Micro Enterprises’ Start-Up Constraints in South Africa

Abstract

The creation of micro enterprises is important to the reduction of high levels of poverty, income inequality and unemployment in South Africa. The objective of the study is to investigate the constraints faced by the owners of micro enterprises during the start-up stage. Understanding these factors can help to improve the low total early stage entrepreneurial activity rate of South Africa. The study used the qualitative research technique. In-depth interview method was used for primary data collection from twenty two owners of micro enterprises. The results indicate that inadequate owners’ capital, difficulty in raising external finance and lack of physical resources such as equipment are some of the major constraints to new business creation. Other important barriers are lack of experience and start-up skills, high level of competition and difficulty in getting a proper location. Recommendations to reduce the constraints faced by the owners of new micro enterprises during the start-up phase are suggested.

DOI: 10.5901/mjss.2014.v5n23p30