The hurdle for SMMEs to grow past infancy

Small Business Pic Kabo Mpaetona
Small Business Pic Kabo Mpaetona

A high number of Small Medium and Micro Enterprises (SMMEs) fail during the establishment phase of their businesses, which is in the first three to five years of operation, largely due to lack of entrepreneurial skills, lack of market, lack of finance and poor quality of products. BusinessWeek Staff Writer PAULINE DIKUELO writes

Though various sectors have their own definition of SMME, it usually refers to a business that has a turnover that ranges between a pula to P10 million. Most of these businesses are highly concentrated in supplies and service industries and contribute largely to the employment creation. As part of empowering locals, government has established entities such as Local Enterprise Authority (LEA), Citizen Entrepreneurial Development Agency (CEDA), BOBS, Ministry of Trade and Industry through the Economic Diversification Drive initiative and the Botswana Investment and Trade Centre (BITC) to help SMMEs with institutional support ranging from the provision of entrepreneurial development support and enabling business environment, financial institutional support and export promotion.

However, it has been evident that despite these initiatives half of the SMMEs fail in the first 3-5 years of establishment while the remaining half that survive continue to operate in conditions of uncertainty that is laden with a highly volatile market, intense competitive rivalry, shortage of serviced land, lack of marketing skills, low technology uptake and inherent biases against SMMEs. Out of the 12 908 SMMEs that LEA registered since inception, the director corporate and stakeholder communications Boikhutso Kgomanyane said some are no longer operating and either using their services while some have graduated from being small businesses.

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