An Exploration of Factors that Limit the Long-Term Survival and Development of Micro and Survivalist Enterprises: Empirical Evidence from the Informal Economy in South Africa

Abstract

This research explores the factors that limit the long-term survival and development of micro and survivalist enterprises of a selected informal sector in Durban, South Africa. Micro and survivalist enterprises play a critical role in social economic development, but despite the enterprises’ significance, several studies have shown that these enterprises fail within their first five years. The high failure rate is partially attributed to lack of support from external sources of support as well as the enterprises own internal weaknesses. The study employed non-probability, convenience sampling to collect data from 108 micro and survivalist businesses using questionnaires. The results obtained identified a number of limiting factors for the selected informal enterprises’ long-term survival and development. The limiting factors, that are internal to the businesses, included: poor planning, lack of networking, insufficient business experience, poor pricing knowledge, managerial and business knowledge incompetence and lack of literacy, education and training. External business factors comprised of inadequate knowledge in terms of the institutional and supportive environment. Few respondents knew about financial and non-financial services and access to training and development programmes provided by government, semi-government and other institutions. As a result, recommendations to increase awareness of the different incentives available to micro and survivalist enterprises have been set.

DOI: 10.5901/mjss.2013.v4n13p237