Full Length Research Paper
Established correlation between marketing skills of ethnic SME owners and business failure
van Scheers Louise
School of Business Management, University of South Africa
Accepted: 08 July 2011 Published: 31 December 2011
SMEs comprise over 90% of African business operations and contribute to over 50% of African employment and Gross Domestic Product (GDP). SMEs sector has shown positive signs in South Africa, Mauritius and North Africa. In South Africa, SMEs constitute 55% of all jobs. Research such as Bowler et al. (2007) and Guler (2005, 2009) reveal that 40% of new business ventures fail in their first year, 60% in their second year, and 90% in their first 10 years of existence. It seems that a number of challenges have been identified as contributing to the failure of SMEs in South Africa and worldwide. The research problem of this study emanates from the current high business failure rate as well as marketing skills of ethnic South African SME owners. The research aims to establish the correlation between marketing skills of ethnic SME owners and business failure. 2000 questionnaires were posted to small business owners, 222 questionnaires were posted to each of the nine provinces of South Africa. The researchers acknowledge government’s involvement in managerial training which focuses on basic literacy, numeracy and communication skills with development rather than a business focus. Training should also focus on administration, financial management, and marketing skills. Ethnic SME owners would then also be more equipped to make better-informed decisions, and to steer their business away from known pitfalls. The research established that there is a correlation between problems experienced by ethnic SME owners and their marketing skills. Improving the managerial skills of small business owners will solve unemployment problems and a stagnating economy.
Key words: Ethnic SME owners, marketing and managerial skills, marketing training needs, entrepreneurship, South Africa ethnic entrepreneur, leadership.