An investigation into the problems and constraints facing small business in 'downtown' Pietermaritzburg.

Abstract

This study attempts to investigate the perceived problems and constraints facing small Indian owned businesses in the 'downtown' area of Pietermaritzburg. An attempt was further made to profile businesses in the area, to investigate the specific problems and constraints facing them, and to look at problems on the basis of business sector and type of business. Further, the study aimed to provide information to marketers in the area and to make recommendations from a management point of view.

The problems facing SMME's were broadly divided into internal problems, external problems and those facing the firm at industry level. Internal problems are those over which the owner-manager has control and external problems are those over which the owner-manager has no control. The main problem facing SMME's at industry level appears to be competition from similar businesses.

The profile of businesses in downtown Pietermaritzburg is as follows:

• Owners

• Retail businesses

• Family owned

• Sole proprietors

• Male co-owners

• Approximately 72% of the businesses in the sample exist for a period of longer than 10 years.

The internal problems faced by the businesses include:

• 24% have no business experience

• Businesses do not offer credit facilities

• 32% experience problems in recruiting skilled staff

• Location is by far a major constraint in the business

The external problems do not seem to be having a serious! very strong negative impact, however the common external problems faced by these businesses include

• Business cycle

• Exchange rates

• Changes in distribution patterns

• Social Cultural factors

• Rentals

Crime however appears to have the most serious negative impact on the businesses in this area.

Medical practices in the area surprisingly do not appear to have stock control systems in place. Operating costs were high for clothing businesses and general dealers. Location appears to be a problem for general dealers, jewelers, medical practices and clothing businesses. Crime appears to be a problem especially for jewelers, medical practices, and general dealers. General dealers, hairdressers and clothing businesses are affected by competition from similar businesses. Clothing businesses are negatively impacted by changes in distribution patterns.

There does not seem to be much difference between retail, service and other businesses with respect to internal and external problems. There also does not seem to be much difference between owners, managers and partners with respect to internal and external problems.