A study investigating the extent to which small businesses in Mooi River exhibit symptoms of small business failure.

Abstract

The objective of this study is to determine whether businesses In Mooi River are exhibiting symptoms of small business failure. Based upon the literature addressing small business failures, three general internal factors are identified: finance, management, and marketing. Within each of these three problematic areas, numerous specific difficulties are identified and examined. The external reasons for small business failures that are outside the owners control have been identified as inflation, economic conditions and union problems. The economic structure within which a firm must exist acts as a cause of failure that originates outside the business itself and is not a result of acts of management. A company cannot change the environment; it must be able to use it to its benefit. Due to time and cost limitations only 30 small businesses were surveyed using a systematic sampling method. The data was collected via a self-administered questionnaire, with closed ended questions. Data analysis was conducted using SPSS software and data analysed using frequency counts and statistical methods such as tests of significance and goodness of fit tests. From this study it can be concluded that the major symptoms of failure being demonstrated by the small businesses in Mooi River are external and marketing causes of failure. However, the small businesses are also demonstrating certain symptoms of money and management causes of failure. Due to the high turnover of small businesses in South Africa it is recommended that this study be extended to other areas or regions in Kwa-Zulu Natal and in South Africa to determine the factors impacting adversely on small businesses, as small businesses are vital components to our economy.