By: Tebogo Mokwena
A new study has revealed that Gauteng-based SMMEs suffer from poor entrepreneurial leadership skills, crime, corruption and a lack of technology. This in turn leaves them vulnerable to crime and corruption. The study, which was published by the Southern African Journal of Entrepreneurship and Small Business Management, said there was a correlation between business leadership and business growth.
SMMEs in Gauteng could afford money for education and training, and this stunted managerial competency and growth. It said that businesses also suffered as a result of limited entrepreneurial expertise and operational practices which were needed to develop enterprises. Poor management abilities were linked to insufficient training, education and business expertise. Businesses were shown to be at risk of theft and fraud when they did not sufficiently invest in technology, and those that did not have good internal controls were more likely to experience unethical behaviour.
Furthermore, businesses noted that operational costs were increasing as a result of the crime. Also, small businesses from Johannesburg, Alexandra, and Ekurhuleni revealed that business regulatory compliance was another hindrance to SMME growth, as well as a lack of competitiveness. The study titled “Challenges faced by small, medium and micro enterprises in Gauteng: A case for entrepreneurial leadership as an essential tool for success” is authored by Thabisile Mhlongo from the Durban University of Technology and University of Cape Town business graduate Preeya Daya.
SMMEs from various sectors including agriculture, mining, quarrying and manufacturing participated in the research. The authors recommended that research be conducted to explore the entrepreneurial leadership challenges faced by small businesses by the private sector and the government. This was because the traditional ways of leadership were proving to be ineffective to solve business solutions in an environment as increasingly complex as entrepreneurship.
“Complex regulatory procedures remain a significant obstacle to entrepreneurs. Therefore, efforts to lower compliance costs should (focus) mainly on reducing commercial red tape and increasing the efficiency and clarity of administrative rules,” the study pointed out.