failure rate, whereas the SME business owners identified mostly external factors such as access to finance and regulatory compliance as pushing them out of business. The study generally concluded that SMEs in the private security industry needed to focus mainly on internal factors like improving management competencies and infrastructure that will necessitate execution of a security mandate. Notably no participants had studied beyond a post matric diploma or had acquired a first degree. Other external factors such as the effects of globalisation and technology were found to have minimal influence on the viability of SMEs in the private security industry. The research concluded by making recommendations that could mitigate on the viability factors that affect SMEs in the private security industry.