Analysis of Factors That Affect the Long-Term Survival of Small Businesses in Pretoria, South Africa

Zeleke Worku

doi:10.4236/jdaip.2013.14008

Abstract

The paper is based on a 5-year follow-up study (2007 to 2012) of a random sample of 349 small business enterprises that operate in and around the city of Pretoria in South Africa. Data weregathered from each of the businesses on socio economic factors that were known to affect the long-term survival of small businesses. The objective of the study was to identify and quantify key predictors of viability and long-term survival. Pearson’s chi-square tests of associations, binary logistic regression analysis and the Cox Proportional Hazards Model were used for screening of variables, and for estimating odds ratios and hazard ratios of key predictors of viability and long-term survival. The study found that 188 of the 349 businesses that took part in the study (54%) were not viable, and that the long-term survival and viability of small businesses were adversely affected by lack of entrepreneurial skills, lack of supervisory support to newly established businesses, and inability to operators running newly established businesses to acquire relevant vocational skills.

Highlights

This paper was based on a 5-year long study (2007 to 2012) of a random sample of 349 small and medium sized enterprises conducting business in and around the city of Pretoria, South Africa in which factors responsible for failure in small businesses were investigated by using panel data analysis
Research Questions This study aims to provide adequate answers to the following research questions: What are the socioeconomic characteristics of small business enterprises operating in and around the city of Pretoria? What are the key factors that adversely affect longterm viability in newly established small enterprises operating in and around the city of Pretoria?
The study has found that 188 of the 349 businesses that took part in the study (54%) were not viable, and that the long-term survival and viability of small businesses was adversely affected by lack of entrepreneurial skills, lack of supervisory support to newly established businesses, and inability to operators running newly established

Summary

Introduction

This paper was based on a 5-year long study (2007 to 2012) of a random sample of 349 small and medium sized enterprises conducting business in and around the city of Pretoria, South Africa in which factors responsible for failure in small businesses were investigated by using panel data analysis. The purpose of this research was to identify factors that affect the growth and development of small enterprises that conduct business in and around Pretoria. Failure in small and medium-sized enterprises amounts to failure in the national economy according to Zheng, O’Neill and Morrison [7], Friedman, Miles and Adams [8] and Nieman [9]. This particular study is essential for finding out the root causes of failure in small and medium-sized enterprises that are conducting business in the Pretoria region of South Africa. Very few studies have been conducted so far in and around the

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Conclusion